Bank provides £5m boost to grassroots business

RBS and NatWest have launched a new £5m Community Business Loan, to support community businesses and community development finance institutions that wouldn't normally qualify for mainstream bank lending.

It is the first time that funds of this scale have been made available for these businesses by a UK bank, all loans will be offered on favourable terms. Successful applicants must be able to demonstrate they are financially sustainable and will deliver a positive impact to society and/or the environment.

Supporting the social enterprise sector is an integral part of RBS' strategy to support businesses of all shapes and sizes. The new £5m fund has been created by the bank after demand grew for a much smaller micro finance fund which the bank ran an independent charity for 10 years.

Peter Ibbetson, small business chairman NatWest and RBS: "As the economy struggles, demand is rising for this type of finance. More businesses being set up with a social or community focus. These businesses, including charities, social enterprises, community interest companies and co-operatives, may be small but represent a fast growing sector which should be given every opportunity to play a role in the recovery."

Business and Enterprise Minister Mark Prisk said: "It is vital to improve the flow of finance from banks to all sectors of the economy. The Government supports any initiative that could help make this happen and I hope this fund will create new opportunities for community businesses to get access to mainstream finance. These enterprises play a key part in the Big Society and the links forged by initiatives like this will help them move forward and grow."

This initiative is the latest by the bank to make finance more accessible for small, grass roots businesses. As well as launching the SE100 index to help raise the profile of the UK's top performing social enterprises, the bank announced it was investing in the Community Development Finance Association's (cdfa) Change Matters programme to help increase flow of credit to this thriving but disadvantaged sector.

The Community Business Loan is available to established third sector organisations located and trading in the UK with social or environmental aims and who reinvest their profits for a social purpose. All applicants must be investment ready in terms of management, governance and financial position. Start-ups as well as established businesses can apply. Businesses can find out more information and make applications via the following links:

natwest.com/communitybusinessloan

rbs.co.uk/communitybusinessloan

Charities, social enterprises, community interest companies, co-operatives can apply for minimum loans of £30,000 and maximum loans of £500,000. Community development finance institutions, which will distribute funds to further businesses, can apply for minimum loans of £200,000 and maximum loans of £1,000,000.