No Credit Check Business Bank Accounts and Start Up Loans

Yes, it's possible to open a business bank account without a credit check. Getting a loan is trickier, but it doesn't have to be.

Most small businesses who want a business bank account simply apply for one. As part of the application, they're likely to go through a business credit check, which is a review to establish if there are any financial issues with the company.

The problem is most small businesses won't pass this credit check — not because they may have had their account closed by a previous lender or because they failed to make required payments on time. It's because they have no credit history (or any history as a matter of fact). Even with a history of financial activity, it's very likely to be rated poorly as profits are non-existent and invested funds continuously get spent.

If you're a startup looking to open a business bank account with bad credit or no credit check in the UK or beyond, you might want to consider an alternative route. tldr; There are options to create a basic "no credit check" bank account.

What is a credit check?

There's a lot of big talk about business credit checks, and I'm not going to lie, it can be intimidating. But it's really just simple bookkeeping. Your business credit, like your personal credit, is just a history of how you've paid your bills on time. Anyone can understand that, but it's important that you are able to communicate this to banks and other financing institutions that you might deal with.

A business credit check is a written determination by a lender that you are financially capable of meeting your existing financial obligations. If you have a business credit check then this will provide the bank with enough evidence to make a credit decision on a potential business loan application. Banks need to understand how your business operates financially before allowing you to take out a loan because they do not want to lend money for the risk of non-repayment.

Companies like ClearScore, Equifax and Experian use something like the Delphi score to rate your credit risk. These scores typically range from 0 (dissolved) to 100 (very low risk) and will take into account:

What does bad credit history look like?

There are two main ways that you can avoid having a bad business credit score: (1) make sure you pay off your creditors as agreed and (2) check your score regularly. But how many people actually do these things? The truth is that many people don’t know which areas of their credit will hurt them the most and which areas can be improved upon.

These are quite a few things that could negatively affect your credit score. Even with a perfect credit history, some banks may reject you outright or close your existing account for a variety of reasons, which makes the whole process of getting and keeping a small business bank account even harder:

What's more, traditional banks still want to make sure that the directors are financially responsible individuals, so your own personal credit history can impact your ability to get new credit and ruin any guarantees of getting startup business loans. In addition, submitting multiple applications within a short period of time could suggest that you’re struggling, which banks and lenders will notice.

Business bank accounts with little to no credit checks

Although it may sound too good to be true, opening a new bank account with no credit check is possible. At the very least, you'll need to show some identification, proof of address and proof that the company exists before opening a business bank account.

Skip the traditional financial institutions in favour of a bank or payments platform that does not use your credit history to determine risk and gets you up and running in minutes. They say ignorance is bliss, and these folks are embracing it:

Cashplus business account — For freelancers, sole traders, SMEs and growing businesses. No credit check is required to open an account. Get an account number and sort code in minutes.

CardOneMoney business account — Complete your application online. No branch visits required. No credit checks required, although you're still subject to company insolvency checks.

Natwest foundation account — For new businesses without trading history or poor credit history. It isn't publicly available but you can contact them and ask for it.

Acorn business account — No signatures required. You can open one even with bad credit, but you're still subject to standard identification and business checks.

Anna — No credit checks because they don't offer credit. Standard identification checks (to comply with UK anti-money laundering regulations) don't affect your credit score.

Fair Everywhere international business account — For companies banking internationally. No hard credit checks, but isn't the cheapest option among the roster.

Tide business current account — No credit checks, only identity verification and anti-money laundering checks. While these checks won't impact your credit score, they will appear on your credit report. International payments from foreign investors may cause issues.

Rebank — That's us! Not a bank, but provides the best small business accounts to hold multiple currencies, exchange foreign investment funds, make intercompany transfers and send payments. Quick and simple identification checks to get you started within minutes, no credit checks and does not affect your credit score.

Getting a small business loan

In the world of business loans, there are a plethora of options one can consider, but the right one comes down to your type of business and what you're after. Having a poor credit rating or being a small business or start up may limit you, though you're not out of luck! We recommend aiming for lenders who take a holistic view of your company, not just your credit history — much like investors. Have in mind answers for the following questions:

The bottom line is you won't be able to get a start up business loan without some sort of credit check. Lenders who focus on your business in its entirety and current cash flow will land you favourable outcomes, but be prepared to pay higher interest rates. You do have your every day traditional banks, but they're less likely to give loans to start ups, so focus on securing loans from organisations that aren't banks.

A great resource for small businesses in the UK to dive into is British Business Bank. It's a government-owned business development bank that helps startups, scale ups and other small businesses get started with financing. They outline some schemes that will help you at various stages of the company. For example, the Start Up Loan scheme will factor in your credit history but are very likely to get you on board an affordable, fixed interest rate repayment programme.

If you're a business whose biggest source of income is from card payments, a merchant cash advance may be a great option. Merchant cash advances allow a lender to take a percentage of your customers' card payments in order to pay back the initial loan. Lenders will focus primarily on whether you've been in business for some time and if a modest amount of your transactions are from card payments.

It's also worth highlighting the availability of government grants, crowdfunding and peer-to-peer lending. These are great avenues to explore besides your generic loans. The Funding Options website can also help match you to a lender without affecting your credit score.

Final words

As a new entrepreneur, you may have limited access to traditional bank accounts. In addition to this, it may be difficult for you to determine which institution will best meet your needs. Starting a business requires research, and research is expensive. Even if you decide on a new bank, there is still the matter of applying for a business bank account.

It's not as plain sailing as you may have thought, although at least by now you are aware of what is involved and can make better informed decisions. If you're aiming for a start up business loan, work with a lender that understands the stage you're at. Favour new banks and banking tools to make the whole process frictionless — and hopefully somewhat enjoyable!

Disclaimer: This article is provided only for informational purposes. Rebank does not provide tax, accounting, or legal advice and does not take responsibility for any financial decisions made by the reader.

A banner introducing Rebank's services to help startups better control their finances.A banner introducing Rebank's services to help startups better control their finances.

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