What do banks offer start-up businesses?
We look at what each of the main high street banks can do for you
Choosing the right bank is a critical decision when starting up a business. You will need an efficient, business-friendly account provider who will provide you with plenty of support and, preferably, generous loans, useful business tools and helpful advice.
Almost as important is keeping an eye on other banks once you have chosen who to go with. Research has shown that most businesses stay with their current account supplier whatever happens, not looking around for better deals even if they are opening new accounts. Therefore, it’s important that entrepreneurs keep abreast of what the banks offer, and switch accordingly if necessary.
Here, we have looked at what each of the main banks offer start-up businesses, to help you make up your mind. There are many things to consider when choosing a bank, but the following run-down should give you an idea of who is doing what on the high street.
Financial support on offer
Barclays offers free business banking for two years for individuals setting up their first business bank account within the first 12 months of trading. Loans are available from between £1,000 and £1m.
The bank also offers a free ‘Start-up Guide’ and business support including free seminars, which help small businesses understand credit control, marketing, profitability, online trading and employing staff. Information on ‘hot topics’ is also available covering areas such as ‘awards and competitions’, ‘how to do your own marketing’ and ‘Start-up Britain’.
As part of the Start-up Business Account you also gain access to a variety of benefits including a Barclays business manager, who can review your finances for free once a year, free 24/7 support from Barclays’ business team by phone and free consultations in the first few months with an accountant, marketing professional and solicitor.
Barclays provides overdrafts, loans and commercial mortgages. Business managers will talk to you about your finance options, how much you can borrow, the most suitable form of finance, the purpose of borrowing and what support they are able to offer your business.
If you are an existing Barclays customer you can apply for overdrafts and loans through the online banking system. Barclays also launched their Take One Small Step competition in 2010 aimed at entrepreneurs. Winners receive £50,000 to boost their business.
Barclays’ Start-up Business Account offers free automated transactions when the free business banking period ends as well as a dedicated Barclays business manager. It offers the option to manage your account through phone, in branch, online banking, mobile banking and text alerts. Start-ups will also have access to the online package MyBusinessWorks for a monthly fee where you can manage finances, create your business plan, store your business data securely, meet legal requirements and create your own website.
Barclays also offers free access to CREDITFOCUS, a service to help businesses recover and reduce late payments or bad debts, free consultations (as mentioned above), free business seminars, free online data back-up (up to 2GB), free business skills training and access to Barclays’ unique business management software.
Free banking is offered for 18 months or up to two years depending on the package that is chosen and whether the accounts are active.
Charges on cash or cheque
Automated and non-automated payments in both credit and debits are free for those holding a Start-Up Business Account. Some charges apply to non-automated payments for those on the business free automated transaction tariff. Additional costs apply to both types of account for services such as notes and coin exchange (£1.65 per £100), status enquiries (£8.33 + VAT) and banker’s drafts (£15.00).
Overdraft and loan interest rates
Barclays offers a certain amount of flexibility in its loan repayments. There is no early repayment fee and customers are offered a six-month repayment holiday at the start of the loan (although interest will still accrue). The interest rate is fixed and the rate varies depending on a number of factors. Customers have the freedom of selecting the repayment term and repayment option. Overdrafts are offered with a minimum fee of 0.25% pa and with a margin of 2.21% over the Bank of England base rate.
Website and online banking
From the main website you can select the ‘Business’ tab which will take you to a list of accessible options. The site offers a wealth of information with the option to apply for various services online. The ‘Online Banking’ option allows customers to see the most up-to-date view of their account where they can make payments, transfer money, open a savings account, and apply for loans and overdrafts.
Barclays runs a national programme of seminars that are available to the business community. At these seminars you’ll pick up a wealth of information on how to start a business or how you can improve your marketing and ultimately increase your sales. You’ll also have a chance to network with other small business owners.
The bank says its 1,600 relationship managers will support all aspects of starting up, from planning and finance to growing your business.
Customers who open a Barclays business account are introduced to their own Barclays business manager who will take time to get to know and understand their business’ needs.
Barclays claims that more than 100 businesses move their banking to them every day. An account will be opened within 48 hours of meeting with your Barclays business manager and the account-transfer service will handle the paperwork for you. Barclays, like other banks, is required by the Office of Fair Trading to complete each main element of the account switching process (eg setting up/cancelling regular payments), typically within two to three days.
Number of branches: around 1,700
Ratio of small business managers to branches: 1,600 based in branches