Starting a business can be an exciting and daunting process, especially when it comes to managing finances. One of the most important things you need to do when setting up your business is to open a business bank account. However, this can be a difficult task if you have bad credit – so how do you avoid a credit check?
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Co-Op Business Banking ✓ Business Current Account ✓ Online, App & High Street Banking ✓ Quick & Easy Application Process |
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HSBC Business Banking ✓ Business Current Account ✓ In-Branch, Online & App Banking ✓ FSCS Protected |
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Metro Business Banking ✓ Business Current Account ✓ High Street Presence ✓ FSCS Protected |
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Mettle Business Banking ✓ Business Bank Account ✓ Online & App ✓ Quick & Easy Application Process |
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Monzo Business Banking ✓ Business Current Account ✓ Dedicated mobile app experience ✓ FSCS Protected |
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Tide Business Bank Accounts ✓ Free, Plus, or Pro Account ✓ iOS & Android Mobile App ✓ Upload & Auto-Match Receipts |
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Virgin Money ✓ Business M Account ✓ In-Store, Online & App Banking ✓ Insights & Forecasting Platform |
In the UK, most banks require a credit check before opening a business account, which can be a barrier for many entrepreneurs.
But don’t worry; there are still ways to get a business bank account without undergoing a credit check, even if you have bad credit. In this article, we will explore everything you need to know about getting a business bank account without credit checks when you have bad credit.
Contents
- Best business bank accounts with no credit check for bad credit
- Why do banks conduct credit checks for business accounts?
- Tips for getting a business account with bad credit
- How to apply for a business bank account without a credit check
- Do no-credit-check business bank accounts have any limitations?
- FAQ
Best business bank accounts with no credit check for bad credit
| Bank | Lowest monthly fee | Offers current account | Offers savings account | Overdraft available |
|---|---|---|---|---|
Acorn Account | £12.50 | Yes | No | No |
Anna Bank | £14.90 | Yes | No | No |
CardOneMoney | £12.50 | Yes | No | No |
Cashplus | Free | Yes | No | No |
Fair Everywhere | £12.50 | Yes | No | No |
GoSolo | Free | Yes | No | No |
Monese | £9.95 | Yes | No | No |
PayPal | Free | No | No | No |
Revolut Business | £7 | Yes | No | No |
Silverbird | Free | Yes | No | No |
Tide | £9.99 | Yes | No | No |
Why do banks conduct credit checks for business accounts?
Before we delve into the ways to get a business account without credit checks, it’s important to understand why banks conduct credit checks in the first place.
Credit checks are an essential part of a bank’s risk assessment process, as they help banks determine whether they can trust a potential customer with their money.
Credit checks provide a snapshot of an individual’s credit history, which includes information such as their payment history, outstanding debts, and bankruptcies.
When it comes to business accounts, banks are also interested in the credit history of the company’s directors and shareholders. This is because the financial health of the business is closely linked to the creditworthiness of its directors and shareholders.
If the directors and shareholders have poor credit histories, banks may see the business as a higher risk and may be less likely to approve a business account.
Ways to get a business account without credit checks
If you have bad credit, getting a business account with a traditional bank may not be an option. However, there are still ways to get a business account without undergoing a credit check. Here are some of the most popular options:
Online business accounts
Online business accounts are becoming increasingly popular, and many online banks don’t require a credit check to open an account.
These accounts can be set up quickly and easily, and you can manage your finances from anywhere using a mobile app or online banking.
Examples of online banks that offer business accounts include Tide, CardOneMoney, and Cashplus.
E-Money Accounts
E-money accounts are another option for those with bad credit. These accounts are not provided by traditional banks, but rather by e-money institutions, which are regulated by the Financial Conduct Authority (FCA).
E-money accounts work similarly to traditional bank accounts, but they don’t require a credit check, and you can usually open an account online in a matter of minutes.
Examples of e-money accounts include Pockit, Payoneer, and Revolut.
Prepaid Business Cards
Prepaid business cards are another alternative to traditional business accounts. These cards work like debit cards, but you load them with money before you spend it.
Prepaid business cards don’t require a credit check, and they can be used to make payments and withdraw cash just like a traditional business account.
Examples of prepaid business cards include Cashplus, PFS, and U Account.
Tips for getting a business account with bad credit
While getting a business account without a credit check is possible, it’s important to remember that having bad credit can still make it difficult to get approved. Here are some tips to help you improve your chances of getting a business account with bad credit:
Build your credit score
Even though traditional banks require a credit check, there are other financial institutions that may still consider your credit history. If you can improve your credit score by paying off outstanding debts, making payments on time, and reducing your credit utilization, you may be able to qualify for a business account with a traditional bank in the future.
Provide relevant information
When applying for a business account, make sure you provide all relevant information about your business, including your business plan, financial statements, and any other relevant documentation.
This will help the bank assess the risk of your business and determine whether you are a suitable candidate for a business account.
Consider a guarantor
If you have a guarantor with good credit, you may be able to increase your chances of getting approved for a business account.
A guarantor is someone who agrees to pay back the loan or overdraft if you can’t. Having a guarantor with good credit can give the bank more confidence in your ability to manage your finances.
Choose the right bank
Not all banks have the same criteria for approving business accounts. Some banks may be more willing to work with entrepreneurs who have bad credit than others. Do your research and find a bank that is more likely to approve your application based on your circumstances.
It’s important to note that these accounts may come with fees and restrictions, so it’s essential to compare the features and terms of each account carefully before choosing the best one for your business. Additionally, some of these accounts may require a personal credit check or other types of checks, so it’s crucial to read the terms and conditions carefully before applying.
How to apply for a business bank account without a credit check
If you’re a business owner with bad credit or want to avoid a credit check for other reasons, it’s still possible to apply for a business bank account in the UK. Here’s a step-by-step guide on how to apply for a business bank account without a credit check:
How to get a business bank account with bad credit
- Research your options
There are several business bank account options available that don’t require a credit check. Research each option carefully to find the one that suits your business needs and budget.
- Gather your documents
When applying for a business bank account without a credit check, you’ll need to provide specific documents to verify your business and personal information. These documents typically include:
Business registration documents
Identification documents, such as a passport or driver’s license
Proof of address, such as a utility bill or bank statement
Business plan
Financial statements, such as a profit and loss statement or balance sheet
Make sure you have all the necessary documents before applying for a business bank account. - Choose the right bank and account
After researching your options and gathering your documents, choose the bank and account that best meets your business needs. Make sure to carefully review the account’s fees, features, and any limitations or restrictions.
- Fill out the application
Once you’ve chosen the bank and account, fill out the application form carefully and accurately. Make sure to provide all the necessary information, including your business registration details, personal identification, and financial statements.
- Submit the application and wait for approval
After completing the application, submit it to the bank and wait for approval. Some banks may approve your application immediately, while others may take several days or weeks to review your application.
- Follow up with the bank
If you don’t receive a response from the bank within a reasonable amount of time, follow up with them to inquire about the status of your application. You may need to provide additional documentation or answer further questions before the bank can approve your application.
- Activate your account
Once your application is approved, you’ll need to activate your account and set up any necessary features, such as online banking or a debit card.
In conclusion, applying for a business bank account without a credit check is possible if you research your options, gather the necessary documents, choose the right bank and account, fill out the application accurately, follow up with the bank, and activate your account once approved.
Do no-credit-check business bank accounts have any limitations?
Yes, no-credit-check business bank accounts may have some limitations compared to traditional business bank accounts that require a credit check. Here are some common limitations:
- Lower credit limits: Business accounts that don’t require a credit check may come with lower credit limits. This can limit your ability to access funding or make large purchases.
- Higher fees: Some no-credit-check business accounts may come with higher fees than traditional accounts, such as monthly maintenance fees or transaction fees. Make sure to review the fees carefully before opening an account.
- Limited features: No-credit-check business accounts may not offer as many features as traditional accounts. For example, they may not offer credit cards or business loans, and they may not integrate with certain accounting software or payment processors.
- Limited eligibility: No-credit-check business accounts may have more limited eligibility requirements than traditional accounts. For example, they may only be available to sole traders or small businesses with low transaction volumes.
It’s important to carefully review the terms and conditions of any business bank account before opening an account to ensure that it meets your business needs and doesn’t come with any unexpected limitations.
FAQ
Yes, having a bad credit history can make it more difficult to open a traditional business bank account that requires a credit check. However, no-credit-check business bank accounts may be available as an alternative.
To improve your credit score, you can pay off outstanding debts, make on-time payments, and avoid applying for too much credit at once. You may also want to check your credit report for errors or inaccuracies that could be negatively affecting your score.
No, a no-credit-check business bank account won’t help you improve your credit score since it doesn’t report to credit bureaus. However, if you use the account responsibly and pay bills on time, it can help you establish a positive banking history.
Yes, you can still apply for a traditional business bank account even if you have bad credit. However, your application may be denied or require additional documentation. It’s best to speak with the bank directly to understand their eligibility requirements.
You can search online or speak with a representative from the bank to find out if they offer a no-credit-check business bank account. You can also read customer reviews and ratings to see if other business owners with bad credit have been successful in opening accounts with that bank.
Yes, a no-credit-check business bank account may be available even if you have a history of bankruptcy or other financial issues. However, you may need to provide additional documentation and may face higher fees or restrictions on the account.
No, eligibility requirements for no-credit-check business bank accounts may vary depending on the bank and account. Some accounts may only be available to certain types of businesses, such as sole traders or small businesses with low transaction volumes. It’s important to review eligibility requirements carefully before applying.
A no-credit-check business bank account is a type of account that doesn’t require a credit check for approval. These accounts are often available to business owners with bad credit or those who want to avoid a credit check for other reasons.
The specific documents required to open a no-credit-check business bank account may vary depending on the bank and account you choose. However, you’ll typically need to provide business registration documents, identification documents, proof of address, and financial statements.
Yes, some no-credit-check business bank accounts may come with higher fees than traditional accounts. These fees may include monthly maintenance fees, transaction fees, or ATM withdrawal fees.
No-credit-check business bank accounts may not offer credit cards or loans. If you need access to credit, you may need to explore other options, such as a business line of credit or secured business loan.
It depends on the bank and account you choose. Some no-credit-check business bank accounts may offer international transaction capabilities, while others may not. Make sure to review the account’s features and limitations before opening an account.
Yes, some no-credit-check business bank accounts may come with restrictions on the amount of money you can deposit or withdraw. These restrictions may vary depending on the account and bank you choose, so it’s important to review the account’s terms and conditions carefully.
Yes, you can switch from a no-credit-check business bank account to a traditional account in the future. However, you may need to undergo a credit check to open a traditional account, and you may need to meet other eligibility requirements.
To choose the right no-credit-check business bank account for your business, consider your specific needs and budget, review the account’s fees and features, and read customer reviews and ratings.