Bank closures affect 1 in 7 small businesses
An estimated 350,000 small businesses across the UK have been affected by recent bank branch closures. According to research commissioned by PayPal, businesses reliant on taking cash and cheques are having to travel further to pay money in, taking valuable time that could otherwise be spent generating sales or managing the business.
The poll of 500 cash-taking businesses found that 1 in 7 of small businesses say their local bank branch has closed and relocated in the last few years, or will do so soon.
Northern areas of the UK, including Scotland, have been most affected by bank closures, with 1 in 5 affected. To make matters worse, a significantly higher percentage of businesses in the North of England and Scotland are reliant on cash (64% compared to the national average 56%).
However it’s not just those businesses that need to deposit cash and cheques that are affected. We’ve heard from online retailers for whom a branch closing meant the loss of their business bank manager and banking relationship. Once the local guy disappears, businesses end up talking to a faceless telephone banking service with no prior personal knowledge of the business. We’ve even heard of businesses who’s first contact with their bank after losing their bank manager has been for the bank to request a business plan be submitted.
Of course you should have a business plan anyway and keep it up to date, but if you’ve built up a personal relationship with your banking partners, for them to remove your local business manager and effectively treat you as a new comer is devastating to the business relationship.
Narik Patel, Director of Mobile Merchant Services at PayPal UK, says, “Losing your local bank branch has become all too common for many small business owners up and down the country”. He’s dead right, all businesses need financial support whether it be for loans and overdrafts to support growth or more mundane services like cashing cheques and depositing cash.
Technology can help, such as the PayPal Here app and Chip & PIN card reader which gives businesses the ability to accept card payments as an alternative to cash or cheque payments anywhere where there’s a WiFi or mobile signal. However nothing can replace a businesses relationship with a local business bank manager who’s familiar with your business.
Someone hundreds of miles away tapping numbers into a computer which then makes an automated yes or no decision just doesn’t take into account how a business is performing, especially when it’s a new style internet based business which don’t always operate by the same rules as more traditional offline ventures.
Have you been affected by bank closures? How is your bank supporting or hindering your business growth?