Lloyds vs Starling for business banking

Updated on 7 August 2023

Business banking is an essential factor that can influence the smooth operations of a business. The choice of a business banking partner is critical and in the UK, two of the main contenders are Lloyds vs Starling Bank. This article aims to compare both banks on various facets of their service offerings to provide an insight into their suitability for business banking.

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Lloyds vs Starling

FeatureLloyds BankStarling Bank
Online bankingComprehensive online banking service availableAdvanced online banking platform focused on ease of use
Mobile bankingRobust mobile app available on iOS and AndroidAward-winning mobile banking app available on iOS and Android
24/7 customer service24/7 phone and online customer service24/7 in-app chat support
Free business banking period12 months free business banking for new businessesFree banking indefinitely
Overdraft facilityOverdraft facility subject to approvalOverdraft available based on credit check
Business loansVariety of business loans available, subject to approvalLoans up to £250k, subject to approval
Business credit cardRange of credit card options availableNot available
International paymentsInternational payments available with currency exchangeInternational payments supported in 38 currencies
Invoice financingAvailable, helps businesses improve cash flowNot available
Cash deposits at Post OfficeDeposits at any Post Office branchDeposits at Post Office branches for a small fee
Cash withdrawals at Post OfficeWithdrawals at any Post Office branchNot available
Business savings accountVarious savings account options availableSingle easy-access savings account option
Direct DebitsDirect Debits supportedDirect Debits supported
Standing OrdersStanding Orders supportedStanding Orders supported
Multiple account holdersMultiple account holders allowedMultiple account holders allowed
Cheque book optionCheque book available on requestNot available
Account Switch ServicePart of Current Account Switch ServicePart of Current Account Switch Service
FSCS ProtectionProtected up to £85,000Protected up to £85,000
Branch bankingNationwide branch networkNot available, online only
Real-time notificationsNot availableReal-time notifications for all account activity
Integration with accounting softwareIntegrates with most popular accounting softwareIntegrates with a wide range of accounting software
Business insights and adviceBusiness insights offered via online resources and in-branchBusiness insights offered via app
Business debit cardBusiness debit card issuedBusiness debit card issued
Mobile cheque depositsMobile cheque deposits via appMobile cheque deposits via app
Cashback rewards programAvailable on certain business cardsNot available
Tailored business supportAvailable via branches and onlineAvailable via in-app chat and online resources
Payment schedulingPayment scheduling availablePayment scheduling available
Support for international businessesSupport and products available for businesses operating internationallyPrimarily focused on UK businesses
Currency exchange serviceAvailable with competitive ratesAvailable via the app, rates are real-time and transparent
Lloyds vs Starling

Lloyds Bank

Lloyds Bank is one of the “big four” banks in the UK and offers a comprehensive range of services. With its extensive history and nationwide branch network, it provides traditional banking solutions to businesses of all sizes.

Pros and cons

Pros

  • Nationwide branch network: Unlike digital-only banks, Lloyds Bank has physical branches throughout the UK, making it easier for businesses who prefer face-to-face banking.
  • Comprehensive product range: Lloyds offers a full suite of financial products, from business loans and overdrafts to credit cards and invoice financing.
  • Longstanding reputation: As one of the UK’s oldest banks, Lloyds Bank has a strong reputation and well-established banking infrastructure.
  • 12 months free banking: Lloyds Bank offers a free business banking period of 12 months for new businesses.

Cons

  • Charges after the free banking period: After the 12-month free period, businesses are charged for banking services.
  • Traditional banking model: The bank’s traditional banking model may not be as fast or efficient as digital-only counterparts.
  • No real-time notifications: Unlike digital-only banks, Lloyds does not provide real-time notifications for transactions.

Fees and charges

ServiceLloyds Bank Charges
Monthly account fee£6.50 after 12-month free period
Electronic payments (in or out)£0.35
Cheque or cash payments (in or out)£0.65
Branch cash payment (in or out)0.90% of the cash value
Unplanned overdraft£15 plus interest
Lloyds Bank fees and charges

Unique and standout features

Lloyds Bank’s comprehensive product range, extensive branch network, and in-depth industry expertise stand out among business banking providers.

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Their extensive product range includes invoice financing and business credit cards, which are not offered by all banks.

Additionally, Lloyds Bank offers face-to-face banking and consultation services across their UK branches, giving businesses the opportunity to discuss their needs and requirements in person.

Starling Bank

Starling Bank, a digital-only challenger bank, provides 24/7 mobile business banking services. It aims to streamline the banking experience with features such as real-time notifications and no monthly fees.

Pros and cons

Pros

  • No monthly fees: Starling Bank doesn’t charge monthly account fees, making it more cost-effective for small businesses.
  • 24/7 mobile banking: Allows businesses to bank whenever and wherever they want.
  • Real-time notifications: Instant updates on account activity, helping businesses stay on top of their finances.
  • FSCS protection: Like Lloyds, Starling Bank offers protection on deposits up to £85,000 through the Financial Services Compensation Scheme.

Cons

  • No physical branches: Businesses preferring face-to-face interactions may not find Starling suitable.
  • Limited services: Lacks some services like business credit cards and invoice financing.
  • Cash withdrawal limitations: Cash can’t be withdrawn at Post Offices, unlike Lloyds Bank.

Fees and charges

ServiceStarling Bank Charges
Monthly account fee£0
Electronic payments (in or out)£0
Cheque deposits£0
Cash deposit at Post Office0.3% of the cash value
Unplanned overdraft15% EAR
Starling Bank fees and charges

Unique and standout features

Starling Bank’s real-time notifications, 24/7 mobile banking, and free electronic payments make it a standout choice for businesses seeking a digital banking solution.

Its fee-free structure for regular transactions provides a cost-effective option for startups and small businesses.

Additionally, the bank offers a marketplace that integrates with a range of business tools and services, allowing users to connect their bank account with accounting software, invoicing tools, and more.

Conclusion – Lloyds vs Starling

Both Lloyds Bank and Starling Bank provide compelling business banking services.

The choice between the two depends largely on your business’s unique needs.

If you prefer traditional banking with a wide range of services and face-to-face interactions, Lloyds Bank may be more suitable.

Conversely, if you seek a modern, digital, and cost-effective solution with real-time updates, Starling Bank may be the preferred option.

Remember, the ideal bank for your business will align with your operational preferences, business model, and financial requirements.

FAQ

Can I switch my business account from another bank to either Lloyds or Starling?

Yes, both banks are part of the Current Account Switch Service, which guarantees a smooth transition within seven working days.

What protection do these banks provide for my deposits?

Both banks offer protection through the Financial Services Compensation Scheme (FSCS), insuring deposits up to £85,000.

Can I deposit cash with these banks?

Yes, both banks allow cash deposits. Lloyds Bank permits deposits at their branches and Post Offices, while Starling Bank allows deposits at Post Offices.

Do these banks provide overdraft facilities?

Yes, both Lloyds Bank and Starling Bank provide business overdraft facilities, subject to approval.

Do these banks offer business loans?

Yes, both banks offer business loans. However, approval depends on your business’s financial condition and credit history.

Can I set up direct debits and standing orders with these banks?

Yes, both banks allow the setting up of direct debits and standing orders.

Reviewed by , Managing Director

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