How to Switch Business Bank Accounts — and When to Do So

As your company grows and your financial needs evolve, it’s often necessary to switch business bank accounts. If any of the following are happening, it may be time to find a new business checking account:

• You’re getting hit with fees or bumping up against account limits. 

• You need better integrations or additional business features like invoicing or tax-planning tools.

• You can’t get a business loan from your current bank.

• Your business is changing ownership.

Here are the steps for moving business banks, plus details on knowing if it’s time to make a change.

How to change business bank accounts

1. Research your options

Write down what you need from a business banking account — now and in the future — to find a new account that your business can grow into. Then compare business accounts that meet your needs, paying attention to fees, services and accessibility.

If a business loan is on the horizon, ask your potential choices about funding options and whether they have an SBA loan program. Also ask about how the bank’s accounts integrate with accounting or other business software, in addition to whether it offers dedicated account managers for small business accounts.

2. Apply for and open your new business bank account

After you choose a business account, the next step is to apply online, in person or over the phone, depending on the bank. You’ll need to provide personal information, like your Social Security number, and business details and documents. Find a full list of what you need to open a business account.

Once approved, confirm everything is operating correctly before making any changes to your old account. Open your new business account, set up online and mobile banking and test transferring funds.

3. Transfer business to your new account

Several banks offer “switch kits” to help you migrate your business to your new account. These checklists include helpful reminders, like switching recurring payments and notifying your accountant. Pay attention to timing, particularly if you’re switching over payroll, to avoid any delayed payments.

The transactions you’ll need to update typically include the following:

• Payroll and direct deposit for employees.

• Payments to suppliers, software providers, etc.

• Payments to business advisors or consultants; also, these individuals might need to know about the change for their participation in your business operations.

• Automatic invoices or transfers for customers.

Your new bank may be able to provide you with an account transfer letter to inform business partners that you’ve changed accounts and provide them with your new bank account information.

4. Cancel your old business bank account

Once your new business bank account is set up and operating correctly, follow your old bank’s procedure to close your account. Allow time for any outstanding payments to clear before fully shutting things down.

Transfer out any remaining funds and get a clear answer from your bank on how it handles any payments sent to your account after it is closed (in case vendors send payment to your old account by mistake).

How to switch business checking accounts within your current bank

Upgrading to a new account within your existing bank is more straightforward than switching to a new bank. Simply contact your business banker to make the switch. You’ll keep the same account number, so you won’t need to notify all of your business partners of the change.

You can also easily add additional types of accounts with the same bank, such as a high-yield business savings or business money market account.

When to switch business bank accounts

Sticking with a business account that doesn’t suit your company can hurt your bottom line. Excessive fees, restrictive limits and insufficient business products can cut into profits and stall business growth. And all are cues that it’s time to shop around for a business bank account.

You’re exceeding your limits

Exceeding transaction and cash deposit limits is a good sign that your business has outgrown its business checking account. While it’s tempting to simply upgrade to the next account tier your bank offers, this is a good time to explore your options and compare limits, fees and services at other banks.

You’re hit with excessive or surprise fees

While some fees are expected, charges for overdrafts, wire transfers and ATM usage vary from one bank to the next.

Some business accounts charge $35 or more for overdrafts, for example, while others charge $25 or less — and some don’t charge for overdrafts at all. Compare fees at local banks, credit unions and online banks to find a better fit for your business.

You can’t get a business loan

If your primary bank turns you down for a small-business loan, explore other options. Smaller banks, credit unions and community development financial institutions often have more flexible lending standards than large banks.

For example, 82% of applicants at small banks were approved for at least some funding in 2022, compared with 68% of those who sought funding with a large bank, according to the Federal Reserve’s most recent Small Business Credit Survey.

Applicants at small banks were also less likely to report challenges with the application process, funding time, interest rates and repayment terms.

You need additional business products

At some point, your business may need merchant services, payroll support or a business credit card. While your current bank may offer these products, it’s smart to research rates, fees and features at other banks and service providers as well.

You experience bad customer service

No bank is 100% free of issues and errors; the key is how your bank handles them.

Does it take multiple calls, emails or visits to resolve an issue? Do you get conflicting answers to the same question? Do you struggle to even find someone to talk to? These are all red flags.