RBS opens £1bn fund for manufacturers

Posted on 14 Jan 2010 by The Manufacturer

Royal Bank of Scotland this morning announced to TM the launch of a £1bn fund dedicated to UK-based manufacturers, the first of its kind.

Designed in conjunction with Natwest, and aimed at kick-starting growth in a traditionally under-financed sector, the interest-only loans will be made available via a series of releases, for periods of two or three years, with the first release carrying fixed rates of 3.4% and 4.3%, respectively.

Manufacturers borrowing across three years will have the option to partially repay in their final year, while both lending facilities will attract a flat arrangement fee of 75 basis points — applicable for any loan drawn within the fixed rate.

Accessible in sums between £250,000 and £25m, and with RBS borrowing capital from its own balance sheets — i.e. not government-sponsored — to support UK manufacturing, the fund is primarily geared towards borrowers’ investment for growth; be it through acquisition, capital expenditure or increased working capital.

In making finance available to both new and existing RBS customers, the fund applies across the bank’s corporate division to include its business and commercial segments. While covering manufacturers from start-up to blue-chip organisations, however, loans are primarily aimed at SME and mid-market companies, given the difficultly that such manufacturers all too regularly experience in accessing viable credit lines.

Announcing the scheme to The Manufacturer’s Edward Machin, Peter Russell, head of manufacturing & infrastructure, RBS, said, “We are delighted to launch this fund in support of UK manufacturers. We are under no illusions that recovery across the sector will be easy or straightforward, but from taking to our customers we do see that investment for growth, in whatever form this might take, is back on the agenda.

“That’s why we are launching this fund now; we are keen to ensure that we play our part in helping manufacturers to maintain or improve their competitiveness and build financial strength at the same time. With the absence of capital repayments and very competitively-priced fixed rates, borrowers should be able to maximise their ability to grow, and we see this initiative as an extremely positive step in helping the sector to contribute more broadly to recovery of the UK economy.

“As far as the application process is concerned, it is very much business as usual, in that access to the fund is a straightforward commercial process that manufacturers will be familiar with. Once all relevant information concerning a proposition is available, we expect decisions to be made, loans documented and available for drawing within four to six weeks, and would therefore strongly encourage manufacturers to contact their relationship manager to learn more about the fund in the near future.”