If you’re running a small business, a start-up, or are self-employed, Novo could be an excellent online banking option. It’s specially tailored for business, but is it right for you?
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If you’re running a particularly small business—as a freelancer, a solo practitioner or even an upstart—and you’re looking for a user-friendly bank that specializes in especially small businesses, you might want to look into Novo. It can be difficult for a very small business to deal with a large bank, since large banks tend to prefer large businesses. But if that doesn’t describe your operation, Novo is a fintech company that wants your small business. And best of all, it’s a bank with very few fees to cut into your profits.
- Small businesses and startups
- No minimum balance
- Almost no fees
Novo is a limited service fintech company, designed specifically for small businesses and freelancers. In fact, the Novo’s motto is “customer first banking for the modern entrepreneur.” The company is based in New York City, with a simple product menu that’s user-friendly.
Novo is an independent tech company partnering with Middlesex Federal Savings, a full-service bank based in Massachusetts.
Because of its simple, targeted business model, Novo’s services are very easy to use. They even rely on third-party partners to provide certain business services. The basic concept is to streamline the banking process to make it as comfortable as possible for small, independent businesses.
And because of the simple business model, Novo is extremely light on banking fees. If you’re a freelancer or a small business, the last thing you need is a bunch of fees cutting into your bottom line.
Novo operates primarily as a mobile banking app. It gets 4.5 stars out of 5 in the App Store, but does not have a rating on Google Play.
Related: 6 Best Mobile Banking Apps
Available Accounts at Novo
Novo offers just one type of account: a free business checking account. The account requires only a small minimum balance to open, then no minimum monthly balance requirement and no monthly fees. That also means no hidden fees.
The business checking account can be used to transfer funds, mail checks, and accept incoming wires. And even though Novo doesn’t have its own ATM network, all ATM fees charged by other banks will be refunded.
Some of the features that come with the Novo free business checking account include:
Minimum initial deposit. There is a $50 minimum requirement to open an account, after which there is no minimum account balance required.
Make mobile deposits. You can make deposits into your account by taking a photo of the check and uploading it to your account.
Send and receive international money transfers with TransferWise. Transfer Australian, Japanese, Mexican, Swedish, Swiss, Indian, British, and Canadian currencies, as well as Euros using the TransferWise digital transfer service without having to pay large transaction fees.
Accept foreign checks. If you have international clients who pay you by check, those checks can be deposited using mobile check deposit through your mobile banking app.
Connect your account to digital wallets. You can connect PayPal, Venmo, Google Pay, and Apple Pay to your checking account.
Novo integrates with Xero. Connect your bank account to your Xero account and your transactions will be automatically saved every hour and reconciled to your Xero account. Xero is a global accounting software serving more than 1.8 million subscribers in over 180 countries
Paper checks. Like many online banks, Novo does not offer paper checks. However, they do offer free ACH transfers and you can have physical checks processed and mailed out directly from the app.
Related: The Best Business Checking Accounts
Novo Mastercard Business Debit Card
Your business checking account comes with the Novo Mastercard Business Debit Card. The card can be used anywhere Mastercard is accepted, which is just about everywhere in the world.
You can also use the card at ATM machines. Novo doesn’t charge any ATM fees for use of the card. And even though the Bank does not participate in an ATM network, you’ll have unlimited reimbursement of fees charged by other banks for use of their machines.
The maximum ATM daily withdrawal limit is $1,000.
Learn More: Best Small Business Credit Cards
Novo Deposit Products
The Bank does not offer interest-bearing deposit accounts.
Novo Mobile App
This is the primary operating platform for the bank. The app can be downloaded on Google Play for Android devices 5.0 and up, and in the App Store for iOS devices, 11.0 and later. It’s compatible with iPhone, iPad, and iPod touch.
As a Novo customer, you’ll enjoy discounts and credits offered by third-party providers. The list of providers includes Google Cloud, Zendesk, HubSpot, Stripe, Salesforce, Penji, and Winstar Payments.
For example, you can get the $3,000 in credits toward services purchased through Google Cloud. Those services include data management, application modernization, smart analytics, artificial intelligence, security, and productivity and collaboration.
Novo provides live customer support. They can be contacted directly through the app or by email during regular business hours. When you make contact, you’ll receive a response in under 60 minutes.
All Novo accounts are FDIC insured for up to $250,000 per depositor, through the company’s partner bank, Middlesex Federal Savings.
Novo also employs a dedicated security team and bank-grade encryption to ensure your personal information is protected around-the-clock. Meanwhile, your debit Mastercard is protected by EMV technology, making it impossible for the card to be counterfeited.
Novo Loan Programs
As a financial company, Novo does not offer any loan programs.
Learn More: Best Small Business Loans
One of the most compelling features of Novo is that they have only one fee, and that’s for non-sufficient funds or returned deposited items. And even that fee is below what is typically charged by other banks. Otherwise, there are no monthly service fees, no transaction fees, and no wire fees, whether foreign or domestic.
How to Open an Account with Novo
To open an account, you must be a business owner. You’ll be required to have one of the following types of business organizations:
- Sole Proprietorship
- Limited Liability Company (LLC)
- General Partnership
- Non-profit Organization
You can open an account with Novo entirely online. One of the major advantages of applying through the bank is that your credit history will not be checked in the process. To be eligible, you must either be a U.S. citizen or legally reside within the U.S. and operate a U.S.-based business. However, one exception is that if you have a business partner who lives outside the U.S., they will be considered with a copy of their passport.
Other information required for an application include:
- A valid Social Security number. You can also apply for an account with an employer identification number (EIN).
- U.S. address
- U.S. cell phone number
- Business email address
Business documentation will be required as well, but the specific requirements will depend on your state of residence, as well as the legal entity status. For example, requirements will be different for a sole proprietorship, corporation, partnership, nonprofit organization or LLC. In each case, specific documentation relating to your business type and state regulations will be requested directly by the Bank.
Be aware that Novo will not accept a business checking relationship if your business involves cryptocurrencies, privately owned ATMs, marijuana or cannabis, gambling, crowdfunding, or money services.
If you would like to fund your account using a check, you can either deposit it using the Novo app, or by mailing a paper check to the bank. You can also fund your account through a transfer from an external bank account, Venmo or PayPal, but not with a debit card.
Required business documentation can be uploaded with your application. Novo supports pdf, jpg, jpeg and png file formats.
Learn More: How to Open a Business Bank Account
Why doesn’t Novo accept personal accounts?
Novo has been designed specifically for small business accounts. In order to keep its costs close to nonexistent, they do not offer services commonly provided by traditional banks, such as personal accounts, interest-bearing deposit accounts, or loan products. The streamlining of the bank’s operations enables it to keep fees low.
It seems that Novo is missing a lot of basic banking features. Are there any plans to expand their product offerings?
Novo is a fairly new bank and is currently working to attract small business clients with their very low fee structure and simple account operation. However, they do plan to add services in the future, including loan services and integration with third-party service providers. It’s primarily designed to serve very small and startup business organizations, who can grow along with the bank.
Can I use my Novo MasterCard debit card outside the US?
Yes, the debit card can be used worldwide, in addition to all over the US.
Novo Pros and Cons
No credit check when opening an account — Novo does not check your credit history when you open an account.
Open an account with just $50, then no minimum balance required — The minimum initial deposit is just $50 to open an account, and then there is no ongoing minimum balance requirement.
Only fees are for NSFs and returned deposited items — The bank has only one fee, which is $27 for non-sufficient funds and returned deposited items.
ATM fee reimbursement — Novo does not have an ATM network, but they will reimburse ATM fees charged by other banks for use of their ATM machines.
Discounts and credits for third-party business services — The bank provides valuable discounts and credits for third-party services for small business customers.
Available only to business owners — Novo accounts are available only to business owners.
No paper checks — Novo free checking does not come with paper checks, however, that’s becoming more common with online banks as paper checks seem to be fast becoming history.
No overdraft protection — The bank does not offer overdraft protection.
Does not offer loans or deposit accounts — Novo is not a full-service bank and therefore does not offer interest-bearing deposit accounts or any types of loan products.
No integration with payroll services — The app does not integrate directly with any payroll providers, which won’t matter if you don’t have any employees.
If you need a new bank account for your freelancing business, Lili is a bank designed with you in mind.
Lili is a nearly fee-free bank that focuses on freelancers. There are no monthly fees, account inactivity fees, or overdraft fees to worry about. The bank also offers a few useful features that can help make freelancers’ lives easier.
For example, you can have Lili automatically set aside some of the money you receive from customers. You can use this money to pay your taxes at the end of the year. That saves you from having to save money for taxes on your own.
Lili can also help lower your tax bill by tracking and tagging your business expenses. These records can help you take business expense deductions, which will reduce your taxable income.
NorthOne caters specifically to freelancers and small businesses that need a fast mobile banking option. Accounts take just three minutes to set up and provide users with easy payroll capabilities, mobile check deposits, and faster payments. The accompanying app accommodates one-tap banking, while debit card holders can withdraw cash for free from over 300,000 ATMs across the U.S.
BlueVine is another online bank dedicated to providing banking services for small businesses. But unlike many other dedicated small business banking apps, BlueVine also offers small business loans, as well as invoice factoring and flexible business payments, in addition to the basic checking account. BlueVine's low-cost business checking account comes with no monthly fees, no minimum balances or deposits, unlimited transactions, and no ACH or non-sufficient funds charges. BlueVine is available in all 50 states, comes with a BlueVine Business Debit MasterCard, and offers fee-free access to more than 38,000 in-network ATMs across the country. They also offer invoice capabilities within the banking app, without needing to use the services of a third-party provider. And a feature that’s becoming increasingly rare among online banks – let alone dedicated small business checking accounts – BlueVine does offer paper checks with your account. In fact, the account comes with 200 free checks. And should the need arise, you can deposit cash through the GreenDot network. If you need to begin building your business, BlueVine offers several loan programs, including business financing secured by a general lien on the assets of your business and backed by a personal guarantee. You can receive funding of between $5,000 and $5 million, which will be based on your personal credit history and your business revenue.
Should You Open an Account with Novo?
As you can probably tell from reading this review, Novo is not a fintech company for everyone. First, they don’t allow personal accounts. The program is set up specifically for businesses, and small businesses at that. Second, they don’t offer common banking services, like interest-bearing deposit accounts or loan products, such as auto loans, personal loans, or credit cards.
But if you’re a small, independent business, like a freelancer, sole proprietor or business upstart, Novo’s simplified no-fee business checking account may be exactly the type of banking relationship you’re looking for. It doesn’t come with many of the services offered by commercial banks, but it will provide you with a banking service that will enable you to receive income from your business, as well as make business-related payments. And because they charge no fee—other than for overdrafts or returned deposited items—it’s an account that won’t cut into your business profits.
It must also be remembered that the absence of many of the traditional banking services, including business services offered by commercial banks, will simplify your banking relationship. As a small business owner, you probably don’t need all that complication anyway. Novo can give you a simplified banking relationship at no cost.
And since it’s a new and growing nontraditional banking service, they promise to add additional services and features going forward. It’s the kind of banking organization that will grow with your business.
If you’d like more information, or if you’d like to open an account, check out the Novo website.