The move will expand the services and products on offer to businesses, typically those with turnovers of less than £1million or borrowing of less than £250k, and create a real choice in the market according to the lenders.
The estimated 5 million small businesses in the UK are a key driver of the economy. Collectively, they represent 35% of the turnover of all UK businesses and 55% of all business current accounts. In addition, an estimated 400,000 new businesses start trading each year. (Source:BBA)
The banks are already on track to achieve their 2-year pledge to provide £10bn of new lending by the end of 2011. This new move will support that target and see levels of lending to small businesses increase significantly by 2015.
Last year, the banks appointed Gary Lumby as director for small business to lead and develop the banks' small business proposition. Today's announcement is the result of Gary's review of the sector.
The new small business service will initially offer a local, "high street" presence with additional 24-hour telephone support. An online banking service will also be introduced in the summer.
The new team of over 100 small business managers and business development managers are initially being sited predominantly across the North, Midlands and Scotland but extend as far south as Maidstone; with further appointments expected through the year in these regions and the South, extending coverage to Exeter and Truro in the near future. The banks anticipate that a successful roll-out of the new service will lead to a significant number of further appointments over the next 3 years.
Rather than eschew the "high street", the banks believe that many businesses will welcome the return of local, relationship-based banking that enables swift lending decisions and creates networking opportunities. These local business managers will be supported and supplemented by online banking and telephone-based business advisers.
The banks believe that by offering alternatives to small business customers they can choose the type of banking relationship that is most appropriate for their needs. The new small business managers will concentrate on building and supporting relationships with businesses such as shopkeepers, family businesses, tradesmen, small manufacturing and engineering firms, and professionals; accountants or architects, for example.
Clydesdale and Yorkshire Banks are also offering two "best buy" deals for small businesses. The first is for start-up small businesses; these businesses can benefit from 24 months of free banking, giving them the opportunity to grow without the burden of day-to-day business banking fees.
The other deal is for those small businesses that are unhappy with the service they are receiving from their existing bank. It is estimated that up to 250,000 businesses are in this position (Source: Federation of Small Businesses) Clydesdale and Yorkshire Banks are offering a switching service plus 18 months free day-to-day business banking.
Commenting, Gary Lumby, director for small business, Clydesdale and Yorkshire Banks, said: "Small businesses are the lifeblood of our communities and economy. We've been listening to them and have developed our business to help them develop theirs. We see a real opportunity to offer a credible alternative; establishing local relationships to help small businesses flourish, with local knowledge and services that suit their needs; in branch, online or by phone.
"The evidence suggests that the small business market is underserved by the ‘big banks'. We see this as a great time to correct that and build on our already successful business banking approach. Today's move underlines our commitment to UK businesses."