Why Scottish SMEs are losing out on £370m a year

Allica Bank has found that the “big six” high-street lenders offer an average interest rate of just 1.45 per cent on small business savings, down from 1.59 per cent earlier in the year, but rates of up to 4.33 per cent are available from challenger banks.

For smaller firms with an average £75,000 in savings, the discrepancy between the big six’s interest rates and what’s available elsewhere is equivalent to £2,157 per year, and with 170,650 SMEs across Scotland, this equates to a loss of £368m for Scotland’s economy, £38.5m in Edinburgh alone where there are about 18,000 SMEs, and £7.5 billion across the UK, according to the report. “For established SMEs with larger deposits of savings, the annual figure lost could be much higher,” it added.

Steven Smilie, Scotland relationship manager at Allica Bank, said: “Scotland’s SME economy is Scotland’s real economy... These businesses are the life and soul of communities across Scotland, and the difference between boarded up shops and vibrant high streets.

“Despite this, SMEs aren’t getting the returns they deserve from high-street banks, with interest rates that are consistently lower than are offered to bigger businesses. This lost income could represent a significant boost to the Scottish economy and be put toward investment, employment, and a better deal for employees. The high-street banks are taking SME customers for granted, and those customers should shop around and get the return on their savings that they deserve.”

Allica describes itself as a “new kind of no-nonsense business bank”, designed for established businesses with five to 250 employees, and recently named the UK’s fastest-growing company in Deloitte’s 2023 UK Technology Fast 50. It also revealed in 2023 that it achieved its first full year of profitability and had lent more than £2bn to established UK businesses, and aims to gain 10 per cent market share in the next five years “to help change the SME market for the better”.