What do banks offer start-up businesses?

We look at what each of the main high street banks can do for you

Barclays

NatWest

HSBC

Royal Bank of Scotland

Santander

Lloyds TSB

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.

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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.

Barclays Business Banking

Barclays bank financial support

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 bank joining offers

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.

Barclays bank charges

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).

Barclays bank 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.

One-on-one help

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.

Switching times

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

Website: www.barclays.co.uk

Barclays

NatWest

HSBC

Royal Bank of Scotland

Santander

Lloyds TSB

NatWest Business Banking

NatWest bank financial support

NatWest also offers two years’ fee-free banking as well as fee-free overdrafts in the first year of up to £500. Small business loans are offered between £1,000 and £25,000. Fixed-rate business loans are also available from between £25,001-£250,000. NatWest also offers business account cards, making it easier for you to manage your finances and make payments.

If you want to accept debit and credit card payments from your customers, NatWest will introduce you to WorldPay, a leading payment processor.

NatWest bank joining offers

When you open a business account with NatWest you are assigned an experienced relationship manager who can offer support for your business. They will be based in your local branch and can be contacted via telephone, email and face-to-face. NatWest also provides free online training courses and business guides aimed at those starting a business.

Smarta Business Builder, which launched in April 2011, is offered with the start-up account and is a new online package.

NatWest bank charges on cash and cheques

As long as your turnover is less than £1m the start-up account is fee-free with no transaction limits.

NatWest bank overdraft and loan interest rates

Advantage Business customers can take advantage of a 1% discount for all small business loans. There are no arrangement fees but early repayment will incur an additional charge of two months’ interest.

Business term loans are flexible, allowing you to borrow any amount and to repay it over an agreed amount of time. You can choose between variable or fixed rate and can take a range of repayment holidays.

There is no fee for your overdraft when you open a start-up account; thereafter the arrangement fee is £50 for up to £500, £100 for between £501-1500 and 1.5% for overdrafts of over £1500.

Website and online banking

It is easy to navigate to the business banking section by clicking on the tab at the top of the page. From thereon you are given a number of clearly defined options leading you to easily digestible information.

Both new and existing customers can apply to open an account online in about 15 minutes. The online banking option allows customers to move money, make payments and manage business cashflow. NatWest offers secure online tools and 24/7 access.

One-on-one help

The banks says its local relationship managers make it their job to understand your business community. They can help by offering their advice, making useful introductions and acting as a sounding board.

You’ll be introduced to a named relationship manager who is contactable through face-to-face meetings, email and direct line. According to NatWest, you’ll enjoy free business reviews, access to specialist services, market expertise and fast responses.

Switching times

If you choose to switch to NatWest you will be supported by their dedicated switching team. You’ll have access to everything you need to operate the account within 10 working days of your application being approved and they’ll even help you complete the paperwork.

Number of branches: Over 1,600

Ratio of small business managers to branches: 1,700 relationship managers, who can be accessed through both face-to-face and telephone meetings

Website: www.natwest.co.uk

Barclays

NatWest

HSBC

Royal Bank of Scotland

Santander

Lloyds TSB

HSBC Business Banking

HSBC bank financial support

Up to 18 months’ free banking is offered with both the Business Current and Business Direct Account. The website offers guidance on starting a business with support on writing a business plan. Flexible business overdrafts are offered and loans of between £1,000 and £25,000. HSBC also offers fee-free credit cards for the first two years and various business insurance policies.

HSBC bank joining offers

Business banking customers benefit from 18 months’ free business banking. Business banking is available at 1,500 branches and customers will have access to a local business specialist as well as telephone access to trained specialists between 8am-10pm. Free business planning interactive tools are available, as well as support and resources offered through HSBC’s Knowledge Centre.

HSBC bank charges on cash and cheques

Following the free introductory period those on a Business Direct Account (those with a turnover under £500,000) enjoy many free benefits whereas those on a Business Current Account (turnover below £2m) will be charged £3.15 a month for account maintenance.

28p per cheque will be charged on cheques collected and 63p on cheques paid. 23p will be charged per cash machine withdrawal.

HSBC bank overdraft and loan interest rates

Small business loans are charged at a fixed rate from 7.9% AIR. Business overdrafts are charged at 3% over the Bank of England base rate.

Website and online banking

There are many options to choose from under the ‘Business’ tab on the HSBC website, with further information laid out in easy-to-view boxes. The business internet banking service is accessible 24/7 and the new business mobile banking app allows customers to manage their finances while on the move. The usual services are offered alongside the option to set up multiple users. HSBC online also offers cheaper payments than those made through a branch or over the telephone.

One-on-one help

Customers gain access to a local business specialist, available in one of the 1,500 business banking branches. Trained specialists are available to offer help and guidance over the phone between 8am and 10pm.

Switching times

HSBC aims to complete the move from another bank within two weeks. You can switch your borrowing too, with HSBC promising to match your overdraft rate up to £30,000.

Number of branches: 1,500 business banking branches are available

Ratio of small business managers to branches: Business experts are available in the business banking branches and trained specialists can be contacted through the hotline between 8am and 10pm

Website: www.hsbc.co.uk

Barclays

NatWest

HSBC

Royal Bank of Scotland

Santander

Lloyds TSB

Royal Bank of Scotland Business Banking

Financial support on offer

If you’ve been in business for less than a year you can qualify for two years’ fee-free internet banking. There is no transaction limit as long as your turnover is under £1m. There are various loan options including a small business loan, which those who opt for the Royalties Business Account (£25 a month for firms turning over up to £100,000)  receive a 1% discount on. Fixed rate business loans are available between £25,001 and £250,000. Business overdrafts are also offered on flexible terms with instant access and daily calculated interest.

Joining offers

RBS offers guidance through a series of ‘Start-up Guides’. You will also gain access to a free online business start-up course, and you will be assigned with your own dedicated relationship manager who is there to support your business, says RBS. As with NatWest, RBS offers the Smarta Business Builder software with their start-up account.

The two years’ fee-free banking is offered to businesses that are less than a year old with a turnover of less than £1m. RBS has also teamed up with Regus and is offering free businessworld gold memberships to start-up account holders, giving entrepreneurs access to over 1,000 business lounges worldwide. Regus business lounges offer a professional working environment for entrepreneurs, and businessworld gold members can enjoy free internet access, refreshments and a 10% discount on meeting rooms.

Charges on cash and cheques

Following the two years’ fee-free banking business owners have the choice to move to the Business Plus tariff, which offers free automated transactions for businesses with a turnover of less than £250,000. With the standard tariff customers are charged 67p per cheque or direct debit and 66p per £100 of cash withdrawn at any branch.

Overdraft and loan interest rates

There are various options to choose from when selecting a loan with both fixed and flexible term loans available. Repayment holidays are available and there is also the option of staged drawdown, to save on interest costs. The overdraft facility is guaranteed for 12 months and the interest is calculated daily. You can discuss your needs and options with your relationship manager.

Website and online banking

The website is clean and easy to use with the option to apply online or to get in touch for more information offered on almost every page. The digital banking option allows businesses to access their accounts 24/7. With the RBS digital banking service you can pay bills, manage your accounts and take control of your finances. Information on the security of the site and testimonials from customers are available.

One-on-one help

RBS offer a start-up hotline and a business hotline which are open between 8am and 6pm Monday to Friday. Additionally, businesses banking with RBS have access to a dedicated relationship manager who will get to know their business. You can contact your business relationship manager by phone, mobile or email.

Switching times

RBS aim to set up your new account, transfer your money, transfer your funds to clear an old overdraft and close your old account within two weeks. A new account will be opened within two days. If you are leaving RBS the whole transfer should take no more than four days.

Number of branches: Around 650

Ratio of small business managers to branches: One relationship manager per branch

Website: www.rbs.co.uk
Barclays

NatWest

HSBC

Royal Bank of Scotland

Santander

Lloyds TSB

Santander Business Banking

Financial support on offer

Santander offers up to 18 months free day-to-day banking for businesses that have started up in the last 12 months. Business loans, overdrafts and commercial mortgages are also available.

Joining offers

The business start-up account offers 12 months’ free banking or 18 months free with a Santander Business Start-up Extra Account (if you hold, or switch to, a personal current account with the bank). You will also gain access to online content including advice and business guides.

Businesses have access to a local business manager who is there to offer you advice and support. Santander also offers a range of cards to help you run your business efficiently including a Visa debit card, an Operator card (which lets you authorise other people to do your banking for you) and a Post Office cash deposit card.

Charges on cash and cheques

Following the fee-free period your account is automatically moved to a Business Current Account which has a £7.50 tariff, with the option to choose a more suitable tariff if desired. Cheque deposits and withdrawals, cash withdrawals, debit card payments, direct debits and transfers, and transfers between linked accounts are free and unlimited on all Business Current Account tariffs.

There are limits, however, on the amount of cash you can deposit monthly. You can deposit up to £1,000 on the £7.50 tariff, up to £3,000 on the £12.50 tariff and up to £5,000 on the £20 tariff. If you exceed your limit, you will be charged 50p thereafter for each deposit of £100 on all tariffs.

Overdraft and loan interest rates

The unsecured business loan is a fixed term loan; you can borrow between £1,000 and £25,000, choosing to repay the loan between 12 months and five years. The interest rate is 7.9% p.a and a ‘business loan calculator’ is a handy tool on the website which will calculate your monthly repayments.

Arranged overdrafts are offered between £500 and £25,000 without security and for more than £25,000 with security. The arranged overdraft interest rate is 5.5% EAR with an unarranged fee of 25.5%.

Website and online banking

The Santander website is very accessible with clear options to take you to the information you want to find. Santander is very transparent with its interest rates and charges, which can be viewed online in PDF form.

You can view a demo of Santander’s online banking system which has recently been updated. You can now use e-documents to view statements in PDF format online, manage both your debit and credit card in one place, make faster payments and send and receive secure messages.

One-on-one help

When you open an account you will be introduced to your local business manager, who will get to know your business and understand its place within the local community, according to Santander. You can phone them, arrange to meet them at the branch, or invite them to meet you at your business to discuss products and services.

Switching times

It can take up to 10 days to open and switch your account.

Number of branches: 1,400 branches across the UK, access to 10,500 Post Office branches and 25 Corporate Business Centres

Ratio of small business managers to branches: A local business manager is available in every branch

Website: www.santander.co.uk

Barclays

NatWest

HSBC

Royal Bank of Scotland

Santander

Lloyds TSB

Lloyds TSB Business Banking

Financial support on offer

Up to 18 months’ free banking is offered to start-ups and six months to switchers. Business loans and overdrafts are offered and, for a limited time, European Investment Bank loans are offered to eligible projects.

Islamic business accounts are also offered, giving customers the peace of mind that their account is managed in a Shariah-approved way.

Joining offers

Start-up accounts benefit from 18 months’ free day-to-day banking and the support of a named relationship manager. Customers can also take advantage of free Sage Planning for Business software and a free 90-day trial of an accounts package, Sage Start-Up. A 90-day trial of Sage Instant Accounts is also available, which is a bookkeeping package aimed at small businesses.

Charges on cash and cheques

Following the free banking period Lloyds TSB offers customers a range of monthly price plans, making managing your bank charges easier. As long as you stay within your monthly price plan your banking charges remain fixed, and you can change your plan to adapt to the quieter and busier periods of business. Price plans range from XS (£5 charge for up to five transactions) up to XL (£40 for up to 125 transactions).

Overdraft and loan interest rates

You can choose a base rate or fixed rate loan. An arrangement fee of up to 1.5% is charged with the minimum loan being £1,000. Lloyds TSB will discuss your business plans and needs with you and agree on an interest rate for your overdraft.

Website and online banking

The clean and well-organised website allows you to easily select business banking. From there you can explore a number of options using the tab bar, or the links on the left-hand side of the page. Online banking for business is easy to use and is free; you can view your statements, make payments and transfer money. Lloyds TSB uses card reader technology to make online banking more secure and you can register online at the same time as opening an account.

One-on-one help

As well as offering a named relationship manager, Lloyds TSB supports the mentoring service MentorSME. Relationship managers are available for face-to-face meetings and can be contacted over the telephone. According to Lloyds TSB, its relationship managers help around 80,000 new businesses start each year.

Switching times

Lloyds TSB guarantees a ‘smooth move’, or you get £50 back. Between January and June 2011 Lloyds TSB achieved an 89.37% success rate in moving accounts from another bank within three working days. If you are moving from Lloyds TSB they aim to close your account within four days of notification.

Number of branches: Near to 1,900 branches

Ratio of small business managers to branches: Around 1,700 relationship managers

Website: www.lloydstsb.com

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