Thousands of businesses fall behind on loans as inflation soars

‘We have put in place a range of targeted measures to support those who are likely to need it most’

THOUSANDS of businesses are falling behind on their loan repayments at Natwest, with the bank’s chief executive warning that the worst is yet to come for the economy.

Late repayments of up to 30 days on business loans more than doubled to £2.37bn in the first half of the year, Natwest results revealed, as inflation soared to a 40-year high of 9.4pc.

The bank is one of the country’s biggest business lenders, with more than £200bn of loans to small and medium businesses. The sharp rise in late payments is a worrying sign of the struggles this part of the economy is facing.

Natwest has also frozen fees on small business current accounts for 12 months to help struggling customers and introduced capital repayment holidays, increases to overdrafts, and reductions in interest rates. Chief executive Alison Rose warned “the most significant challenges are yet to come”, with inflation forecast to peak at over 12pc this year.

So far this year Natwest set aside an additional £152m to help customers with lower incomes who are in fuel poverty and over-indebted. By the end of July, the bank estimates it will have contacted more than 2.7m personal and business customers to offer advice.

Despite payment difficulties, defaults have yet to see an uptick. Pre-tax operating profits at Natwest rose 13pc in the first half to hit £2.6bn. It declared an interim dividend of 3.5p per share and a special dividend of 16.8p, or £1.8bn.

Ms Rose said: “We know that continued increases in the cost of living are impacting people, families and businesses across the UK and we have put in place targeted measures to support those who are likely to need it most.”