Top Business News

Derin Clark

Derin Clark

Online Reporter
Published: 14/01/2020

Starling Bank has boosted its business products by introducing a range of new features to its business accounts.

The bank is now offering businesses and sole traders unsecured loans of up to £250,000, an increase in its overdraft limits from £10,000 to £150,000 and more competitive overdraft rates, along with a custom-built tax and financial management Toolkit.

The new unsecured loans are available on terms from one to five years, and are available to limited companies that have been trading for at least 18 months on application direct to the bank. The interest rate offered is based on an assessment of the business and the representative APR is 7% (fixed) for loans up to £25,000, while the rates on loans above this are provided upon application.

Starling Bank has increased its overdraft limit from £10,000 to £150,000 and replaced its flat rate of 15% EAR (variable) with a rate of 5%, 10% or 15% EAR (variable). The rate offered will be based on an assessment of the individual business. The representative EAR is 10% (variable) and customers pay an annual fee of 1.5% (minimum fee £50) on any agreed overdraft limit, charge at initial set up.

Metro Bank has launched ‘MCASH’ – a new way for small businesses to request for cash to be collected or delivered directly to their premises. While the number of payments made by card, mobile and online continue to increase, research from the Bank shows that 73% of UK SMEs still rely on cash for some or all of their business transactions.

Not only does cash remain an important part of running a smaller business in the UK, but it is also time-consuming to organise and potentially dangerous to carry. Metro Bank has also calculated that SMEs spend three working days per year just withdrawing or depositing cash and more disturbingly 25% have been robbed or physically harmed when carrying cash from their business.

The cost for SMEs to chase outstanding and late invoices is in the billions of pounds according to data from Pay.UK and QlikBooks. Pay.UK have published a figure of £4.4 billion, while QlickBooks reports a higher figure of £6.3 billion to follow up and manage late payments.

 According to the data published, small businesses are using 56.4 million hours to chase overdue payments and 22% spend more than £500 every month to keep on top of their accounts receivable.

A new pension provider has been launched that is targeted towards the self-employed and more specifically freelancers.

Penfold is targeting the 15% of the UK workforce who are currently self-employed and has stated that it aims to revolutionise the pension industry for UK freelancers. According to figures released by Penfold, five million workers are currently self-employed and, of these, 86% currently do not save into a pension. The company is hoping to change this by offering self-employed workers with a pension that is clear, simple, digital and can be activated in under five minutes.

Once the pension is activated, contributions can be paused, topped up with a bonus and combined with multiple pension balances. Penfold states that users can choose where their money is kept or invested, and the dashboard explains how much they have saved and how far off they are from their ultimate end-goal.

Pete Hykin, co-founder of Penfold, explained: “We know that auto-enrolment has increased participation in pensions to 80% among the employed, but this hasn’t helped the millions of UK self-employed.

“It’s almost like the self-employed, who we know are the backbone of the economy, are being ignored by the Government and UK industry. There are absolutely no pension options out there that adequately serve those working for themselves.

“We’re aiming to make pensions not just easier, but more attractive for self-employed people to start planning for later in life. Often people put off setting up a pension due to the amount of understanding needed, the volume of paperwork and even just the fact that it can involve calling multiple providers to find the best option. Our research has shown the scheme needed to be flexible and adapt to the end-user, not the other way around.”

Chris Eastwood, co-founder of Penfold, added: “Pensions for the self-employed is just phase one of the Penfold plan. The great thing about the pension industry is that there’s so much room for improvement – whether it’s the option of setting up or paying into a pension for your children, giving people more visibility and control over the environmental or social impact of their pension investments, or even earning rewards like airmiles for every contribution. Our aim is to make pensions as accessible and engaging as banking has become.”

SMEs are opting to keep their money in accounts that can be easily accessed rather than depositing funds into long-term accounts, research from the Centre for Economics and Business Research (Cebr) has found.

The research, which was carried out on behalf of Shawbrook Bank, reveals that of more than £300bn SMEs hold in cash, 57% is deposited in current accounts. While small business owners are preferring to keep their money in easy access accounts, this could mean they are missing out on potentially earning higher interest if they lock their money into a fixed long-term account, especially as the research found that, on average, businesses only require ‘ready-access’ to 31% of their cash reserves.

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