The UK government’s National Loan Guarantee
Scheme (NLGS) has been hailed as ‘very positive for finance’ as two
major banks’ have utilised the programme to provide discounted
asset finance deals.
Barclays Asset Finance has used the NLGS to
provide a £2.6m (€3.3m) finance deal to waste management and
recycling company, Roydon Group.
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Lombard, the asset finance division of the
Royal Bank of Scotland, has also used the scheme to provide a
£250,000 facility to specialist glass manufacturer T4 Design.
Under the NLGS, which was launched by
Chancellor George Osborne in March, the government will guarantee
£20bn of bank funding to lend to SMEs with a turnover of less than
£50m.
Participating banks can apply for government
guarantees, which will allow them to raise funds at a lower cost,
so long as they demonstrate they will pass on the benefits through
to businesses by reducing the cost of business loans.
Both Barclays and Lombard have opted to pass
on the benefit in upfront cash-back equivalent to the loan
discount.
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By GlobalDataImperative to invest
Wilf Sumner, director at Roydon Group, which
is using the finance to purchase a custom-made waste-sorting
machine, said: “The 1% discount through the Barclays cash-back
scheme equates to £30,000 and is going to help us even further by
funding some of the additional electrical works needed for the
project.”
T4 Design invested the £250,000 from Lombard
in three specialist glass processing machines and in upgrading in
the company’s IT infrastructure to handle the increase in
capacity.
The deal, arranged by Charlotte Gabb, senior
relationship manager with Lombard, included just over £3,500 in
cash-back.
Gabb said: “The NLGS is one of the most
positive things that has happened in the world of finance in a very
long time – it makes such a difference to customers to be
giving them a positive message.
“Most importantly, it also helps
businesses bring their buying plans forward so that they can invest
in their growth.
“In order for a business to be innovative,
productive and competitive, it is imperative for it to invest in
cutting edge equipment.”
The inclusion of asset finance in the NLGS was
welcomed by Stephen Sklaroff, director general of the Finance &
Leasing Association, when the scheme was announced.
He said: “This will help to ensure that the
NLGS supports investment in plant and machinery and leads to new
jobs.
“Around 750,000 small businesses already use
equipment finance of this kind and it is very good news that
businesses taking advantage of the NLGS discount will be able to
choose the most appropriate kind of finance for their needs.”
grant.collinson@vrlfinancialnews.com
