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Over three million SMEs missing out on any business savings interest

IN: Newsroom
  • Over half (53%) of small businesses are earning less than £300 in interest
  • Over six in ten (65%) SMEs hold a business savings account with the same provider as their personal savings

According to the latest research1 from specialist bank Aldermore, over three fifths (62%) of SMEs in Britain, the equivalent of three million businesses, are not earning any interest on their business savings.

The research has revealed financial pressures are the main reason for this; two fifths (40%) of those not earning interest do not save a sufficient amount on a monthly basis, whilst a third (33%) of SMEs are exhausting their savings before they can gain any interest. The current low interest rate environment is an additional concern as almost two in ten (19%) believe their bank does not offer high enough rates for noticeable interest to be earned.

For those businesses who are earning interest on savings, the majority (53%) are earning less than £300 annually, with the highest proportion (26%) earning less than £100.

Amount of interest earned on business savings

Percentage of self-employed

£0-100

26%

£101-£200

13%

£201-300

14%

£301-500

13%

£501-700

8%

£701-900

6%

£901-1000

6%

£1,000+

7%


When exploring business savings habits among the self-employed and SMEs, almost two thirds (65%) hold a business account with the same provider as their private savings, regardless of the rate offered. This mindset is more acute among firms with more employees (50+), those with higher levels of cash holdings (£100,000+), and being a limited company.

Ewan Edwards, Head of Savings, Aldermore says: “Being a business owner comes with a whole host of challenges, so it is vital that business owners make their surplus cash work harder to provide additional financial support and to strengthen financial resilience. Our research shows over three fifths (62%) of SMEs are not earning any interest, meaning over three million businesses could be missing out on additional income that would be an added boost when dealing with the multiple financial pressures of running a business; such as cash flow.

“In addition, the research reveals that almost two thirds (65%) of business owners adopt the habit of having a business and personal savings account with the same provider. While this may appear to be the ‘easiest’ option, taking this approach means businesses are missing out on a number of good products on the market. We encourage all business owners to shop around to find the best account on offer, as this can make a positive difference in the long term.”

*Ends* 

The research was conducted by Toluna via an online panel during March 2018. The sample consisted of 625 UK residents, including 325 entrepreneurs, self-employed people and business owners.

Notes to Editors:

 For further information about Aldermore, please review our Notes to Editors page.