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Royal Bank of Scotland set to increase lending to small businesses

In a move which many feel could be the catalyst for many competitors to follow, the Royal Bank of Scotland has announced that an extra £3 billion will be made available to small and medium-size companies in 2009. The bank, which is now 70% owned by the taxpayer, has been under pressure for some time to release more funds to the small business market at a time when cash flow is under serious pressure and profitability is hard to find.



It has been revealed that the bank will also be introducing payment holidays and giving businesses the chance to lend money against their assets. While the terms and conditions of these arrangements have not yet been released it is hoped they will be less restrictive than previous attempts to breathe life into the small business sector. Many experts believe this is the first sign that the UK government is actually flexing its muscles and using its 70% shareholding to exert pressure on the directors of Royal Bank of Scotland, prior to installing its own representatives.



If the Royal Bank of Scotland is seen to take a substantial part of the small business and medium business sector this could induce competition and see others follow a similar path.

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