High street lender Virgin Money has launched an instant access savings account for small businesses, after research from the lender showed poor interest rates prevented many owners from opening savings accounts.
A poll from Virgin Money of 500 small UK business decisions makers found that over four in ten avoided savings accounts because of the poor rates generally on offer, whilst almost 30 per cent believe a savings account would tie up much needed cash.
To address the issue, and to encourage more small business customers to open a savings account, Virgin Money’s first ever small business savings account pays a competitive 0.6 per cent interest rate, the lender announced.
The bank has said its new instant access account lets customers save anything from £1,000 to £1m, and is available to registered sole traders, partnerships, limited companies and LLPs that are either classed as micro, small or medium enterprises.
Account applications are available online, from any Virgin Money store or via post, and accounts can be serviced online, through contact centres and in stores.
Chief commercial officer at Virgin Money, Hugh Chater, said: “With lots of SMEs not having enough time to shop around for the best deals, many are getting a rough deal and that is why we are entering the market.
Although 33 per cent of Virgin Money’s small business customers said that managing their business’s finance was a necessary evil, a quarter admitted they’d often rather be working on something else.
As a result of this lack of interest in business finance, the survey results showed that 28 per cent of small company owners never check the interest rates on their accounts.
Chater added: “We know SME business leaders often have to juggle their many business priorities while ensuring their finances are in order. For too long, these businesses have been short-changed with the savings accounts on offer.”
Virgin Money first announced plans to launch its SME savings account late last year. The financial service arm of Richard Branson’s Virgin Group said it would target £5bn in deposits in the first five years.
Launched in 1995, in 2014 Virgin Money floated on the London Stock Exchange, where it was valued at £1.25bn, netting £70m for Branson in the process.
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