If you are thinking of starting a business or are in the process of setting one up, you would have thought about having to open a business bank account, but what if you have bad credit? Bad credit can make everyone’s life very difficult, especially if you dream of being self-employed or owning your own business. However, most people don’t know that you can open a business bank account with bad credit! Read on to find out how.
Create a Personal Relationship
This may be more difficult to do in this day and age, but business moguls the world over have previously been bankrupted or have bad credit against them.
Their advice if you are looking for a business bank account is to build a relationship up with the business advisor teams.
This is much more possible if you are looking to open an account with a local bank or building society, so it is still possible in this day and age.
Consider a Different Type of Bank
Did you know that you can bank with credit unions? Not many people do either it appears. Local credit unions offer you a viable alternative to banks and they are fully regulated and protected just like banks. You will find them locally and they can give you a personalised service at the very beginning of your business. Unlike some of the larger banks, the length of time they hold money deposits for is a lot less, thus decreasing the cashflow risk.
Consider a Basic Account
People don’t really like the idea of having basic accounts as they don’t often come with the benefits of premium bank accounts, but if you are struggling with your credit history this could be a good in road for you. Have a meeting with your current bank account provider and see if they can offer you a basic account, think of this as your first step into business banking, you won’t stay here forever but it is a good start.
Consider A Partnership
If you are starting your own business, why not consider a partnership? If you have bad credit this could be a good way to secure a good account and maybe even some capital. If you start a limited partnership the risk associated with you decreases when the bank conducts their due diligence. Make sure the person you are considering understands that your credit could be better, but if you enter into a partnership, they are also liable for the company debts. If you are starting a business, consider asking your partner or spouse to become an active member of your business.
Look for an Online Only Bank
In the wake of the 2008 global financial recession, people became exceptionally untrusting of the major lenders and high street banks, now you have more choice online than ever before with banks opening up online only facilities. Conduct a google search into non-traditional banks and find out if there are any that will accept poor credit. You may find that as they have broken away from the traditional mould of banking they will be far more understandable to your circumstances and be willing to work with you to not only increase your credit rating but help you get your business off the ground.
Evaluate Your Credit History
It is a tedious task, but this exercise can really help you see what is damaging your ability to get a business account. Find an online credit score system and sign up, this will give you all the information you could possibly need about your credit score. Look at any defaults and black listings and see if you can begin negotiating with the creditor and begin to settle these debts and defaults. Just talking to creditors can vastly reduce any stress relating to your credit history and if you start paying them off, you will slowly see your credit history score increasing. The more it increases the more likely you are to be able to get a business account with the best features.
Look For A Business Account Provider That Wont Credit Check You
Bigger banks would have you believe that no matter which bank you go to, they will subject you to a credit check, this is not the case. Whilst these banks do exist the associated business accounts are there, you just have to look for them and ask the right questions. Start off by searching online for business accounts that won’t credit check you and if at any point you are unsure, call the provider and ask them over the phone. This way you can be sure if you are going to be checked or not as each credit check that you don’t pass for a product actually lowers your credit score.
Consider Forming A Ltd
A limited company is different from a partnership in that all financial liabilities are associated with the business and not an individual. You will need to employ more than just yourself to do this, but it means that you as an individual won’t be checked for any financial products associated with your limited company. Discuss your options with your current bank and see if they can provide an account that will match your new ltd enterprise.
Opening a business bank account can be stressful, especially if you have bad credit. Don’t let your past history stop you from taking the next step in opening and starting your business as there are multiple options out there for people who have bad credit. The main avenue that you should take is to move away from the traditional banks and lenders and look to the new generation of online banks, they have different credit check parameters and will often allow bank accounts that have been previously denied by high street banks. Local credit unions are also an excellent option as this will also give you the face to face interaction that people miss from their traditional lenders.