The Mail on Sunday 08/12/2013 was featured in the Mail on Sunday and the Mail Online following some research on business savings rates.

Businesses are being urged to beat falling savings rates and help the economy by investing in other small firms to earn themselves higher returns.

The average rate of interest paid on business accounts with a balance of £10,000 has fallen by nearly a third in the past year, from 2.34 per cent in December 2012 to 1.6 per cent today, figures show.

With small and medium sized-firms holding close to £126 billion in current and deposit accounts, this equates to a loss of about £931 million in interest before tax annually.

The best-paying no-notice business deposit account is the State Bank of India’s instant access account, which pays 1.49 per cent gross annually, while the 95-day notice account from Cambridge & Counties Bank pays 1.8 per cent.

The website Rebuildingsociety, which carried out the research, enables firms to lend to other small businesses through its website, a process known as peer-to-business lending. It claims they can earn interest of up to 15.5 per cent.

So far about £1.2 million has been lent through the site, with lenders choosing which firms to invest in and the rate of interest they want.

Daniel Rajkumar, who founded the site in 2012, said: ‘Successful businesses will have money sitting on their balance sheets or in a savings account earning very little.

‘Instead they could improve their own industries by lending to suppliers or customers and earn a fantastic return. It will also help the UK become more sustainable.’

Buried in last week’s Autumn Statement was a line saying that the Government would publish a consultation on how peer-to-business lending might be included in tax-free Isas. The market has been growing steadily, fuelled by the apparent reluctance of banks to lend to smaller firms.

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