Business customers can also subscribe to a premium Business Toolkit with invoice tracking and more for £7-£12 a month.
Starling Bank will start originating unsecured SME loans up to £250,000 as it launches a huge expansion of its business and sole trader bank accounts.
The digital bank, saying the move comes as part of its efforts following its £100m win from the Capability and Innovation Fund last year, will also increase its overdraft limits from £10,000 to £150,000.
As part of the changes, Starling is launching its first paid for features for businesses, providing access its new Business Toolkit, costing £7 per month for sole traders and £12 per month for limited companies.
Starling’s accounts for limited businesses and sole traders, will remain free. The premium Business Toolkit includes tools to track invoices, monitor cash-flow, keep track of how much tax and VAT they owe, submit VAT returns through HMRC Making Tax Digital-compliant software and more.
Starling’s new unsecured term loan for business, offering from £5,000 to £250,000 over one to five years, will be available to limited companies that have been trading for at least 18 months. The interest rate offered will have a representative APR 7 per cent (fixed) for loans up to £25,000. Above this loans are taken case by case.
It will replace its flat rate of 15 per cent EAR (variable) for overdrafts with a rate of 5%, 10% or 15% EAR (variable). The Representative EAR is 10% (variable). Customers will pay an annual fee of 1.5% (minimum fee £50) of any agreed overdraft limit, charged at initial set up.
Sole traders can apply for an overdraft valued from £250 up to £10,000 at the existing rate of 15% EAR (variable).
Anne Boden, founder and chief executive of Starling Bank said: “Life as a small business owner can be a bit of a baancing act and time is often in short supply. We’ve built a range of new features in the Business Toolkit to help save entrepreneurs time and money, while at the same time cutting down on paperwork and hassle.”
“Our loans and overdrafts will be particularly helpful for businesses that rely on working capital, but may have gaps in their cash flow across the month or for a period of months.”
“We now have nearly 100,000 business accounts. Our improved lending facilities and our first premium accounts show that Starling really does mean business when it comes to business accounts.”