What is a Second Chance Business Checking Account?

Second Chance Business Checking Account
Photo by Ina Centaur via flickr. Used under a CC BY 2.0 license.

What should a business do if it does not qualify to open a checking account? One option: Consider opening a second chance business checking account through non Chexsystems banks.

Banks offering an additional opportunity for checking feature most of the same options as a regular account, but there are differences, such as monthly fees, minimum daily balances, and withdrawl limits.

Despite certain restrictions, banks with second chance checking accounts do provide value: You can deposit customer payments, cut paychecks to your staff, pay bills, and pay taxes by check.

What is a second chance business checking account?

It is for a business that can not qualify for a checking account due to a poor report from ChexSystems Network.

ChexSytems Network is a verification and credit reporting agency for deposit accounts.

A report generated from the network contains information relating to mishandling of checking and/or savings account in the business’s past or in the business owner’s past.

If a consumer has been known to mismanage a checking account or closed an account without paying the overdraft penalties then they might be flagged in the ChexSystems Network.

Blacklisted in ChexSystems

Being blacklisted in ChexSystems is more than likely going to make it more difficult to open a regular business checking account in the future, especially a small business checking account.

Banks call for a report with ChexSystems when businesses request to open a new account.

Banks will run either the business’s Employer Identification Number (EIN) or Taxpayer Identification Number (TIN), which is similar to a social security number for the company.

If neither of those are available then the bank may run the business owner’s social security number.

A negative report from ChexSystems will more than likely prohibit the business from qualifying for a regular checking account.

If that happens then a second chance checking account becomes valuable to the business.

Non Chexsystems checking account

Majority of the second chance banks do not take into consideration a ChexSystems report or if they do then their requirements are lower than majority of banks.

Non Chexsystems checking account for businesses are opened by select banks that work with businesses.

Typically these types of accounts are considered a high risk for the bank. There may be a monthly maintenance fee or a minimum monthly balance requirement.

However, the bank may not have any of these requirements; it depends on the individual bank.

Here are some items to consider when comparing banks that offer second chance business checking accounts:

  • Monthly maintenance fee.
  • Minimum account balance requirement.
  • Number of items allowed to be charged in a month. Banks may have a specific item number that is allowed such as 250 charges and then any charge that is made after the 250th one may have a fee of $0.25 attached to it.
  • One-time account activation fee.

In addition to the items listed above, business account holders will need to know the facts about their account.

For instance, ATM deposits may not be allowed, a checkbook may not be customary, or a pretty tight daily spending limit that cannot be increased.

If a business owner is need of a 2nd chance checking account, he or she should shop around.

Finding banks that offer second chance checking

Business may find it difficult to locate a bank that features a non Chexsystems checking account. They are considered a high risk account so big banks tend to stay clear of them.

It appears that there are many smaller banks that offer second chance checking accounts along with a few credit unions.

There are a few big banks that offer 2nd second chance financing for businesses.

Select banks will allow for businesses to upgrade to a regular business checking account once they have been in good standing for a period of time.

Of course, once a business owner has proven their ability to properly manage their funds then a positive ChexSytems report can be generated.

A favorable consumer report ran by ChexSystem could be used by the business owner to open a regular checking account.

Research, research, research

Some banks may not list on their website that they offer second chance checking accounts.

Business owners and managers may have to speak directly with a representative at the bank to learn more.

Businesses should keep in mind that it is important to look into several different banks to see what their requirements are, their fees, and how their accounts work.

Bankrate.com offers a detailed list of which banks offer these types of checking accounts and information on their fees.

Businesses should ensure that the bank is a good fit for them, what they need from a checking account, and their financial state.

I hope this information about second chance business checking accounts has been helpful.

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