Barclays has begun extending cheap loans to firms that wish to expand, as it begins to carve up £150 million in available cash.
The money, from the European Investment Bank, will be loaned at a rate 2.5 per cent lower than the normal loans provided by Barclays. It will be made available only to firms with fewer than 250 employees and with strong plans for expansion.
Perhaps most appealing in these cash-strapped times is the fact that the discount will be provided as a single cash payment when the loan is granted - rather than being spread across the payments.
The maximum amount that will be loaned to any single business is £22 million. The EIB has also changed the restrictions on its loans such that an larger number of businesses will now be able to apply for them.
Both Barclays and the EIB have stressed that the loans are available only for capital investment. Loans will not be extended to firms looking for cash to refinance existing arrangements, or to those who need working capital.
The new loans represent the third round of EIB funding handed out by Barclays. It has already loaned £300 million in this way, and has made discount payments totaling almost £2 million.
The European Investment Bank established the scheme with the aim of providing support to small firms during the recession. It is scheduled to end in 2011.
