Turned down for Business Account ..what do i do?

sitcom321

a little advice needed please if possible, my daughter and her husband got behind with their mortgage about 2 years ago when my daughter went on maternity leave, they were in arrears quite a lot, she is now back at work and they have an agreement with the mortgage company where they pay extra every month to cover the arrears. the arrears now stand at £1800 but are coming down steadily. her husband has decided that he and a friend are going to spread their wings and go into business together he is a plasterer and has been working for the same person since leaving school (he is now 30) he has done his research and has secured 18 months of work everything has been going smoothly until he applied for a business account to be set up, he wasnt asking for an overdraft on it, the bank phoned him yesterday to say they have to decline because of a bad debt and that is all they will say. his partner has just got a mortgage 2 months ago so he thinks it must be the mortgage arrears as he has looked on experian and that is the only thing. if I give them the money for the arrears how long will it be before he can again apply for a business account

Wywth

sitcom321 wrote: »

a little advice needed please if possible, my daughter and her husband got behind with their mortgage about 2 years ago when my daughter went on maternity leave, they were in arrears quite a lot, she is now back at work and they have an agreement with the mortgage company where they pay extra every month to cover the arrears. the arrears now stand at £1800 but are coming down steadily. her husband has decided that he and a friend are going to spread their wings and go into business together he is a plasterer and has been working for the same person since leaving school (he is now 30) he has done his research and has secured 18 months of work everything has been going smoothly until he applied for a business account to be set up, he wasnt asking for an overdraft on it, the bank phoned him yesterday to say they have to decline because of a bad debt and that is all they will say. his partner has just got a mortgage 2 months ago so he thinks it must be the mortgage arrears as he has looked on experian and that is the only thing. if I give them the money for the arrears how long will it be before he can again apply for a business account

On what basis is this business being set up?

If a sole trader (albeit with his mate) then has he tried his own bank? I'm sure they could arrange something for him. Afterall, he currently banks with them and they would be aware that if push comes to shove he will probably end up using his personal account for the business anyway ... and that often results in the personal account being switched to a business account.

If a limited company basis it would be a little different. It may be as simple as not being given access to the account, or it may mean he shouldn't be a director of the company ... but he can still own it (or his share of it)

bengalknights

He could just use his own account if trading as sole trader

Experian_company_representative

If the arrears are cleared then from that point onwards the account will be registered each month as up to date and the previous arrears will start to age. But the arrears history doesn't disappear for at least six years. Lenders will tend to focus their assessment on the most recent credit behaviour, particularly the last 6-12 months. So it may take a few months to see any significant improvement in credit scores I'm afraid.

James

missymish

My partner had to set up a limited company bank account 18 months ago, he hasnt got the greatest credit history. He applied to HSBC as on advice given to him by is accountant but it was rejected. No reasoning behind it.
He then applied to Lloyds TSB business banking and was given the account no problem. Both these applications were made within a week of each other I suppose different banks have different criteria.
Sole Trader account should be easy I got a sole trader account with Natwest which is where I hold my current account they just wouldnt give me a business credit card which in the long run I was glad of!

Mistral001

Just use his personal account if he has not formed a Ltd company. If he does not have many business transactions going in and out of the account, most banks will not insist on him not using the account for his business. Alternatively use his wifes's personal account or their joint account.

Wywth

bengalknights wrote: »

He could just use his own account if trading as sole trader

Mistral001 wrote: »

Just use his personal account if he has not formed a Ltd company. If he does not have many business transactions going in and out of the account, most banks will not insist on him not using the account for his business. Alternatively use his wifes's personal account or their joint account.

Indeed, as I mentioned in my earlier post, this would almost certainly be the last solution for anyone in the OP's situation.

When the bank realise a personal account is being used for business purposes, their usual policy is to change it to a business account anyway
(although, be aware, they could also just close it for breach of terms)

The downside to this, though, is then all transactions on that account will be subject to the usual business charges. If that is the OP's sole (or main) personal account, then all their personal transactions will also attract the business charges.

Mistral001

Wywth wrote: »

Indeed, as I mentioned in my earlier post, this would almost certainly be the last solution for anyone in the OP's situation.

When the bank realise a personal account is being used for business purposes, their usual policy is to change it to a business account anyway
(although, be aware, they could also just close it for breach of terms)
.

Interesting. I have been using my personal account for my business for the last 15 years. My bank knows that I use it for business and I have had dicussions with bank staff and managers about my business affairs and they have never raised the fact that I use my personal account for business as being a problem.

HasBeen_2

I was discharged from bankruptcy over four years ago but hadn't realized I needed to ensure that my credit report showed updated information and began the task of writing to all defaulted accounts with a copy of my discharge certificate asking them to update the accounts to a status of 'settled'. However, these combined details already meant that the NatWest bank had declined me a foundation business account, even after appeal. I was lucky enough to approach a lesser known bank - professionally with my company certificate of incorporation, certificate of discharge, evidence I was making efforts to update my credit report, passport and utility bills, etc - and explain that I merely needed an account to pay into and did not require any finance, credit or loans. My application failed the automatic application but I was able to be interviewed by the manager and was very grateful that common sense prevailed and I was able to open a business account. I did some research online, and for anyone having similar problems I'm including the following companies/banks can be found online, which you may find useful.

caterallen, mycashplus, icicibank, metrobankonline, ubluk, islamic-bank, bathbuildingsociety, nandp, sbiuk, ulsterbank, ybonline, unity, bankofbarodauk, danskebank ... dot com or co dot uk.