RBS, NatWest and HSBC are to distribute £95m of government cash from the Regional Growth Fund in the form of grants awarded alongside bank loans.
Small firms can qualify for a grant if they are going to invest in new capital assets, such as plant and machinery, plan to create new jobs and cannot get normal bank finance. Grants of up to £500,000 will be awarded alongside the award of a new bank loan on commercial terms. To qualify for the NatWest and RBS scheme, small firms need a turnover of less than £25m. The banks will not earn any fees to administer the scheme. Interest earned on any funds held on the bank's balance sheet must be used for beneficiary grants or returned to the government.
RBS and NatWest will facilitate £70m and HSBC will facilitate £25m. Grants cannot be used to support refinancing existing debt by a beneficiary. The banks expect that bank loans that accompany an RGF grant will typically be two to five times the size of the grant.
Mark Prisk, business minister, said: "These schemes will directly help SMEs that want to invest and create new jobs. They will deliver a shot in the arm to local communities and help small businesses drive local growth. 100 per cent of the RGF funding will be provided as grants to small businesses with the banks employing their regional networks to administer the schemes for free."