Allica Bank can today reveal that the gap in interest rates offered to SMEs by challenger banks and traditional high street banks has almost tripled compared with this time two years ago.

Allica has been monitoring these savings rates across the market for the last two years, and a clear trend has emerged.

SMEs banking with traditional banks are continuing to lose out, while challenger banks have consistently offered a significantly better deal to SMEs.

This trend inspired the Great British Savings Squeeze campaign, run by Allica Bank and supported by the Federation of Small Businesses, Institute of Directors and more.

Since it launched last April however, the gap has continued to widen with Big Banks showing no sign of helping their SME customers make the most of their savings.

In May 2025 SMEs saving their cash with a challenger bank received on average £2,326.50 more interest per year than if they kept the same cash with a traditional Big Bank.

This number has increased dramatically since May two years ago showing that challenger banks are doing a good job of offering strong rates to SME customers.

The rates offered by big banks meanwhile are lagging behind dramatically, underlining the rationale behind Allica’s continued push for a review into the business savings market, and emphasising the importance of business owners to consider where they keep their excess cash.

SMEs are losing out on thousands of pounds of interest each year

Allica has been independently tracking average savings rates since January 2023.

In the last two years (May 2023 to May 2025), Big Banks have offered SMEs savings average interest rates of between 0.76% and 1.59%.

Meanwhile challenger banks regularly offered rates of more than 4% on SME savings during the same period.

The difference in interest on the average SME savings of £75,000 is significant, but there are thousands of established businesses in the UK that have far more saved with their bank. For these firms, the difference is even more noticeable.

For example, in June 2025 a business with £1 million saved would have earned almost £12,000 annual interest with a Big Bank. The same cash saved with a challenger bank could have earned nearly £42,000. That’s an extra £30,000 that could have been invested back into the business or helped absorb rising costs.

Given that there are 5.5 million SMEs in the UK, the cumulative effect of this discrepancy on local economies is significant. Allica estimates that the UK’s small firms are being short-changed by £9 billion a year in total in missing interest. That’s a sum that could make a huge difference in the current economic climate.

Allica is working to change this and is calling for an urgent review of the savings market so that money can be redirected from the pockets of Big Banks to small business owners and local communities.

Steps should be taken by government and regulators to force big banks to notify their SME customers of the top rates in the market and where they can be found. Better options are out there – SMEs just need to know where to look.

Richard Davies, CEO of Allica Bank, said:

“Looking back on two years’ worth of interest rate data that Allica has gathered, it’s so disappointing to see the way Big Banks continue to provide such poor value to their SME customers.

“At the start of 2023 there was already a significant gap between what businesses could earn in savings interest from challenger banks compared with what they earned at a traditional high street bank. But it’s clear from the trend over the past two years, during which time we’ve seen the Bank of England Base Rate both rise and fall, that Big Banks do not prioritise their SME customers.

“The positive take away from this is that business owners have a huge opportunity to make a relatively small change – switch their bank – and to potentially triple income from their savings in return. At a time when costs are high and SMEs are being squeezed from all sides, this extra cash could make an important difference to businesses across the country.”

Claire Burden, Partner and Head of Consulting at accounting and financial advisory firm S&W added:

"This latest data from Allica is a wake-up call for businesses to reassess whether they’re making the most of any excess cash sitting in their accounts. With interest rates now substantially higher than just a few years ago, smart cash management has once again become a powerful tool for businesses, whether to generate passive income or help offset rising costs. It’s an opportunity we haven’t seen on this scale since before the 2008 financial crisis. Accounting firms like S&W are in a prime position to help their clients take advantage.”

Calls for action

Allica Bank has previously called for an investigation into the business savings market by government and regulators.

Together with the Federation of Small Businesses (FSB), Institute of Directors and (IoD) and British Independent Retailers Association (BIRA), the Great British Savings Squeeze campaign was formed.

The campaign asks for an immediate investigation into the business savings market, with a focus on asking government and regulators to repair the broken elements and get small businesses they money they deserve.

Specifically, the campaign is calling for the following:

• End the SME savings penalty – get banks to start offering small businesses the same savings rates as big firms

• Notify SMEs of better rates – banks should actively notify their SME customers of what the top 3 rates in the market are

• Increase protections for SME deposits – give small firms confidence to save large amounts with all banks, by further raising limits for the small business Financial Services Compensation Scheme