Are you a small business owner who has had a few banking blunders in the past? If so, you may have experienced difficulties opening a business checking account. The good news is there are plenty of banks out there willing to work with you.
If you aren’t familiar with ChexSystems, it is a nationwide consumer reporting system. It has a database made up of checking account activity, such as check writing history, openings and closures of checking accounts, and any checking account applications you turn in.
When you need a personal account without restrictions, you can choose a bank that doesn’t use ChexSystems. The same applies to business checking accounts, and we’ve selected some of the top contenders out there to get you back up and running with a second chance business checking account.
The Top Second Chance Business Checking Accounts
While you can look for a local bank or credit union in your neighborhood that offers second chance business checking, the options may be few and far between. Another option is to choose an online-based bank that operates across the nation.
In-person banking may not be provided but these banks often have fewer fees since the cost of running a physical bank isn’t an issue for online financial institutions. If you’d like to open a business checking account online with no ChexSystems, the options below are a great place to start.
Open an account today!
NorthOne is a fast-growing company built specifically around business banking solutions for freelancers, entrepreneurs, and small business owners. In addition to dramatically streamlining the application process, NorthOne doesn’t check your credit and doesn’t use ChexSystems. Here’s a recap:
- FREE business Mastercard debit card
- FREE access at over 40,000 ATMs nationwide
- FREE online and mobile app
- FREE live chat (not a chatbot), telephone, or email support
- FREE in-app invoice creator
- NO minimum monthly balance requirement
- NO NSF fees
- NO ACH transfer fees
- NO credit check or ChexSystems
Banking Services
NorthOne doesn’t require a minimum account balance and charges a $10 monthly fee that includes unlimited transactions in your account. These include ACH payments, bill pay, debit card usage, mobile deposits, and transfers. The only other fee is $15 for wire transfers.
You can also grant read-only access to employees or your accountant or bookkeeper. This keeps your account safe while also giving access to those who need it.
Integrations
With NorthOne business banking, you can connect your account to an almost unlimited number of third-party apps. NorthOne integrates with business tools including Paypal, Stripe, Square, Etsy, Shopify, Airbnb, Amazon, Venmo, Toast, Uber, Lyft, Quickbooks, FreshBooks, Wave, Expensify, and many more. Through these integrations, you can sync transaction details, collect payments, see and pay invoices, send payroll, pay contractors, and more.
If creating and sending invoices, quotes, and estimates is critical to your business, NorthOne offers a free stand-alone invoice creator that integrates seamlessly with the banking app. We’ve tried it and think it’s an elegant solution.
Envelopes
NorthOne has created a feature that helps you plan for and manage important expense categories. They call these sub-accounts “Envelopes” and you can set up as many as you want. This allows you to set aside funds you know you’ll need in the future such as taxes or payroll. You can set custom rules for your envelopes and easily move money back and forth as needed.
Application Process
NorthOne targets account approvals within one to two business days. Information required to open an account includes name, address, and social security number or tax identification number. If applicable, NorthOne may ask for a copy of your business license and business formation documents. After you’re approved, you’ll need to make a $50 minimum opening deposit.
NorthOne is one of the most competitive business bank accounts for entrepreneurs and small business owners. Their combination of services and offerings, the fast application process, and customer support create an outsized competitive advantage for both the bank and its customers. Every small business owner understands how critical that is for success.
Lili was custom made for freelancers and independent contractors who are operating as sole proprietors and single member LLCs and we really like their offering. Lili aims to approve most accounts within 2-3 days, but some accounts are approved in 2-3 hours.
Lili offers a checking account and Visa debit card with no initial deposit or minimum balance requirement, no hidden fees, no credit check, and no ChexSystems. Lili makes getting your account easy! Here’s more of what we like:
- FREE business VISA debit card
- FREE (and very user-friendly) mobile app
- NO minimum balance
- NO NSF charges or fees
- NO credit check or ChexSystems
- Receive direct deposit funds 2 days earlier than many banks
- Mobile check deposit
- Unlimited fee-free transactions
- Takes 3 minutes to apply
Integrated Tools
The Lili smartphone app gives you access to tools to manage your expenses and taxes. You assign a category for each expense by swiping left for “life” or personal expenses and right for “work” or business. You can also add receipts to transactions, download quarterly and annual expense reports, and track spending in real-time. Lili will automatically assign an expense category based on the merchant, but allows you to edit the category as needed.
Buckets
Lili has an optional feature called “buckets” that allows you to set aside money in a savings account. The first of these is called a “Tax Bucket”, where you specify a percentage of your direct deposits you want to be saved for future tax payments. You can easily make adjustments and changes along the way and move the money back and forth from your checking account and tax bucket savings account. That way, you know the money will be there when you need to make tax payments.
The second of these buckets is called the Emergency Savings Bucket. You can automatically transfer at least $1 a day to this savings account to use for any larger purchase or unforeseen expense.
Robust for Most
Lili is best for small business owners who want a no-frills, no cost, no minimum balance bank account. You can run all your business and personal expenses through the account and can easily identify and separate them out for accounting and tax purposes. After your account is set up, you can add a business name or DBA name to the account. And you manage everything from the touch of your smartphone.
But there are some limits, too. Lili doesn’t offer checks and you can’t set up your account with an employer identification number. Depositing cash at Green Dot locations can cost up to $4.95 and mobile check deposits are limited to $6,000 per month.
Lili Pro
Lili recently announced a new set of features called Lili Pro. The cost is $9 per month and includes a no-fee overdraft up to $200 on debit card purchases and a robust and unlimited invoicing capability built into the smartphone app. On top of that, users receive 1.50% APY on savings account balances and a more robust expense tracking capability. The Pro version also offers cashback when you make purchases at over 14,000 merchants. If you’re not sure you want to sign up for Lili Pro, get Lili Standard (no cost) and you can upgrade later.
Application Process
You can set up an account online. If you’re a freelancer, you should receive approval and account access almost instantly. All others (Sole Proprietor, Single-Member LLC, Multi-Member LLC, General Partnership, Limited Liability Partnership, or S Corp) can take a couple of days to get approved. You can fund your account using a mobile check deposit, direct deposit, ACH transfer, or by linking your Venmo, PayPal, or Cash App account.
Lili is open for business. Anyone who is their own boss: a sole proprietor, gigsters (ie. Uber and Lyft drivers), contractors, freelancers, or part-time entrepreneurs – you all qualify! Whether you opt for the fee-free Lili Standard account or the upgraded Lili Pro account, we think you’re going to like the way Lili helps you manage your growing business!
One of the most important steps to taking your business to the next level is the need to set up a business bank account. And if you get the right business account, it can give your growing business all the tools much larger businesses enjoy… without all the big business costs.
Novo understands small business owners and makes it easy to open and manage an account. As an online-only bank, you’ll find Novo strikes the right balance between technology, human touch, and real-world benefits. Here are some of our favorite features for Novo Business Checking:
- NO monthly fees
- NO minimum balance requirement
- NO ATM fees
- NO credit check or ChexSystems
- FREE Mastercard debit card
- FREE mobile app
- FREE transfers, mailed checks, and incoming wires
- FREE invoicing to create, send, and track invoices
- FREE mobile check deposit
Business Banking Made Easy
There are no monthly fees, no minimum balance requirements, no incoming wire fees, and no transaction fees with Novo. Novo even refunds all ATM fees. You’ll never be charged for incoming or outgoing ACH transfers, debit card replacements, paper statements, or stop payments.
If you’d like, Novo will send free paper checks for your use. You can also use the app to have checks mailed out. The gotcha with paper checks is that if you don’t have enough money to cover the check, Novo will charge a fee of $27 for insufficient funds. And if you deposit a check from a customer that doesn’t clear, you’ll get whacked for $27.
Novo doesn’t allow you to deposit cash. Instead, you’ll have to use vendors such as USPS, Walmart, and grocery stores to exchange your cash for a money order. Then you can use the mobile check deposit feature to deposit the money order. Novo may not be the right business account for you if your business deals with a lot of cash.
Business Tools
You can manage your account from your computer or the Novo smartphone app. This allows you to avoid the hassle of visiting a physical bank. And the Novo Reserves budgeting tool allows you to set aside funds in your checking account for expenses such as payroll or taxes.
We especially like their fully integrated invoicing feature which allows freelancers and contractors to send and manage unlimited invoices. You can make payments by ACH transfer and if you are using the Novo Stripe integration you can accept payments through your Stripe account.
Novo seamlessly integrates with popular business tools such as Stripe, Shopify, Zapier, Quickbooks, and Xero. You can also connect Square, Wave, PayPal, Venmo, Apple Pay and Google Pay.
Discounts
Novo has a program called Novo Perks that gives you perks on wide range of business software and services such as Stripe, Quickbooks, Gusto, Google, Hubspot, Booking.com, and many more. For example, you can get $20,000 in fee-free credit card processing with Stripe.
Application Process
It takes about 10 minutes to sign up for a Novo account. You’ll need personal and business information, which may include a social security number, business tax ID, and business formation documents. They do not check your credit or use ChexSystems.
Novo is growing quickly. Their offering is popular with small business owners. The account approval process is currently taking 1-2 business days and once you’re approved, you can get full access to your account with a simple $50 deposit.
We like Novo. We think you’ll like it, too.
Documentation You Might Need When Opening a Business Checking Account
In most cases, banks will want to verify both the business itself and the people involved in the business through a few official documents you may be required to provide.
For many banks, a ChexSystems report may be run based on your business structure. If this is the case, it gives the bank an idea of how you’ve managed savings and checking accounts in the past.
As an example, a sole proprietor may need to provide a Social Security number that is used to pull your ChexSystems history. Corporations and limited liability companies (LLCs) will instead provide an employer identification number (EIN) instead of using ChexSystems. Below is a list of what might be required to open an account based on the type of business.
Sole Proprietor
If the name of the business is not the same as the legal first and last name of the owner, additional documentation is required. So if the owner’s name is Jane Doe and the business name is Doe’s Bakery, additional documentation is needed. However, if it’s called Jane Doe Bakery, none will be required.
Some of the extra documentation in this category that may be required include:
- Business License
- Certificate of assumed name
- Fictitious name certificate or “doing business as”
- Registration of trade name
Limited Liability Company (LLC)
One of the following documents will be needed:
- Articles of organization
- Certificate of formation
- Certificate of organization
Corporation
For a corporation, you will need one of the documents below:
- Articles of incorporation
- Certificate of good standing
General Partnership
A general partnership will need to provide one of the following documents:
- Business license
- Certificate of assumed name
- Fictitious name certificate or “doing business as”
- Partnership agreement
Basic Info for All Businesses
Regardless of the business type for a second chance business checking account, there are a few things that will likely need to be shared. These include:
- Date of birth
- Email address
- Mobile phone number
- Personal address
- Social Security number
Ideas to Improve Your ChexSystems Reports
Those with negative marks on their report may wish to open a business checking account online with no ChexSystems. However, in the following years, it can be useful to increase your chances of being accepted at other banks since this may be needed for your business as it grows.
Below are a few tips you can use to improve your ChexSystems report, so you have a better selection of options going forward:
- Request the report – Once each year, you can request a complimentary copy of your ChexSystems report. This is also known as a consumer disclosure report. You can request it from ChexSystems by phone, mail, or fax. Visiting their website will also give you the option to request a report.
- Look for errors – Once you have the report in hand, go through it and check for any mistakes. Make sure to note any information that is outdated, misreported, or otherwise incorrect.
- File a dispute – Assuming there are errors, filing a ChexSystems dispute is the best way to have these things corrected. You can choose to file by mail, fax, or online. You can have ChexSystems carry out the dispute or submit it to the supplier of the data, such as a bank or credit union.
When filing a ChexSystems dispute, make sure all important documentation is included. This might include payment receipts, bank statements, and similar items. Most investigations occur within 30 days and ChexSystems will provide the results through mail.
If it turns out there were mistakes in the report, federal law requires ChexSystems to remove these entries from it.
- Pay off debts – If the report shows that you owe money and it’s a legitimate case, it’s important to take care of those debts when possible. Whether it’s unpaid fees or overdrawn accounts, handle it when you can do so. The sooner you do so, the quicker your report can improve.
- Ask for updated records – Banks and credit unions are obliged to revise your file once a debt has been settled or paid. However, this can take time. Reach out to creditors after you’ve repaid a debt to have the files updated more quickly.
It’s a good idea to keep records of interactions with creditors and debt payments. If you find yourself needing to dispute something on ChexSystems, this will make the process much more efficient. It’s also good practice in case these documents are needed for any other purposes if you run the business.
Takeaway
ChexSystems keeps records for five years except when the person who reports it asks for it to be removed or a dispute shows that it should be taken off. If there are things you can do right now to make changes, the benefits will be immediate. However, if things are present that you cannot change, you may need to give it some time until they drop off the report.
Those who have an improved report can open any business checking account online. However, even those with issues on ChexSystems can opt to open second chance business checking accounts. Remember to check on other important factors like ATM access, transaction limits, fees, and more.