There are more small businesses trading in the UK now than ever before. The number of small businesses has grown from 4.4 million in 2010 to 5.2 million in 2014. This has given banks a huge opportunity to build larger small business banking portfolios. However, the number of small business bank accounts increased by just 0.5% in 2014, with the size of the market broadly stagnant since 2011. While the value of the accounts that have been set up has soared in the last year, providers need to improve their reach, especially among sole traders and start-ups.
This report examines the UK market for small business banking, specifically small business current accounts. This includes discussion of the size of the market for small business current accounts, with a forecast for the next five years, and a look at major factors which influence the market. The report also examines lending to small businesses.
The report looks at the key players in the market, including market share, company strategies and promotional activity. Finally, Mintel’s exclusive consumer research covers the market in detail. This includes looking at the rates of ownership of small business bank accounts, the services that small business owners use and how satisfied they are with their current bank. The report also examines the length of business owners’ relationships with their banks and their switching intentions, what other products they have, and experience of borrowing and how confident business owners are of obtaining credit now. Finally, the report looks at consumers’ attitudes towards business banking, and towards borrowing.
Market definition
There is no single definition of a small firm, mainly because of the wide diversity of businesses. However, the Department for Business Innovation and Skills (BIS) uses the following definitions:
Micro firm: 0-9 employees
Small firm: 0-49 employees (includes micro)
Medium firm: 50-249 employees
Large firm: over 250 employees.
In comparison, the British Bankers’ Association (BBA) defines a small business as a non-financial private sector business having an annual debit turnover of up to £1 million/£2 million (note: different banks use different turnover criteria).
