New research from rebuildingsociety.com has shown that business savers have seen rates on cash held on deposit decline rapidly over the past year. The average rate paid on best buy business savings accounts on a £10,000 investment has fallen from 2.34% Gross AER in December 2012, to just 1.60% Gross AER currently. This represents a fall of nearly a third over a worryingly short period of time. Given that £125.9 billion is presently held in current and deposit accounts by UK SMEs, the overall loss in the past year amounts to roughly £931 million in interest before tax.
Daniel Rajkumar, managing director of rebuildingsociety.com, offered a solution:
“Successful businesses will have money sitting on their balance sheets or in a savings account earning very little, as our research shows. They can actually improve their own industries by lending to suppliers, researchers and customers and earn a fantastic return at the same time. This is a productive use of money and will help the UK economy become sustainable.
“P2P in general is seeing strong levels of interest from SMEs and consumers because of the value it creates for both parties. The businesses that borrow through rebuildingsociety.com have effectively won a crowd of stakeholders with an interest in their success which is more powerful and valuable than institutional finance”.
Rebuildingsociety allows successful businesses and entrepreneurs to lend to SMEs, offering rates of up to 15.5%. The platform recently surpassed £1 million in total amount borrowed, and is now targeting the lofty goal of £20 million in borrowing by the end of 2014. The pitiful rates now being offered by current and deposit accounts for UK SMEs, when combined with a rapidly expanding business (and sector), have made that goal achievable.