This can make it far more challenging to open a business bank account. However, there are options available to you, as we explain. This guide is for those looking for a business current account – we have a separate guide on opening a consumer bank account after an IVA.
Business bank and e-money accounts you can open with an IVA
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There are no credit checks involved when opening the Revolut business account, which means it’s worth considering if you have poor credit. There are 4 different pricing plans to choose from, each offering different features, depending on how big your business is and how much you use the account. Benefits of the business account include the option to sync your transactions and expenses with accounting software like Xero, QuickBook and Sage, and 24/7 customer support. You’ll also have access to multi currency accounts, allowing you to exchange money in more than 25 currencies, as well as an allocated number of free international payments depending on the payment plan you're on.
Pros
Flexible account options
Mobile app with lots of good features
Ability to issue cards to all employees
Easy to apply
Freeze card if lost or stolen
Safe and secure
Free purchases
Cons
Basic account does not include many free transactions
You’ll only need to undergo a soft credit check if you open a business bank account with Monzo. This won’t affect your credit score which means it could be a good option if you have poor credit. Monzo offers 3 different pricing plans to choose from, one of which is free. All come with a business debit card, 24/7 customer support, free UK bank transfers and savings pots to separate money, and you can spend on your card abroad for free. However, the paid-for accounts offer a wider range of features, such as accounting and invoicing tools, as well as virtual cards.
Pros
Fee-free spending abroad.
Custom payment links.
Pots to separate money.
FSCS protected.
Cons
No branches.
Charge to deposit cash.
Accounting software only available with Pro account.
There’s no credit check involved when you open the ANNA Money business account. All you need to provide is proof of ID, your email address and some details about your company. There are 3 different pricing plans available, including a free option, and the amount you pay will depend on your monthly turnover and business type. Depending on the plan you choose, you can benefit from a set number of free transactions, multiple user access and free ATM withdrawals. You’ll also be able to set up different savings pots, earn cashback on purchases and create and manage invoices with ease.
Pros
24/7 in-app support.
Invoice and expenses services in the app.
Pay-as-you-go option means you only pay for features that use.
No monthly account fee for the first three months.
It’s quick and easy to open a business account with Card One Money and no credit checks are carried out. There are 2 accounts to choose from, depending on the size of your business, but monthly fees are fairly high, plus there is an application fee to pay on top. However, in return, you'll be able to send instant domestic payments, as well as international payments in a range of currencies. You'll also be able to order cards for up to 4 other people within your business and assign different levels of access depending on their roles and responsibilities.
Pros
Quick application process
No credit check required
Cashback rewards available on the associated Mastercard
No failed payment fees
Cons
Quite a few charges involved compared to some other business accounts, including the £55 application fee, £12.50 monthly account fee and various other transaction fees
No annual or monthly fee when you apply using the Finder link.
Zempler is another business account that requires no credit check when you apply, making it a good option for those with poor credit. There are 2 accounts to choose from, one of which has no monthly fee. Both accounts are quick and easy to open and you’ll benefit from tools such as cashflow tracking and integrated accounting. You’ll also have UK telephone customer support and FSCS protection. Upgrading to the Extra account (which requires a monthly fee) means you can earn cashback on your card spend as well.
Pros
Open an account in 5 minutes
"Cashplus iDraft" once eligible
Currency cards for travel
Online services in addition to the mobile app
Cons
Charge to have your bank card issued
Traditional bank still needed for majority of your business finance needs
Opening a business bank account that doesn’t require a credit check
Because an IVA negatively affects your credit score, it’s worth looking for a business bank account that doesn’t require a credit check. That way, your application is more likely to be accepted.
Challenger banks such as Monese and Monzo also offer accounts with no hard credit check, as long as you’re not applying for an overdraft.
You can usually open these accounts quickly via the provider’s app, but it’s important to check eligibility requirements to ensure your business type is accepted. Some plans also charge monthly fees and keep in mind that if your account is managed via an app, you won’t have a bank branch to pop into. Not all accounts let you deposit cash either.
However, many of these accounts connect to accounting software and include invoicing and budgeting tools to make life a little easier.
Opening a basic bank account from a high street bank
If you have poor credit, you might be able to get a basic, everyday business bank account with certain high street banks. These can be used for general banking transactions, but there will be limited perks with this type of account.
Because of your poor credit history, you won’t be given an overdraft and you won’t qualify for a business credit card. But a basic account could tide you over until your credit score has started to improve.
It’s best to contact your local bank branches to find out whether they can help you.
How an IVA can impact getting a business bank account
If you have an IVA, this shows you’ve had problems managing your money in the past. As a result, providers may be more reluctant to let you open a business bank account.
As we’ve mentioned, an IVA can have a long-term negative impact on your credit score. If you’re a sole trader, you and your business are one and the same. This means banks will always look at your personal credit score when you apply for a business bank account.
If you’re a limited company, your personal and business finances are separate, which means banks will first look at your business credit score – which won’t be affected if you have a personal IVA.
However, if you’re a director of your limited company, many banks will look at your personal credit score as well. This will also be the case if your business is new as you won’t have much of a business credit history.
This can reduce the number of business bank accounts you’ll be able to apply for, and those you do get accepted for are unlikely to come with an overdraft.
Alternative options
If you’re struggling to get accepted for the business accounts mentioned above, you could consider applying for a prepaid business card. No credit check is carried out when you apply for one of these cards, so you won’t need to worry about poor credit.
What’s more, these cards can be ideal for budgeting as you need to load up your card in advance and can then only spend what’s on it. You can often give cards to your employees, and they can be a great way to prevent your employees from overspending.
The drawback is you won’t be able to set up standing orders or direct debits on your account and there’s no overdraft facility either.
How to manage your existing business bank account
If you have debts such as an overdraft or credit card with your existing bank and these are included in your IVA, it’s usually best to open a new business bank account with another provider. That’s because your existing bank could freeze your business account or take funds from it to pay off your debts.
This also applies if you have debts with any providers in the same banking group – for example, if you have a debt with HSBC and a bank account with First Direct.
If you already have a business bank account and this isn’t linked to any of your creditors, you don’t necessarily need to open a new one. However, if you have an overdraft, it’s best to stay out of it, and always make sure you pay your bills on time.
Bottom line
If you have an IVA, it can be harder to open a new business bank account, but it’s not impossible. The key is to compare your options carefully with both challenger banks and high street banks to see what works best for you. When comparing accounts, consider factors such as fees, eligibility requirements and account management before you apply.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio
By switching your business bank account, you may be able to reduce your monthly fees or take advantage of different features like smart bookkeeping tools.
Considering a Revolut Business account? We take a closer look at the features and price plans available with these digital-only accounts.
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