Novo Review: Unique Small Business Checking Accounts

What Is Novo?

Novo isn’t a bank. It is a tech company that’s working to bring small business banking into the digital era. Its goal is to create a compelling banking experience by allowing small business owners to quickly open accounts and to use their banking data for bookkeeping and reporting.

Right now, Novo only offers online business checking accounts. Its accounts are offered through the company’s financial partner Middlesex Federal Savings.

What Makes a Checking Account from Novo Special?

For someone with no experience with business checking accounts, a business checking probably seems plain vanilla. However, opening a business banking account can be a frustrating experience. Additionally, business banking accounts often carry hefty monthly fees.

Novo’s business checking account differentiates itself on two points:

• The account is easy to open. You can open your business account as a sole proprietorship if you haven’t filed documentation for an LLC (or another corporate structure) in your state. The documents you need to upload are quickly identified.
• There are no ongoing fees. You won’t pay for debit cards, a monthly fee, a statement fee, or any other ongoing fee. You may have to pay a $27 fee for non-sufficient funds (if you overdraft) or a $27 fee for a returned item. However, these costs are reasonable compared with the high cost of other business checking accounts.

Novo also allows you to export your statements, so you can easily upload a spreadsheet to QuickBooks or other bookkeeping software.

Should I Open My Business Checking Account at Novo?

Opening up a small business checking account at a local bank shouldn’t be expensive or difficult. But for whatever reason, it is.

Few brick-and-mortar institutions offer free business checking accounts. And those that do require you to stand in line, bring a bunch of documentation, and fill out paperwork to officially open the account. For entrepreneurs who only earn a few hundred dollars in profit each month, the normal rigmarole is excessive.

Novo clearly eases the process. Since Novo’s accounts have no monthly fees, the business checking account seems like a good idea, especially for side hustlers and entrepreneurs who don’t have a business checking account yet.

That said, I have one word of caution about opening a Novo checking account. Novo is not an established business. If it folds, or if it gets acquired, you may have some headache figuring out how to use a new banking system. 

It is really annoying to deal with bank closures when you have your account at the institution. Consider that as a possible risk before you move forward with Novo.