Small firms set for bank-loans boost

The launch of Shawbrook Bank comes as the Treasury reportedly looks at creating a scheme to allow banks to lend Government money.

Shawbrook, which is backed financially in part by RBS Equity Finance, is chaired by Sir George Mathewson, who ran Royal Bank of Scotland until 2006.

The Forum of Private Business gave a cautious welcome to the new bank.

“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.

“While a target of lending £250m per year is not huge, the funding that will be available via the new bank should not be dismissed out of hand.

“However, there is a great deal of work to be done to improve competition to address the over-centralised, tick-box nature of today’s banking system, and to restore local decision-making powers to branch managers who know the businesses in their areas.”

Acorn Commercial Finance, the pub specialist finance broker, has teamed up with the new bank and noted it already has some cases in the pipeline: a pubco tenant who is able to buy the freehold of the site with 90% of the purchase price already agreed; and a licensee looking to buy a second unit.

Paul Thompson, partner at Acorn, said: “We’re excited to welcome a new lender to our panel. With the main lenders making it difficult for our clients it’s good news when a bank wants to get loans out to the smaller end of the business market.”