Tag Archive for Small-business Banking

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Business challenges for UK small to medium sized companies

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Originally written by Stephanie Spicer on Small Business
Of all the business challenges facing small to medium sized businesses (SMEs) in the UK the looming economic impact of Brexit is the biggest concern they have at the moment. 30% of SMEs list this as their biggest worry with 19% then concerned about the potential for their operating costs to increase. This according to research from The Co-operative Bank.
SMEs were asked to consider their biggest concerns as regards business challenges across a range of business issues.  Concerns over rising supplier costs was high up the list and as the table shows competition, red tape and regulation, knowing how to grow their business, late payments and staff issues were also key worries.

10 biggest concerns of SMEsPercentage of SMEs

Impact of Brexit upon the economy30%

Increase in operating costs19%

Competition17%

Red tape/regulation 14%

Increasing supplier costs14%

How to take my business to the next stage in its journey13%

Changing customer behaviour13%

Late payments13%

Access to funding11%

Recruitment/retaining talent10%

Donald Kerr, managing director of SME banking at The Co-operative Bank said: “It’s understandable that SMEs are concerned about the potential for rising costs, particularly when there remains so much uncertainty about the impact that an exit from European Union will have.  Small businesses can prepare to adapt

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Four fintechs share £40m funding pot to boost small business finance

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Originally written by Timothy Adler on Small Business
Four fintechs have been awarded £40m between them to address the £10bn funding gap caused by the lack of small business finance.
The £40m is part of a £775m programme funded by Royal Bank of Scotland as a condition of its bailout during the financial crisis.
A total of £425m will be given in cash grants to rival business banks and financial technology companies to support small businesses.
Previous recipients include Nationwide, Investec and the Co-Operative Bank.
Read: Best small business loans in the UK
Iwoca
Iwoca has been awarded £10m in funding, pledging to make £5bn available to small businesses by 2023.
The lender has pledged an additional £13m on top of the £10m grant to help open an office outside of London with at least 50 staff.
The £10m grant will expand Iwoca’s SME customer base to 150,000.
Since Iwoca launched in 2012, the small business lender has already funded 35,000 businesses in the UK, raised £350m in equity and debt finance.
Iwoca will make finance more accessible through the introduction of OpenLending, a customisable self-serve “plug & play” platform for a growing number of SME fintech partners involved in small business finance.
And Iwoca has partnered with Xero, the online accounting

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Exclusive – B-North to open national small business bank by end-2020

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Originally written by Timothy Adler on Small Business
B-North plans to open a national network of small business-only bank branches across England by the end of 2020.
The start-up bank, which has raised £4.5m in seed funding so far, plans to offer small business loans of anything between £500,000 up to £5m when it opens its doors.
Manchester will be the first B-North branch (or “lending pod”) to open next door, followed by branches opening in Yorkshire, the Midlands and London in stage one. B-North has identified another four locations for stage two.
Founders of the bank – which is currently in the process of applying for a banking licence – believe there is a gap in the market for an SME lender offering loans higher than the almost-instant debt offered by fintechs and peer-to-peer lenders, while offering faster lending decisions than incumbent high-street banks.
Spotcap, for example, offers loans of up to £250,000 to small businesses, priding itself on one-day decisions, while rival Esme offers fully automated SME loans of up to £150,000.
Currently, with traditional banks, requests for loans have to be passed upward to head office and can take between three and four months to be rubber stamped.
B-North’s highly localised model will allow

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Revolut launches free accounts for freelancers and small business

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Originally written by Timothy Adler on Small Business
Revolut, the challenger digital bank, has made two of its business accounts free for freelancers and small businesses.
The bank is suitable for entrepreneurs who travel or trade overseas a lot. Its currency exchange rates are far lower than high-street banks and customers can hold, exchange and transfer 29 currencies. Employers can issue fee-free corporate cards to employees to reduce expenses when they’re abroad. Revolut also integrates with apps including Slack, Xero, FreeAgent and Zapier. Future bolt-ons include expenses management.
More than 100,000 businesses in Britain and the rest of Europe have signed up for the service.
Although Revolut will not say how many customers it wants to sign up by scrapping its £25 per month, product owner James Gibson said: “We got feedback from small businesses that £25 a month is too much for them. Now that we’re free, we want customers to come and give us a go.”
And although there is no subscription fee, international transfers are charged 0.4pc above the interbank rate.
Revolut for Business has also introduced more flexibility into its paid-for plans, enabling customers to either upgrade or downgrade their plans at any time.
Gibson said: “We understand first-hand how frustrating it can

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KPMG urges SMEs to speak to banks before shock of no-deal Brexit

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Originally written by Timothy Adler on Small Business
Small businesses should speak to their banks about their debt facilities now, ahead of a possible no-deal Brexit, advises KPMG.
Banks have been putting small businesses under the microscope, figuring out which ones would be most vulnerable if Britain were to crash out of the European Union without a deal.
SME lending could be tightened up as the shock of a no-deal Brexit reverberates around the economy.
“Credit could be a little squeezed in the interim. If you haven’t had that conversation with your high-street bank, best have it now,” said Richard Bernau, director at KPMG.
Small businesses should ensure that their working capital facility remains intact should the UK suffer a disorderly exit from the EU, check the employment status of European Union nationals, and make sure their international supply chains are robust.
Although the Bank of England believes the banking sector is well prepared for a no-deal Brexit, SMEs could still find their access to credit dry up in a sudden downturn.
“Any bad or malign economic impact will have an impact on their ability to lend and the terms they are prepared to do so,” Andrew Pilgrim at EY told the Daily Telegraph.
Bernau said that banks

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Co-Operative Bank offers new business customers 2½ years’ free banking

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Originally written by Timothy Adler on Small Business
The Co-Operative Bank has nearly doubled its free-banking offer for start-ups and SMEs from 18 months to 30 months.
New small business customers will benefit from free everyday banking – subject to certain transaction limits and a minimum credit balance of £1,000 – making it, says the Co-Op, the best introductory offer in the market.
The Co-Op bank aims to double its market share over the next five years, with a particular focus on supporting ethically minded businesses. One in five SMEs (22pc) are set up with a broader social purpose in mind.
In 2018, the Co-operative Bank had over 84,000 SME accounts, including 750 co-operatives, 5,000 charities and 218 credit unions, making it the seventh-biggest provider for business current accounts.
SME customers will then go on to the standard Business Directplus tariff once the 30-month period expires.

Official data indicates that businesses are most likely to struggle in their second year, says the Co-Op. According to the Office for National Statistics (ONS), one in four (26pc) of the approximately 380,000 businesses established each year are likely to struggle or fail within their first two years.
Existing Business DirectPlus customers currently in their introductory period will see it extended

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British Business Bank increases small business support by 27pc

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Originally written by Timothy Adler on Small Business
British Business Bank, the Government economic development bank, increased support for start-ups and smaller businesses by over a quarter in the past year.
It has supported over 89,000 businesses in the UK with £6.6bn of finance in 2018-19, an increase of 27pc from £5.2bn the previous year, according to its annual report.
Over 90pc of the finance was delivered through smaller, newer or alternative finance providers. The bank announced 13 new delivery partners across its programmes during this period, lifting the total number of providers it works with to more than 130.
Almost half of the £6.6bn involved providing capital to SME lenders, a third consisted of equity placed with venture capital fuinds, and the rest spent by the BBB guaranteeing borrowing by businesses.
Indeed, the BBB has become one of the largest investors in venture capital funds. Unicorn companies that the BBB has backed through VCs include Revolut, Graphcore and TransferWise.
Meanwhile, the bank’s regional development funds, aimed at levelling the playing field for access to finance, now support more than £240m of funding.
The bank made a pre-tax profit of £81.3m over the period.
Lord Smith of Kelvin, chairman of the British Business Bank, said: “Smaller businesses are

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Barclays rapped by UK watchdog over way it treats small business

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Originally written by Timothy Adler on Small Business
Barclays has refunded small business clients an average of £2.50 each after it misled them into opening unnecessary current accounts to access other services such as loans.
About 800 affected Barclays small business clients shared the £2,000 compensation.
The financial services group reported pre-tax profits of £1.5bn in the first quarter.
Britain’s competition watchdog the Competition and Markets Authority has told Barclays to improve the way it treats small businesses. The rules, which Barclays signed up to in 2002, prevent banks from insisting that businesses open or maintain current accounts before they can access other products.
Barclays breached the rules by preventing small and medium-sized businesses that had premium accounts from transferring funds to or from accounts outside Barclays, and also by telling deposit account holders that they had to open a current account as well.
However, the Competition and Markets Authority is prevented from imposing fines for flouting rules.
“The bank’s actions led to unnecessary costs to some SMEs who were made to hold accounts they did not need,” the CMA said.
But it was Barclays itself that turned whistle blower, reporting its transgression to the CMA, and it has since moved to patch the problem, allowing affected customers

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Regional business growth – investors called on to narrow the gap

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Originally written by Stephanie Spicer on Small Business
Regional business growth investment inequality is set to worsen without significant changes and job growth, business investment and infrastructure in the regions could suffer most, according to the trade association for regional business investment – the UK Business Angels Association (UKBAA), which is launching a series of investment seminars for all interested parties.
The Association cites a new independent report by the UK 2070 commission, (the independent inquiry into city and regional inequalities in the UK, chaired by Lord Kerslake)  which says the UK is one of the most regionally unbalanced countries in the industrialised world and the disparities will widen unless the government adopts a radical programme of investment.
UKBAA says a huge shift in emphasis is needed towards regional funding support to address this inequality in the next few years. One of the biggest problems it highlights is the UK’s regions is a lack of investment into small, growing, businesses. This it says, creates further gaps in terms of wage and job growth with fewer businesses able to grow and scale apace with their London counterparts.
It adds that there is currently a lack of awareness regionally in wealthy individuals as to the wide

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