The best business bank accounts now go far beyond offering a secure way of depositing, withdrawing and transferring money – they offer genuinely useful tools and services to help you work more efficiently and manage your finances as you grow.
The arrival of new challenger banks – like Revolut, Tide and Starling – has brought increased competition in the market. Now both online alternatives and long-standing high street banks are fighting for your custom, offering additional benefits and reduced fees as a result.
What’s more, Switchers – businesses who have been trading for over 12 months and are looking to take their business account from one bank to another – will also find some great offers available today.
However, despite the growing number of banks to choose from, 80% of small businesses in the UK still use either Royal Bank of Scotland, Lloyds, Barclays or HSBC according to the Competition and Markets Authority, and only 4% of SMEs switch bank accounts each year.
As a savvy business owner, where you choose to bank should be a strategic decision. Consider this article your essential guide to getting the best deal for your business bank account.
We’ve done all the research for you and made it easy to compare 12 of the best business bank accounts available.
You can also view our bank accounts for specific business types:
Free Banking Period: Free always (there are paid add-ons/integrations available such as accountancy software integrations and their newly launched Toolkit).
Fee Thereafter: Free, depending on your needs.
Cash Transaction Limit: None but £3 charged per deposit of up to £1000 at the post office. For amounts over £1000 there’s a fee of 0.3% of the amount deposited and you can deposit up to £20,000. There is and a 50p charge per withdrawal.
Eligibility: Sole traders and limited companies can open a business current account. Limited companies must be registered in the UK at Companies House. All Persons of Significant Control must be UK residents and people (not other companies, trusts etc.)
Starling is one of the few alternative banks where all eligible deposits are protected by the FSCS up to £85,000. Customers also get free electronic payments and domestic transfers, with no monthly account fees.
All customers benefit from no monthly fees, accounts can be opened in minutes and direct integration with accountancy tools like Xero and FreeAgent.
Free Banking Period: 6 months from this link.
Fee Thereafter: Limited company pricing varies with turnover, from £4.90 to £24.90 per month. If you’re a sole trader, the monthly fee is £5 per month.
Cash Transaction Limit: ATM limit of £300 per day.
Eligibility: Business owners must be over 18 years old and in the UK.
ANNA is one of the more unusual offerings in this review. ANNA stands for’ Absolutely No Nonsense Admin’ and the bank’s goal is to offer a service which does your admin for you, automating things like issuing invoices, chasing payments and tax reminders.
For now, this seems like a novelty, with ANNA feeling more like a digital admin assistant than a banking option. However, if you are a freelancer or very small business, this might be enough.
Free Banking Period: Free.
Fee Thereafter: Free.
Cash Transaction Limit: All Tide accounts are subject to transaction limits, but these can be increased on request.
Eligibility: Business owners must be over 18 years old, running a limited company registered in the UK.
Tide has over 100,000 business owners using this ‘non-bank’ for their business banking needs. As Tide proudly claim on its homepage “we’re not a bank we’re better” but do provide a full range of business banking services for a competitive fee-free. However, there are charges on most transactions, including transfers, cash transactions, direct debits and other payment types like CHAPS. For example, there’s a £1 charge on cash deposits through the Post Office – or 3% if done via PayPoint – and all ATM cash withdrawals are charged at £1.
There’s little information regarding transaction limits on the Tide website, but rest assured the ATM cash limit of £500 a day is quite standard – and you can request to increase your limits through the app.
At the time of writing, Tide is launching a Tide Plus account. This includes 20 free transactions each month, including inbound and outbound Faster Payments, CHAPS, BACs and Direct Debits, but does not include international payments. It also includes access to a legal helpline for impartial and confidential advice from Irwin Mitchell LLP – a unique benefit.
Free Banking Period: Free plan available for smaller businesses.
Fee Thereafter: Free plan available, then various plans from £25 p/month to £1000 p/month.
Cash Transaction Limit: Daily withdrawal limit of £3000 a day and £100,000 a month.
Eligibility: Company must be registered and physically present in the EEA and Switzerland.
Revolut is ideal for multinational businesses and, unlike the traditional high street banks, Revolut’s fee structure is dependent on the size of your business – with monthly fees on a sliding scale from ‘Free’, to ‘Grow’, ‘Scale’ and lastly, ‘Enterprise’. Note: with a ‘Free’ account, you can add only 2 team members.
Revolut’s main appeal is its fast international payments and well-featured mobile application. If your business runs internationally, Revolut could save you significant charges. There’s also some interesting additional features, like simple expense cards for employees. However, offline businesses would be better served by a bank with a high street presence for cash and cheque deposits.
Free Banking Period: 18 months for startups or 12 months for Switchers.
Fee Thereafter: £6.50 per month (for the 12 months following your free banking period).
Cash Transaction Limit: Up to £3,000 cash per month, then 0.50% fee of value deposited above £3,000.
Eligibility: Your business turnover must not exceed £2M annually.
Founded in the 19th century, HSBC is a banking heavyweight known around the world. So is the 7th largest bank in the world the best choice for your growing business?
Truth be told: HSBC’s business banking offering is nothing revolutionary. For customers new to business banking, HSBC offer a now-standard 18 months free banking period. Whereas customers switching from another business current account get 12 months. For both new businesses and Switchers, this free banking period is followed by a reduced monthly fee for a further 12 months. However, you should pay attention to the fees applied during these 12 months, which apply to virtually all transactions on the account.
In terms of additional benefits, HSBC also gives access to a knowledge centre and business planning tools as an add-on to its online banking. Nevertheless, this business planning tool is little more than a template.
We were also concerned with HSBC’s online reviews on TrustPilo
Free Banking Period: 18 months for startups. Note: Santander does not offer free banking for Switchers, but instead gives a reduced £5.00 monthly fee for 12 months.
Fee Thereafter: £7.50 a month.
Cash Transaction Limit: No limits within the first 18 months.
Eligibility: New businesses need to have been trading for less than 12 months. Both young firms and Switcher customers need to meet the following criteria: up to 2 directors, owners (shareholders) or partners – all of whom are to be UK residents.
Santander is a new name on the British high street but has grown quickly in recent years through its acquisitions of Abbey National, Bradford & Bingley and Alliance and Leicester.
However – despite its award-winning status – Santander has struggled with its customer service record. From 2007 to 2011, Santander was ranked as one of the worst banks in the UK for customer service, according to the J. D. Power UK Retail Banking Satisfaction Study.
However, there are signs of improvement. In a 2019 Which? Money customer survey, Santander scored 72%, ranking 7th in a survey of 25 banks.
All in all, Santander’s business banking offering is similar to other options on the high street. For new businesses, there’s the standard 18 months free banking period, followed by £7.50 per month – so long as your business is in the first year of trading and you have no more than two directors, owners or partners. For Switchers, you’ll get a reduced £5.00 monthly fee for 12 months.
Founders looking for extra resources can turn to Santander’s Breakthrough programme, which educates business leaders on cyber security, exit strategies, brand building and more, through a series of workshops, masterclasses and events. Handy, if you need the additional support.
Free Banking Period: 18 months for new businesses, no free banking period for Switchers.
Fee Thereafter: Minimum monthly charge of £5.
Cash Transaction Limit: The ‘Start Up’ account offers no limits or charges for the first 18 months, but then reverts to the standard tariff: cash payments (in or out) cost £0.70 per £100.
Eligibility: New firm to be trading for fewer than 12 months with turnover less than £1m. Switchers need to have a turnover of less than £2m to be eligible.
NatWest is one of the best-known banks in the UK, with centuries of history. Acquired by RBS in March 2000, it is part of one of the world’s largest banking groups.
At first glance, Natwest’s offering seems similar to others on test, with the standard 18 months of free banking for new businesses, but there are some key differences.
Firstly, this monthly charge is not a fixed fee. Instead, there’s a minimum charge of £5 per month. For example, if you made a purchase outside the UK of £250, you would incur a £6.87 fee, so the account charge would be waived. As a result, we’d recommend businesses carefully review the NatWest account charges to see if they will save versus a fixed banking fee.
Secondly, NatWest has a very competitive suite of banking benefits. For one, it includes free access to FreeAgent, a top-rated accountancy software package which focuses on small business accounting. Importantly, this connects directly to your NatWest account via a bank feed, which can be accessed by your accountant and is fully compliant with the new ‘Making Tax Digital’ initiatives, keeping you on track with HMRC. With a FreeAgent plan starting from £20 per month, this is an exceptional free benefit.
In addition, NatWest’s business banking also includes an international shipping discount of 60% off the standard DHL tariff for 12 months. Plus free receipt and expense management app for iPhone and Android, helping you keep a record of outgoings.
Free Banking Period: 18 months for new businesses, 6 months for Switchers.
Fee Thereafter: £6.50 per month.
Cash Transaction Limit: £1 per £100 for the first £1500 each month, and 80p per £100 for amounts over that amount.
Eligibility: Turnover expected to be less than £3m.
Lloyds Bank was founded in 1765 and has over 30 million customers. Its business banking arm is one of the most popular in the UK, with over 26,000 corporate customers and over 1 million SME customers.
The business banking on offer here is similar to other high street banks, with the standard 18 months of free business banking for new businesses. If you are switching from another account, you’ll get a 6 months free banking period. This includes electronic payments, cheques and cash withdrawals/deposits, with transparent and competitive fees for other transaction types.
So what helps set them apart? Lloyds Bank’s business banking app is one of the best we’ve tried, with biometric login via fingerprint or face ID and a full set of features to help you manage your business on the go.
Lloyds also has one of the more comprehensive offerings in this review if you require additional banking services, offering business loans, insurance, overdrafts and charge cards.
Free Banking Period: 25 months for new businesses and Switchers
Fee Thereafter: £6.50 a month.
Cash Transaction Limit: £250,000 per annum limit and fees of 65p per £100 once the free banking period has ended.
Eligibility: Turnover less than £2m
Established in 1849, Yorkshire Bank has had a varied history of ownership, being acquired by the National Australia Bank in 1990 then by CYBG in 2018. Yorkshire Bank is currently undergoing rebranding and will relaunch as Virgin Money later this year.
Yorkshire Bank’s free banking period is one of the most generous available, with 25 months of free banking available to businesses trading for fewer than 12 months. However, not all charges are included in this offer – there are fees for additional services or borrowing charges (as outlined in the business banking tariff).
Digitally-speaking, Yorkshire Bank is somewhat lacking – it doesn’t offer a business banking app, for either iPhone or Android. However, you can manage your account through an online portal. At the time of writing, though, the previous BusinessOnline portal is currently being replaced which means certain features are currently unavailable online such as a salary runs, CHAPS and international payments.
Free Banking Period: No free banking period, even for new businesses.
Fee Thereafter: Free if account balance stays above £5,000 at the close of each working day.
Cash Transaction Limit: If balance remains above £5000 you’ll get 50 free transactions per month then £0.30 each. Cash paid in or out subject to 0.50% fee, regardless of bank balance.
Eligibility: Turnover of less than £2m and at least 50% of the business owners or directors (representing more than 25% of the shares) should be UK residents, and at least 50% of shares should be held by UK residents.
Metro Bank is a new name on the High Street, founded in 2010, making them the first new bank to open in the UK in over 150 years.
Self-described as a ‘revolutionary’ bank, Metro has focused on combining the benefits of online banking with face-to-face customer service. The result is one of the best business banking offerings we’ve reviewed.
Firstly, Metro’s monthly fee is one of the lowest on the high street, being waived if your balance remains above £5,000 throughout the month. Secondly, small or new businesses with low transaction volume will love Metro Bank’s zero-fee approach on your first 50 transactions each month. Finally, Metro’s focus on in-person banking with branches open seven days a week from 8am-8pm is a real benefit to cash focused businesses.
Metro’s business banking app is fully featured, with support for payments, transfers and card management built into the application. It also includes a graphical Business Insights tool, which shows the performance of your business and alerts you when larger than usual transactions occur.
Free Banking Period: 30 months for new customers and Switchers (subject to some further criteria).
Fee Thereafter: £5 per month.
Cash Transaction Limit: No charges for all automated credits and cash withdrawals. Deposit £2,000 in cash and 100 cheques per month for free.
Eligibility: Business owners must be over 18 years old and in the UK.
The Co-operative Bank is the only ethical bank in this review. This means it follows an ethical code and screens customers against an ethical policy, refusing to do business with arms manufacturers, oppressive regimes or businesses with an overtly negative ecological impact. Co-op also regularly conducts customer polls and changes policies based upon customer opinion.
This free banking period is the most generous in this review at 30 months, followed by one of the lowest fees at £5 per month – but this offer is subject to some additional requirements. If you check the tariff sheet, you’ll see that the free banking offer is based on businesses maintaining a credit balance of £1000 or more. If a balance drops below £1000, then the £5 monthly fee applies. What’s more: cash above £2000 paid in a month is subject to a fee of 75p per £100.
Despite this small print, Co-op has received awards for customer service in 2017 and 2018, being awarded “Best Service from a Business Bank” by Business Moneyfacts.
Free Banking Period: Tailored to the business.
Fee Thereafter: Bespoke fee.
Cash Transaction Limit: Bespoke limits.
Eligibility: Registered company or sole trader based in the UK.
Handelsbanken is Sweden’s largest bank and the 3rd largest in the Nordic area. It was established in 1871 and is one of the most sustainably financed banks in Europe, relying upon building long term and individual relationships with its customers.
The bank has 128 branches in the UK, opening 27 of those branches within the last 12 months to meet customer demand.
The fees and benefits of your Handelsbanken Business Bank will be tailored by your advisor to meet your individual business needs. If your business would incur high charges with other providers for unusual or cash-heavy transactions, consider speaking to Handelsbanken to build a bespoke business account for your requirements.
Poor credit will limit the choice of lenders that will accept you, but there are still options available. You may be able to secure invoice financing or a cash advance, as these present a lower risk for lenders. Some specialist online lenders will consider you even with bad credit, especially if your business is consistently delivering positive financial results.
In short, yes. Just as lenders will look at both your business and personal credit history when assessing a new loan, that loan also has the possibility of affecting your personal credit score down the road. This is particularly true for sole traders whose business and personal finances are essentially the same. If your business runs into financial difficulty with you as an owner or director, this will have a bearing on your credit score when it comes to borrowing more money in the future.
Each lender will have their own criteria, with banks often having the strictest rules. Lenders will look at a host of factors, including the type of company you operate, the number of years you have been running, your annual turnover, your profitability, and your personal financial history as an owner or director.
These and other factors will impact who you can borrow money from, how much you can borrow, the rate of interest, and the repayment terms. The lower the financial risk you present to lenders, the more flexible they will be with their loan offerings.
Copyright © ALL RIGHTS RESERVED 2021
Merchant Savvy is a division of VUBO Ltd (Company Number 09017066).
Address: Spaces, 9 Greyfriars Rd, Reading, RG1 1NU.