You do not legally need a business checking account to receive a PPP loan, but lenders almost always require one before they will fund you

The Paycheck Protection Program did not mandate that you have a business bank account. The Small Business Administration's rules did not require it. But in practice, nearly every lender — banks, credit unions, online lenders — will not process your PPP application without one. Some will open an account for you as part of the loan process. Others will refuse to work with you if you do not already have one. The difference depends on the lender and the timing of your application.

If you applied during the first round of PPP funding (April to August 2020), many lenders were more flexible because the money was moving fast and rules were still being written. By the second round (January to May 2021), most lenders had tightened their requirements. Now, if you are applying through a bank or credit union, assume you need a business account before you start.

Key Takeaways

  • Most lenders require a business checking account to fund a PPP loan, even though the SBA does not legally mandate one.
  • Some banks will open a business account for you during the PPP application process, while others require one to exist before you apply.
  • Online lenders and alternative funding sources are more likely to fund PPP loans without a pre-existing business account than traditional banks.
  • If you were denied PPP because you lacked a business account, you may still be able to reapply through a different lender or during a future funding round.
  • A business account typically costs between $0 and $30 per month, depending on the bank and account type.

Why lenders require a business account even though the SBA does not

The SBA's PPP rules said the money had to go into an account in the business's name. That account could theoretically be a personal account under a business name, a sole proprietor's personal account, or a business checking account. But banks have their own risk management rules that go beyond what the SBA requires.

A business checking account gives the lender proof that your business is real and separate from your personal finances. It shows a history of business deposits and expenses. It lets the lender verify that the funds are being used for payroll and allowed expenses. A personal account, even one labeled with your business name, does not provide that visibility. Banks also use business accounts to monitor the loan after it funds — they can see whether you are spending the money on payroll, which is part of the forgiveness process.

During the first PPP round, some lenders were willing to skip this step because the program was new and money was scarce. By the second round, most had made business accounts a hard requirement. If you are applying now through a bank or credit union, you should expect to need one.

Which lenders will open an account for you during the PPP process

Some banks will open a business checking account as part of your PPP application, especially if you are already a customer or if you have a strong credit history. Chase, Bank of America, and Wells Fargo all did this during the PPP rounds, though their willingness varied by branch and by timing. Credit unions often took the same approach. The account usually opens within a few days, and the PPP funds are deposited once the SBA approves the loan.

If a bank offers to open an account for you, read the terms before you agree. Some accounts have monthly fees ($10 to $30), minimum balance requirements, or transaction limits. Others waive fees for the first year or if you maintain a certain balance. Ask whether the account will stay free after the PPP loan is forgiven, or whether you will need to meet ongoing requirements to avoid fees.

Online lenders and fintech companies that handled PPP loans were often more flexible about this requirement than brick-and-mortar banks. If your bank refuses to open an account or requires one before you apply, calling a few online lenders or credit unions may give you another path forward.

How to open a business checking account if you need one before applying

If your lender requires a business account to exist before you submit your PPP application, you can open one in one to three business days at most banks. You will need your Social Security number or EIN, a government-issued ID, and proof of your business address (a utility bill, lease, or business license). Some banks also ask for your business formation documents — articles of incorporation for an LLC or corporation, or a DBA filing for a sole proprietorship.

Online banks like Novo, Mercury, and Brex can open accounts in hours, sometimes the same day. Traditional banks like Chase and Bank of America usually take one to three business days. Credit unions vary, but many can open an account in a single visit if you bring the right documents.

Once the account is open, you do not need to deposit anything or keep a minimum balance to use it for your PPP loan. The PPP funds will be the first deposit. However, read the account agreement to see whether there are monthly fees or minimum balance requirements after the loan arrives. Some banks waive fees during the loan period but charge them afterward.

What to do if you were denied PPP because you lacked a business account

If a lender turned you down because you did not have a business checking account, you have options. First, open a business account at any bank or credit union — this takes one to three days. Then contact the lender that denied you and ask whether you can reapply now that you have one. Some lenders will reprocess your application at no cost.

If the original lender will not reconsider, apply through a different lender. Each lender had its own underwriting standards, and some were more flexible than others. A bank that rejected you might have been stricter than a credit union or online lender. You can submit a new application to a different lender, and they will run their own review.

PPP funding rounds have closed and reopened multiple times. If you were denied in 2020 or 2021, check whether new funding has become available. The SBA has announced future rounds of funding in the past, and it may do so again. When new money opens, you can apply with your new business account in place.

Business account costs and what to watch for

Most business checking accounts cost between $0 and $30 per month, depending on the bank and the account type. Some banks waive monthly fees if you maintain a minimum balance (often $500 to $2,500) or if you set up direct deposit. Others charge a flat fee regardless of balance.

Online banks tend to have lower fees than traditional banks. Novo, Mercury, and Brex offer free business checking with no minimum balance. Chase and Bank of America typically charge $10 to $15 per month unless you meet balance or deposit requirements. Credit unions often have the lowest fees, sometimes free for the first year.

When you open an account, ask the bank three things: whether fees are waived during the PPP loan period, what the monthly fee is after the loan is forgiven, and whether you can close the account without penalty once you no longer need it. Some banks make it easy to close an account; others charge a closure fee or require you to maintain the account for a minimum time.

Sole proprietors and the business account question

Sole proprietors sometimes face pushback on the business account requirement because they can legally operate under their personal Social Security number without forming an LLC or corporation. Some lenders treated sole proprietors more leniently during the PPP rounds, allowing them to deposit funds into a personal account. Others required a business account regardless of business structure.

If you are a sole proprietor and a lender requires a business account, you have two paths. You can open a business checking account in your name and your business name — this takes one to three days and costs $0 to $30 per month. Or you can apply through a different lender that may be more flexible with sole proprietors. Online lenders and credit unions were often more willing to work with sole proprietors who used personal accounts, though this became less common as the program went on.

Frequently Asked Questions

Can I use a personal account for PPP if I put my business name on it?

Most lenders will not accept this. Even if the account is labeled with your business name, banks want to see a formal business checking account to verify that your business is real and separate from your personal finances. A personal account under a business name does not provide the same visibility into your business spending that a business account does.

What if my bank refuses to open a business account for me?

Banks can refuse to open accounts based on their own policies, credit history, or business type. If your bank refuses, try a credit union or online bank — they often have more flexible requirements. You can also ask the bank why they refused and whether there is anything you can do to change their decision, such as providing additional documentation or maintaining a minimum balance.

Do I have to keep the business account open after the PPP loan is forgiven?

No. Once the loan is forgiven, you can close the account. However, check the account agreement for closure fees or minimum holding periods. Some banks charge $25 to $50 to close an account within the first year. Others allow free closure at any time. Ask about this before you open the account so you know what to expect.

Can I apply for PPP through multiple lenders at the same time?

The SBA rules said you could only receive one PPP loan. If you applied through multiple lenders and received more than one loan, you were required to return the extra funds. However, applying through multiple lenders to see which one would fund you was common practice. Once one lender approved and funded your loan, you should have notified the others to withdraw your applications.

What if I need a business account but do not have an EIN?

You can open a business checking account using your Social Security number if you are a sole proprietor or if your business has not yet received an EIN. Most banks will accept an SSN in place of an EIN for sole proprietorships. If you have formed an LLC or corporation, you should obtain an EIN from the IRS before opening the account, though some banks will open the account and let you add the EIN later.