Natwest is the first UK bank to offer loans to businesses specifically to cover the costs of crushing the millennium bug.
Businesses can borrow between #500 and #1 million and defer capital repayments until after the turn of the century.
?We launched the loan because companies were coming to us saying they had no surplus cash flow to deal with the millennium,? said head of lending solutions Mike Sadler.
?The second reason was that companies who were more on the millennium ball were asking us if we could still provide them with their financial services in the Year 2000."
He went on: "We are suppliers in our own right. It emphasised how we all rely on the supply chain. No business is in a vacuum. It doesn?t help us if our customers don?t survive. If we don?t support them they could go out of business and we won?t get back the money already out to them.?
Jerry Whitmarsh, Natwest?s Millennium programme manager, said: ?Natwest has set aside #100 million to solve the millennium problem but we recognise that not all of our customers have the money they need to do the same.?
Asked to explain why the bank is putting an upper limit of #1 million on the loan, when Natwest itself has a Y2K budget of #100 million, Sadler said: ?Most of the companies that will be using the service will be smaller businesses without their own IT department or ones that haven?t even started. They will need less money than a business like ours but if they need more, we will provide them with more.?
The interest rate will be 10.5 per cent for small companies secured by property and 11.9 per cent if unsecured. Larger companies - with over #1 million turnover - will have the interest rate linked to the base rate with the margin based on their risk, primarily the strength of their balance sheet.
Sadler said: ?There is an initial #50 million in the kitty for the larger companies but on the smaller business side - it is a moveable feast. UK plc has a #50 billion bill for the millennium problem and there needs to be a lot more finance out there to meet that.?
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