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New research from Allica Bank reveals that small and medium sized businesses (SMEs) across Yorkshire & The Humber are losing out on £413 million annually as a result of not shopping around for better interest rates on their business savings. In Sheffield, the city’s 13,700 SMEs are therefore missing out on more than £29.7 million.
The analysis reveals that the ‘big six’ high street banks offer an average interest rate of 1.45% on small business savings, down from 1.59% earlier in the year. Beyond the big six however, rates of up to 4.33% available from challenger banks, a figure nearly three times higher than the big six.
For SMEs with an average £75,000 in savings, the discrepancy between big six interest rates and what’s available elsewhere is equivalent to £2,157 per year. With more than 191,000 SMEs across Yorkshire & The Humber, this equates to a whopping loss of £413,108,640 for the regional economy. For established SMEs with larger deposits of savings, the annual figure lost could be much higher.
The big banks are under-serving SME customers despite SMEs being the back-bone of the economy and supporting high-streets, job creation, investment and livelihoods across Yorkshire & The Humber. Nationally, SMEs account for around 61% of all UK employment, and around a quarter of GDP.
The latest figures come off the back of research produced last year by Allica which revealed that SMEs are losing more than £7.5 billion per annum in ‘missing’ savings interest per year.
Commenting, Katie Roberts, Yorkshire & The Humber Relationship Manager at Allica Bank said:
“Yorkshire & The Humber’s SME economy is Yorkshire & The Humber’s real economy, accounting for more than 191,000 businesses. These businesses are the life and soul of communities across the region and the difference between boarded up shops and vibrant high-streets.
“Despite this, SMEs aren’t getting the returns they deserve from high-street banks with interest rates that are consistently lower than are offered to bigger businesses. This lost income could represent a significant boost to Yorkshire & The Humber’s economy and be put toward investment, employment and a better deal for employees.
“The high-street banks are taking SME customers for granted, and those customers should shop around and get the return on their savings that they deserve.”
Which region is losing most in lost interest?
No of SMEs (1-250 employees)
Lost interest (based on average SME savings of £75,000)
North East
£155,810,895
North West
£573,416,880
Yorkshire & The Humber
£413,108,640
£394,213,320
£467,939,580
East of England
£579,380,985
£1,129,308,135
South East
£869,756,325
South West
£508,663,740
£368,092,050
Northern Ireland
£168,095,010
£230,453,880
