Business Banking, FICA and Finance for Contractors

A Pty Ltd must have its own bank account, and a sole proprietor should open one anyway: it is the difference between books SARS accepts and a shoebox of mixed slips. Opening the account means passing the bank's FICA checks, which takes one prepared visit, and several SA banks now offer zero-rand monthly fees for small business accounts. Here is what the bank wants, why the separation matters, and how contractors actually finance work.‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍

The FICA paperwork

Under the Financial Intelligence Centre Act (FICA), banks run know-your-customer checks on every business account application. Bring:

CIPC registration certificate (CoR14.3) for a company, or proof of your trading name for a sole prop (see Registering Your Business with CIPC).
Valid SA ID or passport for each director, owner and signatory.
Proof of business address (utility bill or lease, not older than 3 months).
Proof of residential address for each director.
The company's tax reference number from SARS.
The Memorandum of Incorporation (MOI).
For companies: share certificates and a beneficial ownership declaration.
Recent bank statements or financials if the business is not a start-up.

Why you separate business and personal money

Mixing the two creates real damage, not just untidiness. SARS cannot verify your business expenses, so you lose legitimate deductions. In a CIDB or tender audit, unexplained personal transactions cast doubt on your financials. In a dispute with a client or creditor, commingled accounts make it nearly impossible to show the company's true position. And your COIDA Return of Earnings and UIF declarations become guesswork instead of a bank-statement read-off.

Low-fee accounts worth comparing

As at a 2024 survey, several banks offered R0 monthly-fee business accounts (Absa Business Evolve Lite, FNB First Business Zero, Bank Zero, TymeBank and Lula), with Standard Bank's MyMoBiz at R7, Capitec's business account at R50 and Nedbank's Startup Bundle at R70 with the first 6 months free. Banks reprice every year, so treat that as a shortlist to check current pricing on, not a promise. Transaction fees and cash-deposit fees often matter more than the headline monthly fee for a trade business handling deposits.

What a funder wants to see

Whether you are after an overdraft, asset finance or a development loan, expect to produce: 3 to 6 months of business bank statements, your latest financials or management accounts, the CIPC certificate, a valid SARS tax clearance or TCS PIN, proof of contracts or purchase orders (essential for bridging and order finance), a business plan and cash flow projection for development finance, your CIDB certificate for construction finance, and directors' certified IDs with personal statements of assets and liabilities. A clean, separate bank account makes almost every item on that list easier.

The finance options

From commercial banks (FNB, Absa, Standard Bank, Nedbank):

Overdraft or revolving credit, typically priced around prime plus 3% to 5%, usually needing 6 to 12 months of banking history.
Asset and vehicle finance, secured on the bakkie or machine itself, available to newer businesses with a deposit of roughly 10% to 30%.
Invoice discounting, an advance against signed invoices, which earns its keep once you win government work on long payment terms.

From the state side:

SEFA (Small Enterprise Finance Agency, sefa.org.za): loans from R500 to R5 million for SMMEs, with direct lending from R50,000 to R5 million and micro-finance below that via intermediaries. You need a registered entity, a business plan, SA citizenship or permanent residence, majority owner-management and tax clearance. SEFA does not publish its interest rates, which vary by product and risk, so confirm current pricing with SEFA directly before you build it into a bid.
SEDA for free non-financial support such as business plans and mentoring.
NEF (equity and loans for black-owned businesses, generally from about R1 million) and the IDC for larger project finance.

Worked example: Mpho's first tender nearly breaks him

Mpho wins his first municipal tender: R450,000 for materials and labour, paid on 60-day terms. He has R50,000 in the business account. Using round, illustrative numbers: materials will cost about R240,000 and wages about R90,000 over six weeks on site. He can only invoice on completion, and the municipality pays 60 days after that, so close to R330,000 must go out the door more than three months before the first rand comes in. His R50,000 covers barely the first fortnight.

What gets him through:

A 30-day supplier account. With his CoR14.3, bank letter and clean statements, the builders' merchant opens a credit account, shifting most of the materials bill closer to his invoice date.
Bridging finance against the signed appointment letter. A purchase-order or bridging facility (bank or SEFA) funds the wages and the materials gap; invoice discounting can take over once the completion invoice exists.
Asking about interim payment certificates. If the contract allows monthly claims rather than payment on completion, the gap shrinks dramatically; he asks before signing, not after.

Mpho completes the job, invoices, and settles the facility when the municipality pays around day 100. The lesson he prices into every future bid: on 60-day terms, the cost of finance is a real line item, and you never start a tender job on R50,000 of cash without a finance line agreed first.

Common mistakes

Running the business through a personal account. It costs you deductions, funding and tender credibility.
Walking into the bank half-prepared. One missing FICA document restarts the process.
Winning a tender with no cash flow plan. Sixty-day terms sink unprepared contractors; arrange finance before you bid.
Taking the first overdraft quote. Compare bank pricing against SEFA and supplier credit.

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