UK SMEs Lose Thousands on Lower Deposit Rates

Small and medium-sized enterprises (SMEs) in the United Kingdom are losing thousands of pounds annually due to lower interest rates on their deposits compared to those offered to larger corporations by major banks, according to data from challenger bank Allica Bank. The disparity, which can reach up to 2.9 percentage points, affects established businesses holding significant cash reserves, prompting a growing number of owners to explore alternative banking options.

Allica Bank reports that SMEs typically earn far less on spare cash than bigger firms, with no equivalent rewards for everyday spending. For a business with £75,000 in deposits, this gap translates to more than £2,100 in forgone interest each year. Larger holdings amplify the impact: a company with £1 million in the bank could lose over £28,000 annually from suboptimal returns. These figures stem from standard practices among traditional banks, where interest on business accounts often lags behind rates available to corporate clients or even personal savers.

In response, Allica Bank has positioned its Business Rewards Account as a tailored solution for SMEs with turnovers between £1 million and £100 million. The...