Shawbrook Bank has launched a new savings bond for business customers.

The bond will be added to an existing suite of products for small-to-medium businesses and property investors.

The new one year fixed rate savings bond offers businesses a return of 2.70 per cent gross, guaranteed for one year.

Businesses can invest any amount from £5,000 to £100,000 and can put more money into the account while the product is available. The interest, which can be paid into any account where the customer is named, can be paid gross or net – whichever fits the tax status of your business.

Shawbrook business customers will also benefit from a new, increased rate on the 100 day notice business savings account. The rate now stands at 2.40 per cent gross, an increase on the previous rate of 2.10 per cent. 

Nick McAuliffe, COO of Shawbrook Bank said: “We think business customers should have access to competitive interest rates on savings, just as our personal customers do. Our new fixed rate savings bond gives SMEs with money to deposit another competitive savings option.

“When we launched Shawbrook we voiced our commitment to being open and straightforward with our small business customers. We offer clear, competitive rates for small business depositors to enable their savings to grow, and our simple processes mean our business customers can focus their time and energy on running their business.” 

Shawbrook Bank launched in October 2011 and offers lending and savings products to small and medium-sized businesses and individuals.

Aldermore, the new British bank, has increased deposits by more 176 per cent in the last year from £229.6 at the end of 2009 to £633.6m at the end of December 2010.

The number of savings customers for the bank has increased from 8,500 at the end of 2009 to 30,000 at the end of 2010.

Phillip Monks, CEO of Aldermore, said: “This is conclusive proof that we have created a bank that can attract long term, secure deposits.”

“Because of our bank’s low cost base and the state of the art processes and systems we have put in place we have plenty of headroom to lend out that money prudently and profitably to the UK’s small and medium sized businesses.”

At the end of 2010 the bank had outstanding loans to SMEs of £410.2 million, an increase of 107 per cent on the £198.6 million 12 months ago. Asset finance was one of the strongest areas of Aldermore’s growth with funding provided to SMEs increasing by 206 per cent to £69.8 million (end Dec 2010), up from £22.8m 12 months previously.

Simon Healy, head of savings at Aldermore, explained that customers at Aldermore are increasingly choosing the bank’s longer term savings products: “Aldermore has been very careful to ensure that longer term savings products are attractive and match what customers are looking for, as longer term savings products can have a really positive impact on our overall financial performance.”

“We believe our savings business offers the right mix – very decent interest rates and simple and transparent products all backed by friendly and efficient service. That is why we are producing such strong growth and have such a low customer churn.”

Principality Building Society increased the rate on its 12 month Business Savings Fixed Rate Bond by 0.25 per cent, becoming one of the top three 12 month fixed rate bond rates available to businesses in the UK.

The bond will pay 2.55 per cent for investments of between £10,000 and £5 million.

Nicola Crocker, business savings manager at Principality, said: “The increase of a quarter per cent from its previous rate of 2.30 per cent highlights our commitment to offering highly competitive rates to our business customers at a time when businesses are retaining more cash due to economic pressures.

“Businesses are looking for safe havens in which to place these funds, whilst also seeking good returns on money invested. Our new 12 month rate, I believe, addresses this predicament.”

The product is available to sole traders, partnerships, LLPs, limited companies, registered charities and trusts, subject to acceptance criteria. Interest is calculated on the daily balance and paid on maturity.

Small business owners are losing out on deposit interest rates for fear of jeopardising relationships with their existing bank, according to new research from Investec Private Bank.

80,000 small and medium sized UK businesses (35 per cent) say they are reluctant to move their company’s cash deposits to another bank as they do not want to risk their ability to borrow or to lose existing preferential rates they receive on other products from their existing bank.

This is despite more than half (53 per cent) of them saying that they realise they could be earning a higher rate of interest for their business deposits with another bank or building society.

Investec says the research indicates that smaller businesses could be the big losers in the recession as some banks have either reduced lending or have raised the rate of interest on loans at the same time as failing to pay competitive rates of interest on savings deposits. This is particularly worrying as over 500,000 SME owners (37 per cent) do not know the interest rate they are currently paying on bank loans and overdrafts and 65 per cent of owners (over 800,000 companies with a business savings account do not know the returns they are receiving on these deposits.

Almost a third (32 per cent) of SME owners (125,000 companies) who know the rate of interest they are paying on business loans have seen the rate of interest charged on these bank loans increase over the last 12 months. This is despite the Bank of England reducing the bate rate from three per cent in November 2008 to 0.5 per cent now. Of these, more than one in 10 owners said that their bank had increased the rate on their company loan by more than one per cent in the past 12 months.

Jack Jones of Investec Private Bank said: “Smaller businesses are being squeezed at both ends by banks at a time when they are most needed. On the one hand they are struggling to borrow additional monies at affordable rates; while on the other, they are receiving often derisory rates of return on any savings. Our research shows that many owners of smaller businesses are worried that they will be penalised if they move their savings to more competitive accounts.

“Businesses should also be able to move their deposits to accounts that pay a consistently competitive rate of return without jeopardising rates and terms they receive on other products such as loans and mortgages.”

Reasons that smaller business owners have not moved their savings to a bank / building society paying a higher rate of interest

• Not worth the administrative headache
• Have not yet considered moving, but may do so
• Do not want to jeopardise ability to borrow or increase borrowings
• Do not want jeopardise preferential rate paid on existing loans
• Loyalty to existing bank
• Have a good relationship with existing bank
• Do not want to adversely affect rate on existing business overdraft
• Tied in to a fixed rate for a set period
• Do not want to adversely affect rate on existing company mortgage
• Other
• Don’t know

Source: Continental Research

Abbey Business Banking has launched a market leading Time Deposit with a rate of 2.6 per cent, with a six month term.

Available to new and existing Abbey Business Banking account holders, the deposit will offer the opportunity for customers with a turnover of £1 million or less, who are paying in funds from outside Abbey to make the most of their money.

Sue Hayes, Head of Abbey Business Banking said: “With interest rates falling we wanted to offer our customers a safe and profitable way to save their money. This product allow SMEs to safely invest their funds in the short term, with the bonus of market leading growth over six months.

“Abbey Business Banking is committed helping SME’s maximise their business potential, offering free banking forever alongside a range competitive products.”