More than half of UK self-employed and small businesses are dodging the high street banks because of high fees and mounting paperwork according to a survey by APS (Advanced Payment Solutions).
There’s no doubt that for those running a business, it is essential to have a business bank account yet, as this research shows, a massive 60 per cent of small businesses are steering clear of high street banking. Any business owner will know to keep their personal and business bank accounts separate. This eases the stress of running a business, even for those who are self-employed. So why aren’t they choosing to use high street business bank accounts?
One reason highlighted by the research is because of the time these accounts take to set up. Businesses that have already applied for a business account at a high-street bank stated that any form of response after the application has been submitted can take up to a shocking total of 16 days.
Once the application has been approved the waiting game is not necessarily over! In fact many businesses claim to have had to wait a further 26 days before they can even access their account, another inconvenient delay, meaning no payments can be made or received.
The delay on credit checks is understandable, but paperwork? It is not that surprising that over half of the UK’s small businesses are dealing with ‘banking red tape.’ 39 per cent of UK small businesses are demonstrating their feelings by stating communication with their bank is a ‘necessary evil of operating a business.’
For those who are self-employed, the struggle is greater than just a time delay and cost is another huge factor. The research shows that the self-employed and small businesses are paying an average amount of £468 a year to their high street banks. That equals an inconvenient £39 per month.
The charges are leading 31 per cent of the self-employed and small businesses to perceive that their bank is finding ways to add extra fines and fees that they realistically don’t understand. 16 per cent of these businesses have openly admitted that they don’t actually know how much they are paying per month to maintain their business bank account.
Even when businesses are applying for facilities such as overdrafts and loans, they are suggesting there is still a struggle. Less than one quarter of small business owners have been able to access a full amount of credit, of which they had requested from their bank. Only half say that the facilities are meeting their business requirements.
Founder and CEO of APS Richard Wagner stated, “It’s worrying to see that UK SMEs are finding it so difficult to gain access to basic high street business bank accounts. The laborious credit checks and paperwork that SMEs must endure are an unnecessary hurdle, and it is more to do with banks ensuring that their new small business customers will be profitable for them, than a risk assessment tool. This highlights that banks are not always best placed to serve the needs of the smallest business customers.”
Philip Brennan, Head of businesscomparison.com says that there are other options available to SMEs, “High street banks are not the most transparent with their fee structures, the access onto their sites is not easy and they are certainly much more complex than retail banking. The growth of challenger banks and the disinvestment of RBS and Lloyds TSB and the enhancements to the prepaid propositions from CashPlus and CardOneBanking should all lead to increase in competition and better solutions for SMEs”
If you’re looking for a business bank account, then use our comparison tool to get the best deal.