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SMEs are opting to keep their money in accounts that can be easily accessed rather than depositing funds into long-term accounts, research from the Centre for Economics and Business Research (Cebr) has found.
The research, which was carried out on behalf of Shawbrook Bank, reveals that of more than £300bn SMEs hold in cash, 57% is deposited in current accounts. While small business owners are preferring to keep their money in easy access accounts, this could mean they are missing out on potentially earning higher interest if they lock their money into a fixed long-term account, especially as the research found that, on average, businesses only require ‘ready-access’ to 31% of their cash reserves.
Finding out that small business owners prefer quick access to their money has resulted in Shawbrook Bank launching a new easy access business savings account, as well as increasing the rate on its existing business notice account. Its new Easy Access Business Account – Issue 1 is second in the easy access savings chart, paying 1.05% gross on anniversary on a minimum deposit of £1,000. There is also a version of this account that pays interest monthly at a slightly lower rate of 1.04% gross. Meanwhile, its 100 Day Notice Business Savings Account – Issue 13 now pays 1.51% gross yearly on an opening minimum deposit of £5,000 and sits third in the variable rate business savings chart.
Commenting on the research and the launch of the new products, Julian Hynd, chief operating officer at Shawbrook Bank, said: “What we have found from our customers and from wider market research is that SMEs want more choice, more flexibility and better accessibility when it comes to savings. We have therefore created a proposition that tries to cater to those needs and removes the headaches or frustrations that businesses feel when it comes to managing their money. We hope customers find these enhancements not only make their lives easier but give them more time to focus on running and growing their business.”
Currently offering the top rate in the easy access business savings chart is Newcastle Building Society’s Newcastle Business Saver, which pays 1.05% gross on anniversary on an opening minimum deposit of just £1. This account also has a version that pays interest monthly at a slightly lower rate of 1.04% gross.
Business owners wanting to get the best rates will have to forego easy access to their money and instead opt for a long-term fixed account. Cambridge & Counties Bank’s 5 Year Business, Trust and Charity Bond Issue 5 is currently at the top of the fixed business savings account chart offering 2.50% gross on a minimum £10,000 deposit. Second in the chart is Masthaven Bank’s 48 Month Flexible Term Saver, which pays 2.18% gross on a minimum opening deposit of £5,000.
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.
