How to get business banking for start-ups

A start-up company is exactly what it sounds like – a new business set up from scratch – and that means it faces some unique challenges, such as trying to build a regular customer base, setting up agreements with suppliers, and even just advertising the fact that it exists.

So if you are planning to open a start-up business, what should you keep in mind? Here we take a look at some of the common features of starting a business, from deciding where to trade from, to sorting out banking for start-ups with no trading history.

Create your business

There are endless different types of start-up business. You might choose to work from home as a sole trader, or base your business entirely online on a virtual marketplace.

Of course there are also plenty of start-up companies with physical premises, from retail outlets to offices to workshops, and if your start-up company has a bricks-and-mortar trading address of this kind, you’re likely to have more overheads in terms of business rates, rent, utilities and so on.

In any case, you’ll need to make sure you have all the facilities you need – working from home, that might mean a faster or more reliable internet connection (and a backup plan if your home connection goes down), an all-inclusive telephone plan, and a space where you can work without distractions.

Suppliers for a start-up business

Finding suppliers for a start-up business is a whole other challenge in its own right. You can call on anyone you already know in the industry to try and find out where they get supplies from – or even look out for the branding on any delivery trucks arriving at their premises.

Ultimately though, you’re more likely to be successful in business if you negotiate deals with suppliers who others in the industry may have missed, as this helps you to offer something unique, as well as potentially get better prices as one of fewer customers that supplier has.

Remember if you have several suppliers to choose between, it’s worth looking at their payment terms – some might give you longer to pay invoices when they are owed, or might even give you a discount if you pay promptly or agree to pay by Direct Debit.

Types of start-up business structure

There are a few different ways to structure a start-up company, if you decide to go beyond sole trader status and actually register a company name.

A limited company – called ‘incorporation’ – is the most obvious first option, but it’s not the only possibility. You can also limit your personal liability to pay any business debts in a number of ways:

  • A limited partnership lets several people go into business together with different levels of liability.
  • A limited liability partnership (LLP) removes personal liability for debts the business can’t repay.

You can also set up a start-up business in a few other ways, for example as a franchise, which allows you to trade on another brand’s name, logo and brand reputation, usually in exchange for a franchise fee or a percentage of your profits.

Access to business banking for start-ups

Access to business banking for start-ups is not always easy. The banks may expect you to have a complete written business plan – which is a good idea anyway, but not something that everybody has when first setting up a new business.

They might even want several months or even years of trading history before they will approve access to certain products, or they may want to base approval on your credit rating, all of which can be up in the air at the start of launching a new company.

If you cannot get access to business banking facilities for start-ups, you run the risk of being unable to pay your suppliers via their preferred method – which at best will often cost more or introduce delays, and at worst may mean you lose their supply agreement completely.

Alternatives to business banking for start-ups

Many sole traders choose to use their personal bank account for professional purposes, but as a company it’s unlikely your bank will want you to keep doing so.

The Arro Business Account is a quick and easy way to get a dedicated account for your business – even as a sole trader – with guaranteed approval for all eligible applicants.

Just fill in our quick online signup form and in three minutes, you can have an active business account for client payments and to pay suppliers’ bills, including a Direct Debit facility and a Business MasterCard® linked directly to your account.