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Why Choosing the Right Business Bank is Crucial
UK business banking for foreigners can be complicated. Banks in the UK offer different services, fees, and products, making some more suitable for entrepreneurs in the UK than others. Some of the factors to consider when choosing a business bank as an international entrepreneur in the UK include:
- The credit rating of the bank
- The reputation of the bank
- Whether they offer online, mobile and/or face-to-face banking
- The level of service offered and the hours of availability
- Your type of business, and
- The range of services and products offered – e.g. loans, overdrafts, mortgages, foreign currency, international banking
Can Foreign Entrepreneurs Open a Business Bank Account in the UK?
As a foreign national, it may be possible to open a bank account in the UK, but the process depends on whether they are resident in the UK or in another country (i.e. business bank account UK for non-residents). For non-UK residents, some banks such as Barclays and Lloyds Bank International Banking have a presence in other countries, allowing clients to open an international bank account. Other banks, such as HSBC, also offer multi-currency accounts in pounds, US dollars and Euros. If you are moving to the UK, it is easier to open a bank account, assuming that you have a UK address.
For foreign nationals who live outside the UK and want to open a bank account here, there are alternatives, including Wise, Revolut, and Payoneer (see below for more details).
Top UK Banks for Foreign Business Owners
Best banks for international entrepreneurs UK
The UK has over 300 banks, of which over 115 are headquartered here. As such, there are many options to choose from catering for a wide range of business needs. Some of the top banks in the UK used by foreign business owners include:
- HSBC
- Barclays
- Lloyds
- Starling
- Monzo
- NatWest, and
- Metro Bank.
Not all of these banks are traditional ‘bricks and mortar’ establishments (i.e. they don’t have physical banks that you can walk into), including Starling Bank and Monzo. These are digital-only banks that provide online offerings.
You can easily compare business bank accounts using online comparison websites such as Money Supermarket.
Online Banks vs. Traditional Banks for Startups
More and more digital-only online banks are opening up in the UK, including Starling Bank and Monzo. These are different from more traditional high-street banks such as Barclays and Lloyds, which have physical branches. However, many more traditional banks are closing branches each year, meaning that you may struggle to find a branch in your local area.
If you prefer to visit a bank to discuss your business banking needs, we recommend opening an account with one of the established banks with a physical presence on the high street, such as Natwest, TSB, and Lloyds. If, on the other hand, you do everything online, including your banking, an online bank will meet your needs.
When it comes to UK banks for startups, new businesses often need more support and guidance regarding their banking arrangements hence having the option to meet with a representative of the bank face-to-face may be advantageous.
No matter which option you choose, online and traditional UK banks are both heavily regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Documents Required to Open a Business Account in the UK
To open a business bank account in the UK, you will need to provide a number of documents, including:
- Proof of identity (e.g. passport)
- Proof of UK address (e.g. rental agreement or utility bill)
- Proof of business name (e.g. business utility bill or invoice from a supplier)
For limited companies, proof of identity and an address must be provided for:
- All account signatories
- Anyone who directly or indirectly controls 25% or more of the capital or profits of the business
- Anyone who directly or indirectly controls 25% or more of the voting rights
- At least 2 company directors if more than one has been appointed (at least half of the directors of the company must be resident in the UK).
Fees & Charges Comparison of UK Business Accounts
Another consideration is banking fees. Online banks have fewer overheads and hence offer low-fee business accounts in the UK compared to traditional banks. It is important to understand the fees and charges that you are likely to pay, which may include:
- Monthly or annual account fees
- Overdraft fees (payable if your account goes overdrawn)
- International transfer fees
- Online payment fees
- Credit card fees
- Currency conversion fees
Best Banks for Business Loans & Credit Facilities
The best banks for your business loan and credit requirements will depend on your unique circumstances, including how much you need to borrow, your credit rating, how long your business has been established, whether the loan will be secured or unsecured, and how long you intend to repay the loan. Some of the most popular and well-known banking institutions in the UK include:
- Barclays
- HSBC
- Lloyds, and
- NatWest
If you are unsure which bank to approach for a business loan, we recommend using a comparison website such as Money Supermarket. You will be asked a series of questions to understand your borrowing needs, including how much you need to borrow, how soon you need the funds, and the purpose of the loan. Based on the information provided, the comparison site will list the best bank loans for your requirements, including the best online business banks UK.
International Transactions & Currency Exchange Benefits
Dealing with international transactions and transferring business funds around the world can be expensive and time-consuming. Some banks such as Barclays, HSBC, and Lloyds offer international banking accounts, which remove the need for currency conversion and make the process of transferring money quick and easy. Alternatively, banks such as Revolut offer corporate bank accounts that support over 25 currencies, allowing you to lock in a future exchange rate to guard against market volatility. In addition, they allow currency transfers at a more favourable interbank rate, reducing the cost of each international transfer.
If you plan to send money to or receive money from another country, it is advisable to review the international transaction services offered at each bank so you can choose the one that is most favourable for your needs.
Alternatives to UK Banks: Wise, Revolut & Payoneer
There is a new generation of electronic money service providers (also referred to as Electronic Money Institutions (EMIs)) that offer a viable alternative to banks in the UK. These include:
- Wise
- Revolut
- Payoneer
- PayPal, and
- Airwallex
EMIs are rather like online electronic wallets as opposed to full banks; however, some offer services such as physical or virtual debit cards. EMIs typically offer online account management, easy money transfers, and multi-currency accounts.
If you are struggling to open a bank account in the UK as a foreign entrepreneur, an electronic money service provider may provide the perfect alternative for your needs.
How to Choose the Right Bank for Your Business Needs
Before opening a bank account in the UK as a foreign entrepreneur, we recommend taking time to consider your needs and the range of banking services on offer to you. You don’t necessarily need to use a traditional bank due to the increasing range of money service providers that are now established in the UK. Generally speaking, if you want to be able to talk to someone at your bank face to face and you need a full range of products and services such as loans and credit facilities, use a traditional UK bank. If you have minimal banking needs, consider an EMI. And if you need to transfer money to other countries, an international bank account may better meet your needs. For guidance on the right bank for your business needs, we recommend speaking to your accountant in the UK, who will be able to advise you based on your needs and circumstances. In addition, if your long-term objective is to move to the UK and run your company directly, combining your banking setup with Self-Sponsorship UK may be the most efficient pathway. Be sure to factor in the self-sponsorship visa UK cost when preparing your business and financial plans.
Self-sponsorship Route UK
As a foreign entrepreneur considering opening a business in the UK, you may need to apply for a suitable visa. The two main options are the Innovator Founder Visa and the self-sponsorship route. We recommend speaking to an immigration solicitor who can ensure that you have the correct type of visa from the outset. The self-sponsorship route UK enables foreign entrepreneurs to establish a company here, which they can then use to sponsor themselves. This removes the reliance on another business to sponsor you; rather, you sponsor yourself, putting you in control.
