NatWest and RBS are eliminating both arrangement fees and early repayment fees on loans to small businesses meaning that SMEs will be able to borrow up to £500,000 and repay it at any time without incurring a penalty.

Marcelino Castrillo, Managing Director of Business Banking at NatWest, said smaller firms wanted greater control of their finances.

He said: “If a company’s circumstances change and they are in a position to pay off an existing loan, we absolutely believe they should have the flexibility to do so without incurring penalties.

“We want our products to be simple, transparent and worry-free to enable our customers to focus on their business.”

Ian Cass, Chief Executive of the Forum of Private Business, added: “The Forum of Private Business welcomes the initiative by NatWest to remove fees on its loans for small business.

“Transparency of bank loan costs is something that we have been lobbying for and this move not only achieves this, but also provides additional flexibility for those businesses who choose to repay a loan early or move to another provider.”

Mike Cherry, Policy Director at the Federation of Small Businesses (FSB), said: “FSB is encouraged by this move from NatWest.

“Our members seek the total removal of unfair fees, and we hope this will now prevent smaller firms being penalised just as they need support to succeed.”

NatWest will also be establishing a team of ‘Business Growth Enablers’ to provide skills and guidance to small businesses across the country.

The 73-strong team will host weekly education events for local business communities covering topics from importing and exporting to cyber security.