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United Kingdom

Co-op increases free introductory period for SME customers to 30 months

The Co-operative Bank has today extended its fee-free introductory period for its New Business Directplus customers by one year.

New customers, who could previously enjoy 18 months' free day-to-day banking after signing up - removing the £5 fee - will now have 30 months free before having to pay a fee. 

What's more, current customers still within their 18 month introductory periods will have an extra 12 months added.

The Co-operative Bank's new offer makes it the best-in-market introductory deal for SMEs.

This comes as the group found businesses are most likely to struggle in their second year and therefore need the the initial support for a longer period of time.

The Co-op said developing its small to medium sized enterprise banking business one of its key priorities and its revised introductory period is one of a series of steps to 'help its customers flourish'. 

It said data from a 2018 report from the Office for National Statistics, found that of the approximately 380,000 businesses that are established each year, one in four (26 per cent) are likely to struggle or fail in their first two years.

Donald Kerr, the Co-operative Bank's managing director of SME banking, said: 'Our market leading introductory offer is another step in improving competition for UK SMEs and supporting them to be better and stronger businesses. 

'Data shows that the second year of an SME’s life is its most difficult; extending free banking by a year will be an important helping-hand which eases pressure for entrepreneurs at a crunch point in their development and provides them with additional support.

'Our aim is to pioneer banking that makes a positive difference to small businesses and, as the only UK high street bank with a customer-led ethical policy, we’re ambitious to support SMEs so they can develop not only their bottom lines but also build a new business that is clear on its values.' 

The Co-operative Bank offer two tariffs for its Business Directplus product - an introductory tariff which lasts for 30 months, and a standard tariff which comes into effect afterwards.

What do Business Directplus account holders get?

The offer, which is also available to existing businesses that choose to switch, gives customers 30 months of free everyday banking subject to certain transaction limits and a minimum credit balance of £1,000.

In turn, customers are able to deposit up to 100 cheques or £2,000 cash, and write up to 30 cheques per month and no charge. All automated credits and debits including standing orders, direct debit, faster payments and debit card payments are free. 

At the end of the 30-month free banking period, customers will be automatically transferred onto the bank's standard Business Directplus tariff with a £5 monthly charge.    

This will allow you to deposit up to £2,000 in cash per month and includes all your standard day-to-day banking. If you go over your monthly cash deposit limit, you'll pay 75p per £100 thereafter.

Each monthly fee also includes 100 free cheques paid in per month with customers paying 25p thereafter.

You can also apply to borrow up to £250,000 through an overdraft with the Co-op, which may be offered on an unsecured or secured basis. 

Arranged overdraft interest rates are variable and are calculated using the Bank of England Base Rate plus the appropriate interest margin. Lending decisions are based on individual circumstances and interest is calculated daily and will be charged on a monthly basis. Interest rates for overdrafts above £25,000 are discussed upon application.

How does Co-op compare to other business accounts? 

With its new 30-month introductory offer period, the Co-operative Bank Business Directplus offers the best-in-market introductory deal across the country.

Some online-only providers such as Tide and Starling, do not charge a monthly fee at any point but customers are not able to make any cash or cheque deposits nor is there an option to take out an overdraft.

Meanwhile, the Co-op's business account is the only one to not charge any UK ATM fees on both the introductory and standard tariff. Santander, Barclays and Yorkshire Bank/Clydesdale Bank offer free withdrawals as part of their monthly account charge while HSBC, Metro Bank and Natwest charge a separate fee.  

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