Opening a Corporate Bank Account: One of the Biggest Barriers for Small Firms

Once upon a time, businesses of every kind could open a corporate bank account without any friction, with the process being as smooth as a hot knife through butter. But that is another story. In reality, what should've been a routine administrative step has become one of the most significant and underestimated barriers to starting and scaling a small business.

Across the world, it has become common for entrepreneurs to navigate extensive documentation requirements, heightened compliance checks, and lengthy processing timelines, turning the process into a complex and time-heavy one. In fact, multiple independent studies show that small businesses can spend weeks and even months going through the onboarding to open a business bank account, often with unclear turnaround times and no guaranteed approval.

It seems, therefore, a curse has fallen upon the land, where the simple act of opening a business bank account can take so long that the seasons change while bold founders go through the entire kingdom to find the cure.

Heavy Documentation, Long Time Spent

As companies try to open a corporate bank account, the obstacles already start arising at the document preparation stage. The latest survey by QuickBooks, cited by Xerosoft, suggests 40% of small businesses report difficulties in gathering the necessary paperwork for banking purposes. Most banks are now demanding that all businesses, including small ones, submit extensive documentation, evidence of the source of funds, and even business model details for securing access to basic banking services.

Although these measures are designed to foster greater trust in the banking system, the time spent gathering the necessary paperwork can be extremely long, delaying account opening for businesses.

Financial thresholds add further complexity, making the process notably harder. Reports indicate 35% of small and medium-sized businesses face difficulties in maintaining minimum balance requirements when opening a bank account. In some jurisdictions, these thresholds may reach substantial sums for certain account types, often going as high as $100,000, putting additional pressure on startups that need all liquidity available to reinvest in growth. In practice, almost every bank has its minimum balance requirements, and failure to meet these may lead to fines and even restrictions on account access.

Even when documentation is prepared and all requirements are met, however, delays can still be a major problem. Approval timelines can take weeks or longer, delaying the market entry and bringing all planned activities to a dead end before they even start.

Regulatory Complexity as Another Barrier

In recent years, anti-money laundering (AML) and know your customer (KYC) requirements have grown substantially across every major economy. While protecting the integrity of the global financial system, their implementation has introduced significant friction to opening a business bank account. Namely, enhanced due diligence and background checks became the new norm for financial institutions and banks, resulting in notably slower customer onboarding for 'new' businesses.

Based on the Reuters findings, 89% of financial institutions themselves believe the KYC verification process is a major setback in the processing of new customers. Banks are struggling to process account applications efficiently as the process becomes more and more intricate under the growing influence of local regulators.

On the other hand, businesses are those who suffer the most, having to tackle banks' extra clarification requests, extended compliance reviews, and, in the worst cases, sudden account closures. Emerging sectors remain the most vulnerable; being relatively new and less understood, these business models are typically labelled as 'high-risk', with compliant firms in the cryptocurrency and fintech industries being unfairly 'debanked' across most jurisdictions.

What makes the situation even worse is deciding to operate beyond a single country. Different risk assessment approaches, conflicting rule interpretations, and varying reporting standards all create overlapping requirements, raising costs and limiting banking options in selected jurisdictions.

Solving the Banking Access Problem

For a growing number of small firms, opening a corporate bank account is no longer a simple step but a breakthrough moment that many pray for but few ever see. What was once a formality has now transformed into a demanding process, often too complex to navigate alone. Yet, even as it might feel like defending a besieged castle against a massive army, opening a corporate bank account is far from impossible.

In times like these, seasoned consultants like Inteliumlaw can truly become a game-changer, bridging the gap between small businesses and banks through proven experience opening corporate accounts for firms in diverse sectors. Bringing their know-how, such advisors help small companies prepare robust documentation, select the best bank, and comply with AML/KYC standards through the onboarding process.

Importantly, many consultants can bring a vast network of banking and EMI/PSP partners, helping to open a corporate bank account for traditional businesses and a merchant account for those operating in the 'high-risk' sectors. For startups, the input of such advisors can be truly foundational.

What should be a routine step, opening a business bank account, has evolved into a major barrier for many small firms and is hard to ignore. With the right guidance and banking partners, however, businesses can transform what appears to be a systemic barrier into a manageable process, establishing the necessary financial base for sustainable growth.