Smaller businesses are losing out on £7.5bn in savings rates, according to new figures.
In a letter to the Treasury Select Committee, Allica Bank’s chief executive, Richard Davies, said that SMEs should be receiving this sum in interest per year on their deposits.
“This is either because their savings are being left in accounts with no interest or – worse in our eyes – because SMEs are being systematically offered lower interest rates for their savings than the rates offered to large companies,” he said.
“[There are] major issues with the SME savings market, where there is a significant lack of transparency and where SMEs are getting an incredibly poor deal.”
Davies wrote to the Treasury Select Committee’s current SME finance inquiry to urge them to include a specific investigation into the SME business savings market.
MPs set up the inquiry in July this year and are currently reviewing evidence to inform which topic areas they should focus their work.
When the inquiry launched, Harriet Baldwin MP, chairman of the Treasury Committee, said: “As a committee, we will be examining whether small businesses are able to access the finance they need to grow and develop, whether there is adequate regulation of the sector, and if government can take a more active approach to support business growth.”
Allica Bank estimates that £150bn of small business deposits aren’t getting any interest. A further £125bn are subject to a ‘hidden SME penalty’ in the form of a relatively low rate. That’s generally around two percentage points below the rates offered to larger businesses.
UK Finance, the body that represents banks, said the market for SME deposits is ‘competitive’, with a wide variety of products offering different rates and ease of access for SMEs. “We would encourage SMEs to shop around to ensure they get the product that best meets their needs,” a spokesman said.
Find out if you could earn more interest on your business savings account at Akoni Hub
Further reading on small business financing
How to get a business loan in 5 steps – Follow this 5-step plan if you want to secure a loan for your small business. There is a wealth of high-street banks and alternative SME lenders to choose from
Small business energy grants – what’s available – Whether you want to install an electric car charging station, replace your old boiler with a heat pump or just replace draughty windows, you can apply for a range of energy grants
Is it worth hiring an accountant as a small business? – Running a business isn’t a walk in the park, and business owners often have a million things to do at once. Outsourcing some services (like your accounts) is a great way to free up some time
