Bank Closed My Business Account

Why did the bank close my business account?Having your business bank account closed by your bank can be a serious and potentially devastating matter.

When a bank closes a business account, it can cause major disruptions to your day-to-day operations, especially if your business relies heavily on cash flow or recurring transactions.

This can result in missed payments, bounced cheques, direct debits and other financial difficulties that can affect your ability to operate and grow your business.

Moreover, having your business account closed by your bank can also have long-lasting negative effects on your credit rating and reputation in the business community.

In some cases, a closed account can lead to legal action, with businesses potentially facing lawsuits, fines, and even criminal charges for non-payment of debts or other financial obligations.

Overall, having your business account closed can be a serious matter that requires immediate attention and action to mitigate the risks and prevent further damage to your business.

Why did the bank close my business account?

There could be several reasons why a bank may choose to close your business account. One of the most common reasons is a violation of the bank’s policies or terms of service. This may include failure to maintain a minimum balance, excessive overdrafts, or suspicious activity such as money laundering or fraud. In some cases, a bank may also close a business account if they suspect the account is being used for illegal activities or if the business is involved in a high-risk industry such as gambling or adult entertainment.

Another reason why a bank may close your business account is due to a change in their risk management policies. Banks have a responsibility to manage their risks and protect their reputation, and may periodically review their customer base to identify any potential risks.

If a bank deems your business to be high-risk or if they are unable to verify your identity or business information, they may choose to close your account as a precautionary measure to protect themselves and their other customers.

Reasons why banks close business accounts

Banks may close business accounts for a variety of reasons, and it is important for business owners to understand these reasons in order to avoid potential disruptions to their operations.

Here are reasons why a bank may close a business account:

  • Insufficient funds or excessive overdrafts
  • Suspicious activity or suspected fraud
  • Use of the account for illegal activities
  • Inaccurate or incomplete information provided during account opening
  • Failure to maintain a minimum balance or meet other account requirements
  • Excessive chargebacks or disputes
  • Multiple returned deposits or bounced checks
  • High-risk business activities or industries
  • Negative credit history or poor financial standing
  • Failure to provide required documentation or information
  • Use of the account for personal transactions
  • Failure to comply with banking regulations or laws
  • Inactive or dormant accounts
  • Change in bank policies or practices
  • Breach of contract or agreement
  • Unresolved issues with the account
  • Adverse legal action against the business
  • Bankruptcy or insolvency of the business
  • Change in ownership or structure of the business
  • Relationship issues between the bank and the business owner.

Overall, banks have a responsibility to manage their risks and protect their reputation, and may close business accounts if they perceive a potential threat to their operations or customers.

To avoid the risk of having your business account closed, it is essential to maintain good communication with your bank, comply with their policies and regulations, and address any outstanding issues in a timely manner.

Bank closed my business account – what to do next?

If your bank has closed your business account and issued a demand letter, it is important to take immediate action to address the issue. This may involve contacting the bank to find out the reason for the closure and working with them to resolve any outstanding issues or finding a new banking partner to ensure uninterrupted operations for your business.

Step1: Don’t argue with the bank – just collect your funds

If your bank has closed your business account, it can be a frustrating and stressful experience. However, it is important to remain calm and avoid arguing with the bank. Instead, focus on collecting your funds and finding a new banking partner for your business. Arguing or being confrontational with the bank can only worsen the situation and make it more difficult to resolve.

The UK Banking Code of Conduct sets out clear guidelines for banks and their customers to ensure fair and transparent banking practices. Under the code, banks are required to treat their customers fairly and communicate with them in a clear and understandable manner. Customers, on the other hand, are expected to provide accurate and complete information, comply with the bank’s policies and regulations, and address any concerns or issues in a timely manner.

By adhering to the code, both banks and their customers can maintain a positive and constructive relationship, even in challenging situations such as a business account closure.

Step 2: Update incoming payments and any outgoing direct debits

If your business bank account has been closed, it is important to update any incoming payments and outgoing direct debits to ensure that there are no disruptions to your operations. This can include notifying your customers, suppliers, and other stakeholders of your new banking information, as well as updating any online payment systems or invoicing platforms.

In addition, you should review any outstanding payments or obligations to ensure that they are properly accounted for and paid on time. By taking these steps, you can avoid potential fees, penalties, or disruptions to your business and maintain a positive relationship with your customers and suppliers.

Step 3: Assess the impact on your business

Assessing the impact of a bank closure on your business is a critical step in determining your next steps. Depending on the nature of your business and the reasons for the bank closure, the impact could range from minor inconvenience to serious financial hardship or even insolvency. If your business relied heavily on the closed account for payments, deposits, or other essential financial services, you may need to act quickly to mitigate the impact and find alternative solutions.

This may include finding a new bank account, negotiating with creditors or suppliers, or seeking professional financial advice. By taking a proactive approach and assessing the impact of the bank closure on your business, you can make informed decisions that support your long-term financial stability and success.

Step 4: Open a new bank account

Opening a new bank account can be a straightforward process, but it is important to take the time to research your options and choose a bank that meets your business needs. Start by reviewing the different types of accounts available, such as current accounts, savings accounts, and merchant accounts, and consider the fees, interest rates, and other features that each account offers. You may also want to consider factors such as the bank’s reputation, customer service, and online banking capabilities.

Once you have selected a bank, you will typically need to provide some basic information and documentation to open a new account. This may include your business registration documents, identification documents for authorized signatories, and proof of address. Some banks may also require a minimum deposit or minimum balance to open an account.

It is important to review the bank’s account opening requirements and ensure that you have all the necessary documentation and information before starting the process. By taking these steps, you can open a new bank account with confidence and ensure that your business has the banking services it needs to succeed.

How to prevent this from happening again

If your business account has been closed by a bank, it is important to take steps to prevent a similar situation from occurring again in the future. One of the most effective ways to do this is by following good banking practices and maintaining a positive relationship with your bank. This can include staying on top of your account activity, providing accurate and complete information to the bank, and addressing any issues or concerns in a timely manner.

Here are some tips for preventing a bank from closing your business account again:

  • Keep your account in good standing by making timely payments and maintaining a positive balance.
  • Stay in communication with your bank and keep them informed of any changes or issues related to your business.
  • Provide accurate and complete information when opening an account or applying for loans or other banking services.
  • Review your account activity regularly and report any errors or unauthorized transactions to the bank immediately.
  • Keep your contact information up to date and respond promptly to any requests from the bank.
  • Familiarize yourself with the bank’s policies and procedures and follow them consistently.
  • Maintain a positive and professional relationship with your bank and avoid confrontational or hostile behavior.
  • Consider working with a financial advisor or accountant to ensure that your business finances are in order and compliant with regulations.
  • Invest in security measures, such as encryption and firewalls, to protect your online banking activities.
  • Use caution when sharing sensitive information, such as passwords and account numbers, and avoid using public or unsecured networks.
  • Consider diversifying your banking relationships by working with multiple banks or financial institutions.
  • Keep your business records organized and up to date to facilitate banking transactions and audits.
  • Regularly review and update your business plan to ensure that it accurately reflects your financial needs and goals.
  • Plan ahead for any major changes or events that could impact your business finances, such as expansion or a change in ownership.
  • Consider working with a business coach or mentor to develop financial management skills and strategies.

By following these best practices and taking a proactive approach to banking, you can minimise the risk of a bank closure and ensure that your business has the financial support it needs to succeed.

Questions to ask before apply for to open a business bank account

Before applying to open a business bank account, it is important to ask some key questions to ensure that you choose the right bank and account for your business needs. By asking the right questions, you can avoid potential issues or surprises down the line and make an informed decision that supports your business goals.

Here are some questions to ask before applying for a business bank account:

  1. What types of business accounts are available, and what are the fees and features of each?
  2. What are the minimum deposit and balance requirements for each type of account?
  3. What documents and information are required to open an account, and what is the process for doing so?
  4. What are the interest rates and terms for loans and credit facilities, and what are the eligibility requirements?
  5. What is the bank’s reputation for customer service, online banking capabilities, and security measures?

By asking these and other relevant questions, you can compare different bank account options and choose the one that best meets your business needs and preferences. Don’t be afraid to ask for clarification or additional information as needed to ensure that you have a clear understanding of the account terms and conditions before opening an account.

Frequently asked questions

What to do when the bank closes your business account?

If the bank closes your business account the closure of your bank account probably means that you also have to repay any loans from the bank, which may mean you need to re-finance the company. Review your business plan so that it's ready for any investors or loan companies.

Should I be worried if the bank closed my account?

Yes, you should be worried if the bank closed my account, an important factor to consider when your bank account is closed is that unpaid bank balances could be forwarded to a collection agency. Collection accounts reported to the credit bureaus can appear on your credit reports and affect your credit scores for up to seven years.

Can a bank just close your business account?

Yes, a bank can just close your business account. A bank might decide to stop services in a certain geographic location; there might be a group policy decision to stop servicing a given sector or market, there might be some form of issue with the performance of the account or there could have been an external action that has meant an account needs to be frozen.


In conclusion, having your business bank account closed can be a serious and stressful situation, but there are steps you can take to mitigate the impact and protect your business. By contacting the bank, reviewing your account activity, updating payments and direct debits, assessing the impact on your business, opening a new account, and following good banking practices, you can regain control of your finances and prevent a similar situation from occurring in the future.

The implications of a bank closure on a business can vary depending on the severity and duration of the closure. It can result in a loss of funds, difficulty paying bills or suppliers, and even insolvency if left unaddressed. It can also damage the business’s reputation and credibility, particularly if customers are affected by the closure. Therefore, it’s crucial for business owners to take immediate action and address the situation to minimise the impact and ensure the long-term financial stability and success of the business.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.