Bank finance

Choosing the right bank

When choosing which bank to set up a business account with, it's a good idea to compare at least two before making a decision. You should consider the various services, fees and facilities that are on offer to enable you to find the best bank for your type of business.

When comparing banks, you should think about:

  • whether the bank has a dedicated small business team
  • what services they offer and how much they cost
  • how charges are levied - if there is a fee per transaction or a one-off charge
  • whether there are any additional charges - some banks charge for sending out letters or if you exceed your agreed overdraft limit
  • whether there is a local branch - especially if you need to make frequent cash transactions
  • if there are special offers for new businesses or for transferring from another bank
  • whether they offer telephone or internet banking - especially if there is no branch local to you

You can compare the packages offered by different banks on the British Bankers' Association (BBA) website.

You could also open a business account with your current bank if you are happy with their service - they may be supportive if you have a good financial track record and have built up a relationship with them.

Once you have chosen a bank, it is important to try and develop a good working relationship to get the most of its services. See our guide on how to choose and manage a business bank account.

Specialist banks

If your business operates in the charity or social enterprise sector - eg co-operatives, employee-owned businesses or social enterprises such as local healthcare or education initiatives - there are specialised social finance banks and other financial bodies that can provide finance.

Specialist loans that comply with Islamic Sharia law are available for business owners regardless of religion. In Sharia law, the giving or receiving of interest is prohibited and money must be invested ethically. The Islamic Bank of Britain and many high street banks provide Sharia-compliant lending.

Find out about Islamic finance on the Islamic Bank of Britain website.

Your choice of bank could be based on their ethical or religious standing - whether its investment policies take into account human rights, corporate and environmental responsibility and 'fair trade' issues. Find out about ethical investing and banking on the Ethical Investment Research Services website.

Private banks

Private banks offer bespoke financial services and avoid packaged deals normally associated with high street banks. They generally have a diverse range of products and lending services that meet the individual demands of private individual and business clients - eg lending and deposits, investment and wealth management and savings.

Private banks aim to have a more relationship-based approach to banking, structuring financial solutions and packages to suit each client's unique financial circumstances.

All payment service providers - including banks, building societies and payment institutions - must be registered or authorised by the Financial Services Authority (FSA) under the Payment Services Regulations 2009 (PSR). They are also required to comply with the Banking Conduct of Business Sourcebook (BCOBS) for financial transactions where both the payer and payee are based in the European Economic Area.

The BCOBS sets standards for the type and format of information that must be provided, what charges can be made and maximum transaction times that must be met under the PSR. Find information on the BCOBS on the FSA website.

Developed with:

British Bankers' Association