Yesterday saw the launch a new kind of bank, a bank that is here to make quick decisions, give good rates and best of all, look out for the little guy.
has been set up to give UK SMEs a helping hand – promising to lend £250 million a year exclusively to small businesses.
In reality, it’s not new. The company has been in business since 1944 and became a licensed bank in 1971. RBS Equity Finance bought it in January and this month a name change saw it become ‘Shawbrook’.
The Forum of Private Business (FPB) – which represents thousands of small businesses in the UK – gave it a cautious welcome. “The bank represents a new source of finance for small firms and that is certainly a positive development,” said campaigns manager Jane Bennett. “But it has to be put into perspective. Shawbrook’s model is lending against the value of a property, a form of asset finance rather than a return to the strong relationship banking that we want to be the bedrock of commercial finance in the UK.”
The commitment to lend £250 million a year is only a very small proportion of the £76 billion UK banks have promised to lend to SMEs this year
. The FPB believes more competition between leading banks and allowing alternative funders to compete in the finance markets they dominate would help to address the perception of small businesses as risky propositions and subsequently bring down lending costs.
The conclusion seems to be: it’s a step in the right direction, just not a particularly big step.