
Opening a bank account for a Community Interest Company (CIC) can often feel like navigating a minefield. Many founders find this stage of their CIC journey particularly challenging due to various factors, including differing bank policies and issues surrounding personal credit. This blog post will provide a detailed guide on how to successfully open a bank account for your CIC, discuss various banking options, and share personal experiences to help streamline the process.
Understanding the Basics of a Community Interest Company
Every CIC is required to have a business bank account. It’s essential to understand that you cannot use a personal bank account for your CIC’s financial transactions. Business bank accounts are specifically tailored for commercial activities, and there are options designed for charities, CICs, and community groups.
When selecting a bank account, consider the costs associated with it. Some accounts charge fees, while others offer free services for an initial period. For new CICs, it’s advisable to look for accounts that minimize overhead costs, particularly during your startup phase.
Factors Affecting Your Ability to Open a Bank Account
Several factors may impact your ability to open a bank account for your CIC:
- Credit Issues: If you or any directors associated with the CIC have a County Court Judgment (CCJ) against them, this can significantly hinder your ability to open an account. Many banks will deny applications if there are credit issues.
- Bank Policies: Different banks have varying policies regarding the types of accounts they offer to CICs. Some may not cater to CICs at all.
For those with credit issues, options may be limited, but there are still solutions available.
Recommended Banks for Opening a CIC Account
Let’s explore some of the best banking options for CICs, along with their pros and cons:
1. Cash Plus (Now Zemper Bank)
Cash Plus, now known as Zemper Bank, is one of the few options available for those with CCJs.
- Pros: Accepts accounts for individuals with credit issues.
- Cons: Does not allow for a second signature on the account, which is often a requirement for grant funding applications. This limitation can be a significant drawback.
2. Metro Bank
Metro Bank is an excellent option for CICs looking for a straightforward banking experience.
- Pros: You can visit a branch and open an account in about two hours. The staff are helpful in guiding you through the process.
- Cons: Limited branch locations; may not be available in all areas.
3. Cooperative Bank
The Cooperative Bank offers a dedicated Community Direct Plus account for CICs.
- Pros: Free account with good customer service.
- Cons: Lengthy opening process and restrictions for applicants with credit issues. It can take a month or more to finalize the account.
4. NatWest
NatWest provides a community account suitable for CICs.
- Pros: Good account quality and service; accepts some credit issues.
- Cons: The application process can be very slow, often taking over a month.
5. Lloyds Treasurer's Account
Lloyds offers a Treasurer’s account that can be beneficial for CICs.
- Pros: Good quality account with the ability for multiple signatures.
- Cons: Can be fussy regarding credit and may also take a long time to open
6. Virgin Money
Virgin Money has emerged as one of the best options for opening a CIC account.
- Pros: Quick online setup, typically within a couple of days, and free for the first 24 months.
- Cons: Ensure you do not apply for their M account, as it does not accept CICs.
About Impact Hive
Fuelling innovative thinkers and removing barriers to drive impactful change
To drive innovative thinkers to the forefront of their industries, disrupting norms to usher in impactful change across multiple sectors, providing them with the tools, opportunities, and information needed for a brighter, innovative future.
Step-by-Step Guide to Opening a Virgin Money Account
Now, let’s walk through the process of setting up a Virgin Money business account for your CIC.
- Visit the Virgin Money website and select the business current account option (not the M account).
- Fill in the required information, including details about your CIC. You will need to have waited at least two days after registering your company with Companies House for it to be recognized in the application system.
- Provide information about your business, including its purpose, estimated annual turnover, and whether you need a license to operate.
- Indicate your expected payment types and the frequency of transactions.
- Submit your application and wait for a confirmation email, which will include a DocuSign document for you to sign electronically.
Get your marketing campaign funded.
marketing aceletrator programme
Apply to our marketing accelerator programme to access funding and a network of specialists.
Get Your Website Designed & Funded.
Website
Funding Programme
Apply to our website funding programme to get your business up and running - skipping financial barriers.
Understanding the Application Process
During the application process, you will be required to select the type of entity your CIC falls under. For a CIC, ensure you choose the option that states it is a non-registered not-for-profit organization. This category highlights that there are no shareholders and emphasizes your commitment to community benefit.
Once you complete the process, you will receive a confirmation, and it usually takes a few days for the application to be fully processed.
Final Thoughts
Opening a bank account for your CIC might seem daunting, but with the right information and preparation, you can navigate this process smoothly. It’s crucial to choose a bank that aligns with your CIC’s needs, particularly regarding fees and the ability to accommodate credit issues.
Remember to gather all necessary documentation and be ready to provide detailed information about your CIC during the application process. With the right approach, you’ll be well on your way to establishing a solid financial foundation for your community interest company.
For further assistance, consider joining community support groups or accessing resources tailored to CICs.
Get the impact hive newsletter
Get the most important business news in your inbox each week.
Step 1: Define Your Mission and Objectives
Before you begin the formal process, it’s essential to define your CIC’s mission. Consider the community issues you are passionate about and how your skills can contribute to addressing them. Clear objectives will guide your activities and help attract funding.
Step 2: Choose a Name and Structure
Your CIC needs a unique name that reflects its mission. Ensure that it complies with the regulations set by the Companies House. Additionally, decide on the structure of your CIC, whether it will be limited by shares or limited by guarantee.