A revamped loan fund for ailing firms hit by the coronavirus lockdown will have an immediate impact, RBS has said.
RBS chairman Sir Howard Davies admitted there had been problems but expects to see a “sharp increase” in lending to small firms in the next few days.
On Thursday, Chancellor Rishi Sunak overhauled the scheme amid claims banks were taking advantage of the crisis.
The government has pledged to guarantee £330bn of loans but only £145m has been lent so far.
Small firms say they have struggled with onerous eligibility criteria for the government-backed loans, which are being issued by High Street banks and other lenders.
They have also complained of facing interest rates of up to 30% and being asked to make unreasonable personal guarantees.
It comes as the UK is facing recession as large parts of the economy are shut down.
On Friday, the influential Purchasing Managers’ Index (PMI) survey showed Britain’s dominant services industry suffered its biggest slump in March since 1996, sinking from a reading of 53.2 to 34.5.
Any figure below 50 marks contraction.
Mr Sunak said that under changes to the Coronavirus Business Interuption Loan Scheme (CBILS):
Sir Howard, who used to chair the Financial Services Authority (now known as the Financial Conduct Authority), told the BBC’s Today programme that the process of checking borrowers’ eligibility had been “difficult”.
He also said RBS had struggled with the demand after inquiries about the loans jumped “by 45 times” in a week.
“I think we have to accept that the scale of this process and the speed with which it’s been put in place has caused challenges for everybody,” he said.
“But we’ve had good discussions with the Treasury and small firms, and I think the changes announced overnight will make a quite a big difference.”