Which business savings account is right for you? | moneyfacts.co.uk

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Michael Brown

Content Writer
Published: 16/04/2022

Written by Alun Williams, Commercial Director of Savings at Shawbrook Bank.

This article is not intended to be financial advice. The views expressed are those of the author and Moneyfacts.co.uk does not endorse the content.

As the cost of living crunch bites, consumers and businesses alike are seeing price hikes due to rising inflation and wider economic factors.

As a result, many businesses may be looking for ways to capitalise on their hard-earned cash. A business savings account could allow your capital to grow while you focus on the day-to-day operations of your business.  

For any business, a savings account makes every penny work harder – creating solid building blocks for future gains.

We polled 500 small businesses across the UK and found that 63% of business owners expected an increase in their business activity in the next year*. This shows that, when the survey was commissioned in July 2021, many business owners had a positive outlook when it came to future business growth.

In setting your business up for success, it’s important to think about the best way to manage your money. When it comes to spare cash, many businesses keep it in their current account, which for the most part lies idle. There could be a better alternative, and that’s where an interest-earning savings account comes in.

The type of business savings account that is most suitable for you depends on the needs of your business in both the short and long-term.

Some businesses may be happy to lock away the cash for a higher rate, whereas others may have greater peace of mind with more accessibility.

Here are the pros and cons of different types of business savings accounts.  

Easy access business accounts

An easy access account allows you to deposit and withdraw money at any time. As the most flexible savings account, we will give you access to your money as quickly as the next working day.

While simple and effective, savers typically pay the price with lower interest rates, in return for being able to withdraw your money at any time.

Our easy access accounts return 0.5% AER/gross (variable)**, with interest paid monthly or annually. This means that while cash reserves are growing year-on-year, the rate of passive growth is typically slower than alternative options.

Easy access gives savers complete flexibility over their funds and may be more suitable for fresh start-ups who are still finding their feet and may need access to money quickly.

Our accounts are quick and easy to set up and require a minimum opening amount – to the tune of an initial £1,000 deposit.

Fixed rate business savings bonds

If your business has surplus cash that you can set aside for a fixed period, you could earn a higher rate of interest in business savings bonds.

You won’t be able to access the funds before the end of the agreed term when you bank with us, but you’ll receive a fixed higher rate in return.

We currently have two fixed rate bonds available. You can choose between a one-year term which returns 1% AER/gross (variable)** and a two-year fixed term which returns 1.1% AER/ 1.09% gross (variable)**, with interest paid monthly or annually.

Fixed rate bonds can be a little too inflexible for some small businesses. For that reason, many businesses typically apply when they are confident they have financial stability and no immediate need to access the funds.  

It is simple to open an account with us, and you can deposit amounts ranging from £5,000 to £2,000,000 in each account. Plus, you can manage your money online, too.

Business savings notice accounts

Business growth can often ebb and flow. All business owners need to focus on reading the head and tailwinds for the business. For those more confident in their ability to read which way the wind is blowing, a notice account offers better interest returns, but slower access to funds.

Following the impact of COVID-19, small business owners can be all too aware of just how biting the lean months can be. As a result of wider economic uncertainty, some businesses could expect slightly more challenging times ahead.

Notice accounts, as their name implies, require you to inform the bank of your intentions to withdraw funds a set amount of time before the actual withdrawal date.

This provides an element of flexibility which can give some business owners peace of mind, and greater control of their money than other options, such as bonds which lock cash away for a set period of time.

Our accounts, for example, offer two options: 45 or 100-day notice periods. Our 45-day notice account receives a 0.55% AER/gross (variable)** while our 100-day notice account benefits from a greater 0.75% AER/gross (variable). You can deposit amounts ranging from £5,000 up to a maximum of £2 million in each account and interest is paid monthly or annually.

Case Study preview - RMP Design & Marketing Ltd

For some businesses, making the move to a different approach to saving can feel jarring and almost too much hassle, even if you know you’ll stand to benefit.

This was exactly the case for Yorkshire-based business, RMP Design & Marketing Ltd, a full-service design and marketing agency that has benefited from manoeuvring quickly to find the best ways to manage its money. The business leveraged its capital-rich position to generate an income via high levels of interest.

Charles Milner, Managing Director of RMP Design, said: “We were tired of seeing consistently depressing interest returns where we banked previously. It doesn’t matter who you are, a return of 0.01% AER won’t keep your attention for long.”

“Our move to Shawbrook came around a year ago, in the middle of dealing with the pandemic. Having examined the market, Shawbrook came out on top with far higher returns, allowing the capital we did have stored away to generate important passive income, rather than languish away in a piggy-bank returning pennies.”

“At the start of the pandemic, we had eight large international exhibitions, that would have been major sources of revenue for the year, effectively shuttered overnight. It was a real concern how we would manage 2021, but by having the money available to act as working capital, we were able to explore new business opportunities without fear of cashflow problems. By the end of the year our turnover and profits had increased significantly.”

RMP Design has been a business savings customer of Shawbrook Bank since the beginning of 2021.

Future? In focus

As we emerge from the impact of the pandemic, small business owners across the UK are finally waking up to a new dawn of opportunity in 2022. The opportunity for greater peace of mind and certainty is there for the taking.

The bottom line: it’s never too late to start saving. Don’t let it just sit idly in your current account, it pays to be savvy with your spare cash, so you can reach your business goals.

At Shawbrook Bank, we offer a variety of business savings accounts. And because we prefer a straightforward approach to savings, we offer consistently competitive business savings rates**.

We provide customers – from sole traders to small businesses – the freedom to make the choices that will steer their business into the future, with sums from £1,000 to £2 million.

Shawbrook Bank is proud to support small and micro businesses across the UK, and we will continue to provide platforms to support the growth of British business for years to come.

For more information about business saving accounts, please visit our website here


*The research was commissioned by independent research company, OnePoll in July 2021 and surveyed 500 UK micro-businesses (25 or fewer employees).


** Interest rates quoted are accurate as at 13 April 2022.


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