Start-up banking

[kg100]

Hi, apologies as I appreciate that this must be one of the most discussed topics on these boards but all the threads I could find are some years out of date and I was hoping that there may be some new information.

I am currently in the process of setting up a not-for-profit company limited by guarantee (not a charity, more like a social enterprise) so may qualify for club/society account but as the rules for these seem to change with the wind we may need a basic start-up business account (and except for charges the two types of account seem broadly the same anyway). The company will have 2 Directors.

This company will require a bank account and while I understand that there is no such thing as a basic bank account for businesses (so a credit check is inevitable), we do not require any overdraft or credit facilities whatsoever. A CashPlus account is not going to be suitable because we'll be needing to pay in more than £15k. A trawl around tells me that Metro Bank is the place to go as they take into account reality over process though I know of nobody who has used them.

The thing is, one of the proposed Directors of the company has a very poor credit rating (multiple defaults over the last 6 years but no CCJs) and I fear that an application for a business bank account will be rejected on the basis of his credit rating. The obvious answer is to have a sole Director to form the company, open the account, then add the second Director in due course but not make him an account signatory.

I called Metro Bank and asked them if credit ratings are performed on Directors or Signatories or both and they said they'd never been asked this before and they couldn't be certain but assumed it was done on both.

4 questions:
1. are there any banks out there who allow you to open a basic account in a business name without a credit check? I gather the Halifax Treasurers' Account was the account of choice for doing this but that is now closed to new applicants and the NatWest Foundation Account is a no-no under these circumstances
2. does anyone have any experience of Metro for business banking?
3. is my solution (opening it with a sole good-credit Director and adding the second after the account is open) a feasible solution to get around the credit check?
4. presumably signatories are far more important to the bank than Directors, but are they easier to add after the account is open than adding them to open it in the first place?

On a final op-ed, I do find it absolutely astonishing that 3 years in to a government that claims to be business-friendly they haven't done the cost-free thing of telling all banks (especially the state-owned ones) that they have to offer basic no-chance-of-debt, no cheque-book bank accounts to all businesses that are unable to pass a credit check for a standard account. No government in history has been in a better position to demand a few small favours from the banks and I honestly can't see what the problem is and what argument the banks use to dismiss this point. It would cost absolutely nothing to government or banks and if the businesses were successful the banks could end up making a fortune. In my experience this is one of the biggest headaches start-ups have and yet it's so easy to rectify!

Thanks in advance!

 

[billie1]

Try Barclays bank, I successfully opened an account with them in November along with my sister who has bad credit rating. They did say they do credit checks, but with my sister credit rating, I'm surprised we still got it open.

I would say go for it, there is a good chance it will be opened. Alternatively you can try Natwest, who use to provide a basic account for people with bad credit rating. Not sure if they still do.

 

[StevensOnln1]

Not sure why you think the Natwest Foundation Business Account is no good for you, as it seems to be exactly what you're after.

 

[kg100]

Not sure why you think the Natwest Foundation Business Account is no good for you, as it seems to be exactly what you're after.

Because the Director with the bad credit history has a bad credit history largely due to NatWest!

 

[billie1]

I think you stand a good chance of getting the account opened with Barclays as my sister still got it opened even though she had bad credit history. I think the credit check is just a standard procedure to eliminate things like fraud. It doesn't always mean you don't get the account opened because your credit history is poor.

 

[kg100]

Update - today I spoke to an advisor at Metro Bank. They were extremely helpful and much more honest and straightforward than Barclays and NatWest while also being much more efficient than Nationwide.

However... even though I was assured that credit checks are done by people and not by computer at their bank, there are still refusals on the grounds of credit checks but that they know from experience of talking to other customers that they are often able to open accounts for people refused at the major banks. His suggestion was to open the account with a sole Director and signatory who was effectively a sleeping Director, and then add additional people down the line (easier said than done but at least it's a solution in part).

He also said that it completely baffles him and his colleagues why there is no such thing as a basic bank account for businesses as there are for personal customers and that they get more enquiries about this than almost anything else...