Lloyds Banking Group has launched its “2012 Charter”, an initiative that sets out a series of commitments to help small and medium sized businesses grow during the next years.
The Charter covers business customers with a turnover up to £15m across both Lloyds TSB and Bank of Scotland and includes measures to stimulate demand and boost access to finance for SMEs, provide guidance to help businesses grow successfully, and clarify the terms on which the group will lend to its customers.
In detail, the action “Encouraging Enterprise” aims to encourage 300,000 new businesses to start up by 2012 by running a programme of 200 nationwide seminars every year for the next three years, providing expert guidance and supporting SMEs in starting up, exporting, and bidding for 2012 contracts.
In addition, the Bank will provide online advice and support to business customers on issues including starting up, sustainability, procurement opportunities and finance.
Through “Access to Finance”, the bank will commit to try meet every reasonable request for competitive commercially-priced finance (both at short-term or long-term) from viable business customers and to do more to support any viable business through temporary difficulties and into the recovery.
A significant part of the Charter is related to the bank’s pledge for “Clearer and Fairer Pricing” to ensure firms have clear information and certainty about the finance they receive.
According to the bank, the price of existing loans or renewed overdrafts will reflect the cost of funding. The margin they charge will only increase where there has been a material increase in risk (subject to a minimum 1.5% over the cost of funds).
The bank guarantees that branches will be transparent about pricing and will help customers understand the price of their facilities. “Where margins increase, we will provide a clear explanation of the reasons”, they say.
Commenting on the initiative, Professor Russel Griggs, Chairman, SME Council, Confederation of British Industry, said: “Understanding how credit is provided is fundamental to all SMEs. Anything that increases that transparency and understanding is welcome because SMEs can then work more closely with banks to change or further enhance their business and address any concerns.
“This new customer charter is a welcome step and will also hopefully encourage more dialogue between banks and SMEs as well as understanding of each others challenges and opportunities”.