Does your business need a Bank?

January 19, 2015 by Andy Crow

Does your business need a Bank?

All companies need to have a bank account for basic banking facilities such as having a current account and to be able to make payments. However the world is changing with regards to some of their other offerings. For example, Business Insurance is probably more competitive elsewhere and their Foreign Exchange rates are usually less than competitive than can be found elsewhere. (That will be discussed next week).

Many small businesses trust their bank to carry out all their needs. We are told that they are “The listening bank” or “The bank that likes to say yes”. Yet recent fines that many of the High Street banks have had for manipulation of Libor and FX rates suggests they aren’t as trustworthy as we thought. Despite this fact, statistically people change their spouse more than they do their bank account!

So what is the major benefit that a bank gives your business? Many people believe that it is they lend us money, which is, after all, what they are supposed to do. However despite years of Quantative Easing where the Government basically lends banks cash at historically low interest rate levels, businesses are lucky to be offered any loans at less than 6% and the age it takes to secure the loan can be detrimental.

Fortunately, there are alternatives to the High Street banks and they are growing quickly.

Challenger banks such as Aldermore, Shawbrook and Metro banks offer very competitive rates and guarantee speedier response times on loans.

Crowd Funding sites such as Funding Circle provide funds for projects in the form of individuals lending money to specific projects at predetermined rates. Collectively this money is used to fund designated businesses.

Peer to Peer lenders such as Zopa, claim to offer more attractive rates than the High Street banks as they enjoy lower costs without the branch networks, ageing IT infrastructure and capital requirements of banks.

So the answer to the question is yes businesses do need banks. However don’t take for granted that their rates are the most competitive. You can shop around looking for better deals or of course you could ask Chorus Business Advisers to help.

For a free Consultation on any business concerns please contact Chorus Business Advisers on 0845 867 1263 or email info@chorusadvisers.co.uk and visit http://chorusadvisers.co.uk for more information. 

This article is by Andy Crow at Chorus Business Advisers