One of the downsides of being an entrepreneur is your thirst for taking risks. You believe and invest in every idea; sometimes, those ideas don’t pan out and can leave you in debt and with a bad credit history.
When you have something that is finally working and making money, and you think of opening a business account, your bad credit history might come calling. Most business account providers will run a credit history check as part of the account opening process. If your credit is less than desirable, you’re application will most likely be rejected.
Traditional banks are the most notorious for this. For the business account to be approved, everything has to line up. Luckily, business owners with a less-than-stellar credit history can now go for challenger banks that are proving to be even better because of their impressive feature offerings and amazing convenience and reliability. You just need to know the ones that open a business account with no credit check, and this guide looks at the top five.
Tips for Getting a Business Account with Bad Credit
If your business has bad credit, you will need to work harder to get a good account without a credit check. With most accounts, having a bad credit score makes it difficult to get approved. But you can use some tips to help improve your chances of getting a business account even with bad credit.
Build your credit score
The most obvious piece of advice you can get in this case is to build your credit score. It takes a bit of time and work but the benefits are worth it. Even traditional banks require a credit check as do other financial institutions, which makes it unavoidable for to address the credit score issue to access more financial solutions at more competitive rates for your business in the future.
Provide relevant information
If you don’t have a good credit score, make sure provide all the relevant information about your business including a business plan, financial statements and other relevant documentation. Banks and challenger banks can use this information to assess the risk of your business and determine whether you’re a suitable candidate without doing the credit check.
Even with a not-so-stellar credit, providing all the details about the business might help the banks understand your system better and turn a blind eye to your poor credit score.
Consider a guarantor
You might increase your chances of getting approved for a business account if you have a guarantor with good credit.
A guarantor is someone who agrees to pay back any loans or overdrafts you take if you can’t pay them. Having a guarantor with good credit can give the bank more confidence in your ability to manage finance and reduce their exposure to risk. The bank might need to run a credit check on the guarantor to verify their credit score.
Choose the right bank
It’s almost certain that every traditional bank requires a credit check before opening a business account. But not all banks follow the same criteria when opening business accounts. Some banks are more flexible and willing to work with entrepreneurs without doing credit check. Challenger banks have been at the forefront championing for this.
Before starting the application process, do your research and identify banks that are more likely to approve your applications without doing a credit check
It is important to note that even though the account might be approved, there’s a chance it will come with higher fees and restrictions so you should also compare the features and terms of each account carefully before settling on any bank and choose the best. Some common limitations for business accounts with credit checks include;
- Lower credit limits – Business accounts that don’t require credit checks may come with lower credit limits that reduce your ability to access funding or make large purchases.
- Higher fees – The account might also come with higher fees than a regular business account. The include the monthly maintenance fees and even the transaction fees. Make sure you review the fees carefully before opening the account.
- Limited features – You might also be locked out of the full features of the business account. Commonly limited features are credit cards and overdraft facilities and the account may not integrate with certain accounting software or payment processors.
Some of the accounts might also require other types of checks so you should read the terms and conditions carefully before applying.
Top 5 Business Accounts With No Credit Checks
Pay iO is one of the most practical challenger banks for businesses. While most challenger banks offer individual customer services as a priority and businesses as an afterthought, Pay iO is designed to help businesses maximise the benefits of online banking.
It’s one of the online banks that has taken the time to understand the challenges and needs of small and large businesses and build financial solutions around that. So, it’s unsurprising that Pay iO is one of the few challenger banks that doesn’t run a credit check when opening a business account, giving your startup, online business or global business the financial lifeline it needs to help you build back your credit score.
Opening a business account with Pay iO is one of the best decisions. You will quickly realise this when you see the features you can enjoy with Pay iO at minimal monthly fees.
The bank offers three business accounts tailored to meet the needs of various businesses. There is the Pay iO Pro business account that costs £25. The account provides a business debit card, international payments, local payments, card payments, an account manager, an app, direct debit and 24/7 support.
The Pay iO Plus account for £100 per month offers the same features as the Pay iO Pro account but at higher limits.
The most outstanding feature that Pay iO offers is the Platinum account. The account caters to businesses with unique needs and requirements. The account is customisable to your needs, with benefits to match.
On the Pay iO platform, businesses will have access to their accounts through the mobile app and web and enjoy competitive real mid-market rates with just one low fee to exchange currencies, giving the business an edge in their pricing.
- Mobile app and web access
- 24/7 support
- Ability to accept and send payments in multiple currencies
- Local accounts in GBP and EUR
- Customisable Platinum account to match the business’s needs
- Global payment and account management features
- There is no free account option. All plans are paid
- No overdraft facility
- Business must be registered before opening the account.
Cashplus Business GO/Extra
Another ideal option to consider when looking for a business account that doesn’t do credit checks is Cashplus. Interesting fact, Cashplus was the first challenger bank in the UK. Despite receiving its bank license in 2019, this online bank has served clients in commercial, council and government sectors since 2004.
That should clear any worries you might have about it not having the ability to deliver. Company owners with poor credit might find Cashplus business accounts a viable option, especially now that it has become a serious contender in the mainstream fintech market. The bank opens business accounts that don’t need a credit check.
Initially, opening a Cashplust business account required paying an annual fee of £69 in favour of tiered account options.
Cashplus Business GO is in the entry-level option with no ongoing service charge. There’s also the Cashplus Business Extra, which costs £9 per month.
The main difference between the Go and Extra accounts is the monthly limit on the free transactions. With the Go business account, you get three free transactions and ten on the Extra account. After exhausting the free transactions, you incur 30p for each additional transaction.
The accounts also offer different maximum account balance limits with cheaper ATM withdrawal costs. The Business Extra account gives you 0.5% cash back on card spending.
You can also receive and make cash deposits using Post Offices nationwide. But not checks. With either account, you can accept payments from outside and transfer money abroad. But you will be charged a fee for this.
Cashplus also provides a connected, easy-access business savings account for companies wishing to save money for a rainy day.
Another noteworthy feature is that Cashplus is among the few challenger bank accounts accepting unlimited liability partnerships. Using this option, your business has a low-cost, time-efficient option for getting your business off the ground.
- No monthly or annual fee
- You can apply for the account online
- Deposits are FSCS-protected
- UK phone support
- Accounting software integration
- FCA regulated
- There’s a one-time £9.95 card fee
- £50k account limit
- No cash back on the Go account
- There’s a minimum £3 fee to deposit cash at the Post Office
Revolut business is a great option for international business accounts with no credit check. Revolut is undoubtedly one of the leading digital account providers in Europe. It began as a pre-paid currency card but has matured to offer a more robust range of financial solutions for businesses.
Headquartered in London, Revolut has been around since 2015. Although it’s not a fully registered bank but an e-money institution, it is authorised under the UK Electronic money regulations and offers plenty of financial solutions that businesses will appreciate.
Revolut has a banking license in the European Union, providing standard services for individual and commercial clients.
Besides being able to open an account with Revolut without a credit check, there are plenty of other features the service can offer you and your business, making it ideal for startups and established businesses.
The most notable benefit that Revolut offers is that all electronic payments, including direct debits, standing orders and card usage, have zero cost to the user. This is a huge upside to customers looking to make payments with the transaction costs.
But, the account does have limits that apply depending on the plan type, whether it’s a weekend or a weekday, and the potential fees charged by partner banks.
Opening a Revolut business account doesn’t need a credit check or ordering a physical card. The account has fantastic features that most businesses would appreciate, like payroll administration, credit card processing and e-commerce connectivity. These are tools that would benefit every student.
- The account can hold and exchange 25+ currencies
- 24/7 support
- Free transfer to other Revolut accounts
- Local accounts in GBP & EUR
- Ability to accept payments
- IBANs for global transfers
- Ability to buy and hold crypto with your account
- Not FSCS protected
- Premium features are only available with paid plans
- 2% fee to withdraw cash
Tide is a great fit for businesses where FSCS protection is a huge deal for their accounts. It’s an online bank that was launched in 2017 and is emerging as one of the formidable new competitors in the challenger bank space, targeting small businesses.
Since its inception, Tide has undergone significant development. One of its highlights is that it is one of the least expensive and simplest business accounts to set up. This might be a good option for you when you’re looking for something quick and easy to set up with rapid onboarding.
There are no costs to open or maintain the account, which is in tandem with its vision to provide small businesses with financial solutions and tools to help them grow and become successful. Withdrawals on Tide cost just 20p per transaction.
Tide doesn’t conduct any credit checks during business account opening, making it an easily accessible option for anyone with poor credit.
Customers can deposit up to £85,000 in their Tide account with full FSCS protection courtesy of Tide’s collaboration with Clearbank. Cash payments can be made at any 11,000 Post Office locations or 44,000 PayPoints across the United Kingdom.
Because of its affordable rates and starting costs, Tide has grown rapidly, becoming a formidable rival to market leaders like Pay iO and Starling Bank.
Tide can also facilitate the formation of Limited companies in England and Wales. Tide not only registers you but also covers the £12 registration charge. In a matter of minutes, your new business can be operational and ready to go.
Tide is perfect when you’re looking for the simplest and quickest way to create a business bank account. There are no recurring costs, which is a bonus for small businesses trying to cut back on their overheads, and you get free company formation and registration with Companies House.
- A free business account with no credit check
- Free company formation and registration with your account
- Multiple payment options, including cash payments through the post office
- Quick and simple account opening, with most accounts being opened within the same day
- Affordable bank transfer at £0.20
- Invoicing tools
- The account doesn’t have overdraft features
Card One Money Bussiness Account
At one point, Card One Money and Cashplus were the most popular options for company owners looking to open a business account with weak credit. However, Card One Money is one of the most costly accounts, requiring an application fee of £55 in addition to a monthly account fee of £12.5. with the rise of other challenger banks offering a similar service, Card One Money has fallen in the pecking order but is still a good option with many impressive features.
For most companies, the benefits may outweigh the costs. The Card One Money account has some unique features, including that it welcomes non-UK resident directors and international firms, which is not something we’ve seen in the other accounts.
With Card One Money, business banking is done in a novel way. Funds are held in both a card and an account. However, you should note that there’s a significant £5 charge difference when transferring money from a prepaid card to a regular bank account.
Once your Card One Money business account is up and running, you can accept foreign payments and checks for an additional 30p per online transaction.
You can use the account at any Barclays Bank to cash checks and accept foreign payments. The account is also accessible to people outside the UK. However, the card has to be recharged as this is a premium account, and you’re not covered by the Financial Services Compensation Scheme.
- No credit check
- Available to sole traders, partnerships and limited companies
- Maximum balance account of £250k
- Deposit cash and cheques for free at any Barclays Bank branch
- Online, mobile text and automated telephone banking allowed
- Account manager provided
- No overdraft
- The account is on the costlier side
- No cheque book provided
If you’ve been struggling to get a business account because of your weak credit score, you can now see there are plenty of options that you can look into that provide you with great features and functionalities, ensuring you get the best possible service and an opportunity to build your credit score back up.
Although getting this business account will solve many of your problems, you should still consider working to improve your credit score to access more financial solutions from these challenger banks and even from traditional banks. By having a good credit score, you can also access additional facilities like overdrafts, which can help to inject operating capital into your business when you need it most, among other benefits.