SME savings gap TRIPLES in two years
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.
Interest offered on the average amount of SME savings (£75,000) | |||
| May 2023 | May 2024 | May 2025 |
Big banks | £783 | £1,090.50 | £906 |
Challengers | £1,695 | £3,247.50 | £3,232.50 |
Difference | £912 | £2,157 | £2,326.50 |
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 £1m 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 £9bn 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.