Choosing the right bank is a critical decision when starting up a business. You will need an efficient, business-friendly account provider who will provide you with plenty of support and, preferably, generous loans, useful business tools and helpful advice.

Almost as important is keeping tabs on other banks once you have chosen who to go with. Research has shown that most businesses stay with their current account supplier whatever happens, not looking around for better deals even if they are opening new accounts. Therefore, it’s important that entrepreneurs keep an eye on what the banks offer, and switch accordingly if necessary.

With banks continuing to provide finance and support to the lion’s share of UK business startups, we have looked at what each bank offers, to help you make up your mind. There are many things to consider when choosing a bank, but the following run-down should give you an idea of who is doing what on the high street.

Financial support on offer

Barclays
Barclays provide an independent “Making the most of financing your business” guide, which helps small business owners understand the most appropriate method of funding, where to obtain it and what to consider when applying for them.

Barclays provide overdrafts, loans and mortgages. The bank’s business managers will guide entrepreneurs through the financing options, how much they can borrow, most suitable form of finance, the purpose of the borrowing and whether it is likely to support the business.

Barclays provide decisions instantly online for existing customers who apply for overdrafts and loans.

Natwest
Natwest offer flexible business loans that enable businesses to change their loans according to the changes to their firm. There’s a committed business overdraft to help businesses manage cashflow, a Natwest Business Card and the Business Offset Service, a unique proposition in the market that enables businesses to offset their business savings against their personal mortgage.

In addition, the bank offers bonus saver accounts, free Businessline and Natwest online banking and telephone and PC banking services. There’s also a free business review, whether you bank with Natwest or not and access to a free business support helpline.

Lloyds TSB
Lloyds say their main support is 18 months free banking.

HSBC
For businesses in their fledgling stages, HSBC offer overdrafts, small business loans and business cards. The bank also works with organisations such as the Prince’s Trust which guarantees small business lending and the Government to provide the Small Firms Loan Guarantee Scheme. HSBC provides access to a comprehensive range of financial products and services, including invoice finance, trade services, insurance services, card acquiring and employee benefits service.

Royal Bank of Scotland
For major investments such as premises, plant and machinery RBS offer a comprehensive range of business loans with a number of different repayment and interest options. Flexible business loan minimum amount is £1,000 and loans are available from periods up to 25 years.

The interest rate is variable and linked to base rate with rates agreed for the circumstances of each individual lend. The flexible business loan offers a range of flexible repayment options to help businesses manage their cashflow.

These include payment holidays, low start options, staged drawdowns, lump sum payments and the ability to redraw repayed funds.

Businesses can also improve their cashflow planning with the repayment stability of one of fixed or capped rate loans. Commercial mortgages are available to assist with the cost of either purchasing or building new premises or improving existing buildings. Loans are available up to 70 per cent of the purchase price or open market value, whichever is lower. Security may be required.

Abbey
Abbey Business provides banking services for businesses including bank accounts, overdrafts, reserve accounts, business mortgages and business insurance.

Joining offers

Barclays
Barclays’ Start-Up Package includes current and deposit accounts, telephone and online banking as standard plus a debit card (subject to status). They have also designed a range of other benefits to give small businesses the support they need through the following initial consultations:

  • A free 45 minute consultation with an Enterprise Agency Adviser who specialises in marketing and business advice under the 'Marketing For Your New Business' programme which is run in association with the NFEA (National Federation of Enterprise Agencies).
  • A further free 45 minute consultation with an accountant who has signed up to the 'Accountants For Your New Business' programme and specialises in financial management and business advice in association with ACCA (Association of Chartered Certified Accountants)
  • A free initial 30 minute consultation with a solicitor who specialises in business law in conjunction with The Law Society's 'Lawyers For Your Business' programme.

Free Banking for up to 18 months until you're up and running. However, banking is only available to new businesses opening their first business account with Barclays and applies to everyday sterling debit and credit transactions and the maintenance fee. Free banking will be for 18 months if you already hold your main personal account with Barclays and/or if you transfer your main personal account to Barclays from another bank. These accounts must be active. The 12 months' free banking will be available if you don't have a personal account with Barclays.

Natwest
Up to 18 months free banking is available if the business brings, or currently has, their personal banking with Natwest. The free banking offer is for 12 months if there is no personal connection. Up to three months free banking when switching.

By joining, you get free business planner software.

Lloyds TSB
Lloyds offer 18 months free banking and you don’t need to bring your current account to the bank. Upon joining, you are given the Small Business Guide by Sara Williams and a choice of bookkeeping systems – you can have a paper-based system or Dosh, the bookkeeping software.

HSBC
Startups get a named, local business banker to support their business, 12 months' free banking, interest paid when your account is in credit at 2.5 per cent below Bank of England base rate, free subscription to an independent Business Support Helpline for the first year, worth £150 and access to a comprehensive range of financial products and services.

There are no charges for payments made via HSBC’s business internet banking and business telephone banking services for the first 18 months, an account opening guarantee and business planning software to help firms prepare their business plan. Businesses also get a fee-free business card for the first 12 months. Credit interest at 2.5 per cent below Bank of England base rate paid monthly on all credit balances.

Royal Bank of Scotland
Key offer is up to 12 months free banking for business startups under approved startup schemes. Up to 6 months free banking is available to established businesses with turnover of less than £1 million a year switching their banking to us. Committed overdraft facilities are put in place for a period of 12 months so that a business can plan ahead and rely upon the facility remaining available for the entire period.

Abbey
Abbey offers businesses free banking forever as long as businesses don’t exceed the monthly transactions limits and up to 3.35 per cent monthly interest on all accounts in credit.

The monthly transactions limits on free banking are as follows - 20 deposits, 100 cheques deposited £3,000 cash deposited (via ATMS, notes only) all BACS credits 50 cash and cheque withdrawals All debit card payments All direct debits, standing order and bill payments and all transfers between linked Abbey accounts.

Abbey’s reserve business offers range from 3.75 per cent to 4.85 per cent depending on balance. The bank doesn’t insist that businesses have all their accounts with them; for example, they offer commercial mortgages to businesses that don’t bank with us.