Majority of Small Businesses Are Boycotting Banks

Over half (60%) of the UK’s small firms have never tried to open a business account with a high-street bank, according to new research by Advanced Payment Solutions (APS) which has highlighted the banking complexities faced by business owners.

The report found that small businesses pay on average £488 a year to hold a business bank account (£39 a month). 16% of respondents admitted that they don’t know how much they pay monthly and 31% believed that banks “actively seeks ways to sneak in fines and fees that [they] do not understand”.

A further 30% of companies said they believed banking ‘red tape’ makes running a business more difficult and 39% called it a “necessary evil” of owning a company.

Of the firms who had set up traditional business accounts, only 6% gained access to it on the day of it opening. The average wait time for approval overall was 16 days however 15% of respondents had to wait over 26 days to make and receive payments.

Access to bank finance was also highlighted as a key issue in the report, with less than a quarter of business owners successfully securing the full credit they had requested and less than half saying that their overdraft facility was meeting their business’ needs.

Rich Wagner, CEO and founder of APS, commented:

“It’s worrying to see that UK small and medium enterprises are finding it so difficult to gain access to a basic high street business bank account.

It is likely that a good portion of the 60% who say they do not hold a traditional business account have been declined, and are therefore being forced to rely on risky alternatives such as cash or personal bank accounts, putting their own credit scores on the line for the sake of their business.”

Simon McVicker, director of Policy and External Affairs at IPSE and the Association of Independent Professionals and the Self-Employed, added:

“It’s hugely important that all businesses, including the self-employed, have access to a business bank account. If the facility isn’t available to them, independent professionals may have no choice but to merge their personal and business incomes. This can result in mismanagement of funds and create significant financial problems in the future. Banks should support these microbusinesses by streamlining the process of opening a business account to make it as clear and simple as possible.”