According to the latest research from specialist bank Aldermore, over three fifths (62pct) 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 (40pct) of those not earning interest do not save a sufficient amount on a monthly basis, whilst a third (33pct) 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 (19pct) 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 (53pct) are earning less than £300 annually, with the highest proportion (26pct) earning less than £100.
When exploring business savings habits among the self-employed and SMEs, almost two thirds (65pct) 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 at Aldermore, says, “Having a business and personal savings account with the same provider… may appear to be the ‘easiest’ option, [but] taking this approach means businesses are missing out on a number of good products on the market.”
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