Just 35% of small business owners know the rate of interest they are currently receiving on their business savings account and, with some easy access accounts paying just 0.01%, they could be losing value on their funds as a result.
Figures released by challenger bank Redwood Bank found that not only did few small business owners know how much interest their savings were earning, but 37% of those interviewed had not moved their savings recently and have no plans to do so.
At a time when base rate stands at a historic low and economic uncertainty has resulted in many providers cutting saving rates, business savers need to be more pro-active to ensure that their money is in accounts that will offer them the best returns. “There is a huge disparity between the interest paid on different business deposit savings accounts,” explained Gary Wilkinson, CEO and co-founder of Redwood Bank. “COVID-19 has had a significant impact on small and medium-sized enterprises (SMEs) and we can see from our findings that there’s also a lot of confusion around what to do for the best when it comes to savings.
“Given the strain that SMEs are currently under at the moment because of the lockdown, it’s vital that businesses protect their cash reserves as much as they can. We urge business owners to be proactive and research savings accounts online to find the best possible rate, because at the moment many providers are paying little more than zero per cent interest.”
|TSB||Business Instant Access||None||1.00%|
|Buckinghamshire Building Society||Business Saver Take 2 Locals||Instant||0.90%|
|Shawbrook Bank||Easy Access Business Account - Issue 3||None||0.80%|
|Newcastle Building Society||Newcastle Business Saver (Issue 2)||Instant||0.80%|
TSB currently tops the business easy access savings chart, with its Business Instant Access paying 1.00% gross monthly. This account pays 1.00% gross on balances of £5,000 and over, but a lower rate of 0.15% gross is paid on balances under £5,000. It allows unlimited further additions and withdrawals can be made at any time.
The next-best business easy access savings rate comes from Buckinghamshire Building Society, which pays 0.90% gross yearly on its Business Saver Take 2 Locals. This account requires a minimum opening deposit of £5,000. It allows unlimited further additions. Withdrawals are restricted to two up to £20,000 per calendar year. The account is closed if more than two withdrawals are made. This account is only available to local companies in Buckinghamshire.
Both Shawbrook Bank and Newcastle Building Society offer the third-best business easy access rate of 0.80% gross. Shawbrook Bank pays 0.80% gross on anniversary on its Easy Access Business Account – Issue 3. This account requires a £1,000 minimum deposit to open and allows unlimited further additions. Withdrawals can be made at any time and must be made via a nominated account. Newcastle Building Society pays 0.80% gross on anniversary on its Newcastle Business Saver (Issue 2). To open this account, a £1 minimum deposit is needed and it allows unlimited further additions. Withdrawals can be made at any time. There are versions of both these accounts that pay interest monthly at the same gross rate.
|UBL UK||7 Year Fixed Deposit Business Account||Seven years||1.45%|
|UBL UK||5 Year Fixed Deposit Business Account||Five years||1.40%|
|Allica Bank||Fixed-Term Business Savings Account (Issue 2)||24 months||1.20%|
|Allica Bank||Fixed-Term Business Savings Account (Issue 2)||12 months||1.10%|
The best long-term business bond rate comes from UBL UK, which pays 1.51% gross on maturity on its 7 Year Fixed Deposit Business Account. This account requires a £2,000 minimum deposit to open. There are also versions of this account that pay interest yearly and monthly at lower gross rates.
UBL UK also offers the best-paying five year business bond rate, with its 5 Year Fixed Deposit Business Account paying 1.44% gross on maturity. Again, a £2,000 deposit is needed to open this account. There are also versions of this account that pay interest yearly and monthly at lower gross rates.
Businesses looking for a short-term bond will find Allica Bank offers the highest two and one year business bond rates. The 24-month version of its Fixed-Term Business Savings Account (Issue 2) pays 1.20% gross on anniversary and the 12-month version of the account pays 1.10% gross on maturity. Both accounts require a £1,000 minimum deposit to open. There are versions of both these bonds that pay interest monthly at a slightly lower gross rate.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.