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Small business owners reluctant to switch banks

Small business owners reluctant to switch banks

Category: Business

Updated: 19/05/2014
First Published: 19/05/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

As a small business owner, getting your finances in order will be the key driver behind your performance. If you haven't got a decent account or a viable stream of funding you might not enjoy the success you'd hoped, but research has found that a lot of small business owners are reluctant to switch banks – even if it isn't providing everything they need.

According to a study from the Forum of Private Business (FPB), only one in five small businesses would consider switching banking provider – despite there being widespread concerns over the likes of excessive charges, lack of finance and the calling in of loans, while a third of those surveyed thought their bank only offered average service and value for money.

Finance is unsurprisingly a key concern, with 16% of those surveyed citing difficulties in obtaining access to finance from their bank an ongoing worry. A further 15% wanted more flexibility and less centralisation in lending, while 14% were actively seeking greater access to finance.

Happily, though, some small businesses wouldn't switch banks for the simple reason that they're happy where they are. Just over half were content with their banking arrangements, believing it offered either good or excellent value for money.

However, the survey did highlight a clear need for more small businesses to consider alternative finance arrangements. A quarter said they wouldn't consider such lending with 35% citing the cost as the key barrier, while poor awareness and a lack of reliable advice were major concerns for 21% and 19% respectively.

Clearly, this is something that needs to change, particularly with so many having difficulties securing funding from their bank. Perhaps increased awareness of alternative lending would mean more small businesses switched provider? Doing so could potentially improve access to finance which could, in turn, help with expansion.

So, if you think it's time to consider the alternatives – or even want to switch banks in the hopes of better service – make sure to compare the options to see what else is out there.

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