Opening a business bank account with bad credit
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By Anna Jordan on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs
Some business owners may be concerned about opening a business bank account when they have bad credit because of a low credit score, CCJs or bankruptcy.
To put yourself in the best position of opening a business bank account, ensure that you have fully prepared your case before meeting with potential sources of finance such as your bank manager. A detailed business plan is essential as this will demonstrate your understanding of how the business will grow, the associated risks and the behaviour of your market.
The plan will also show how your sales aspirations are deliverable and that, even if your do not achieve 100 per cent of your sales, the business can survive.
Be prepared to answer tough questions about the reasons behind your poor credit history and show that you have considered what has gone wrong in the past and how to avoid these pitfalls in the future. Click here for top tips on writing a business plan.
Ensure that you’re registered on the electoral roll at your current address as this will give your application greater legitimacy.
Can I open a business account with bad credit?
Yes, but you will be more limited. High street banks generally run credit checks so you wouldn’t be able to open an account. However, if they offer a more basic business bank account, they may not require a standard credit check.
How do I open a business account?
Open your account online, over the phone or in-branch, depending on your provider. Those who feel more comfortable online will be pleased to know that the process is often entirely online and takes less time to complete than traditional methods of opening a bank account.
What information will I need to provide?
It’ll vary depending on which provider you go with, but could be any of the following:
- Companies House registration number
- Full business address
- Estimated annual turnover
- Details of the main persons of responsibility
- Passport, driving licence and/or EU identity card
- Proof of address (recent bank statement, recent energy bill, latest council tax bill, tenancy agreement or mortgage statement)
Compare business bank accounts now – Easily find the top business bank accounts from a range of providers here.
Which business bank accounts are available to me?
You may have more luck with a digital-only bank/ banking platform which doesn’t require a standard credit check.
Tide
Tide encourages applications from sole traders and limited companies of all sizes.
You can manage multiple accounts, sync up with accounting software from Sage, Xero, KashFlow and you can open an account within minutes.
All account plans come with free Making Tax Digital tools, invoicing software (3 per month), tap to pay and payment links. The Smart, Pro and Max plans come with additional perks, including higher interest rates for Tide Instant Saver, expense cards and a business phone number.
Tide don’t carry out credit checks; rather, they do electronic checks run by third-party services to verify your identity and do anti money laundering checks. These checks will appear on your credit report but will not affect your credit score.
Deposits in Tide are FSCS-protected up to £120,000.
Plans
- Free: £0 per month
- Smart: £12.49 per month
- Pro: £27.49 per month
- Max £69.99 per month
Right now, Tide are offering 1 month on a paid plan for free. T&Cs apply.
Starling Bank
Apply for an account in around ten minutes with Starling. There are no monthly fees and no UK payment charges.
Both the Business Account and the Sole Trader Account have a raft of features including Spending Insights, free UK bank transfers and free invoicing software.
Starling will perform a ‘soft’ credit check which means they’ll get a request for information from credit reference agencies. It won’t be visible to other credit reference companies or affect your credit score.
Plans
- Business Account: Free
- Sole Trader Account: Free
Get started with Starling Bank
Monzo Business
With Monzo Business, you can set money aside from your balance with the Pots feature, get digital receipts and you can budget and categorise spending. Extras like invoicing, multi-user access and virtual cards are available on the Pro version.
Monzo will perform a soft credit search when you apply.
Plans
- Lite: £0
- Pro: £9 per month
- Team: £25 per month
Revolut Business
This is the right account if your business does a lot of foreign currency transfers. First off, track the status of transfers in the app in real time. What’s more you can receive, hold and exchange money in over 30 currencies with no hidden fees. Set up as many sub accounts in each currency as you need.
The bulk payments feature makes paying clients and suppliers easier too.
Plans
- Basic: £10 per month
- Grow: £30 per month
- Scale: £90 per month
- Enterprise: custom pricing
Get started with Revolut Business
Countingup
Countingup’s pricing structure is different in that your subscription fee may go up or down depending on how successful your business has been that month. It’s all in the name of fair pricing for Countingup’s customers.
All of the accounts come with receipt capture, a tax estimate tool, automated categorisation and the ability to share your account with your accountant. There are charges for ATM withdrawals, Post Office deposit and foreign currency transaction fees.
Plans
- Total monthly deposits of £0-£750: £3 per month
- Total monthly deposits of £750-£7,500: £9 per month
- Unlimited monthly deposits: £18 per month
The first three months are free.
Zempler Bank
Zempler Bank welcomes applications from microbusinesses, including freelancers. There are limits on how many payments out you can make per month with the free Business Go account (3 per month), but no monthly account fees and no fees on payments in. Additional features include cashflow tracking and human customer support.
Apply in as little as four minutes, with instant online decision, account number and sort code.
A credit check isn’t performed, but Zempler Bank will need proof that your business is based in the UK. Limited companies will also be required to confirm the date of birth and home address of any Persons of Significant Control (PSCs).
Plans
- Business Go: £0 per month
- Business Extra: £9 per month
- Business Pro: £19 per month
What are my other options?
One further option, if your business has high growth potential is contacting a ‘business angel’.
Business angels are wealthy, entrepreneurial individuals who provide capital in return for a proportion of your company’s shares.
They take a high personal risk in the expectation of owning part of a growing and successful business.
Get a business bank account quote today – click here.
Important Information – Some of the products promoted are from our banking and affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
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Why small businesses should call upon the expert Angels – Business angels can help in a wide range of areas, from advice in planning the business development and growth path, to support with key aspects of the business such as financial management
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