For many foreign owners, establishing an Estonian company is not the biggest challenge.
The biggest challenge is opening a bank account.
A company is often registered in one day, but opening a bank account can take weeks. Sometimes the application is rejected on the first attempt, and the entrepreneur never finds out what changed the decision.
The good news is that most of the time the outcome does not depend on luck.
This depends on how well the company and its operations are explained to the bank.
Before you contact a bank or payment institution, ask yourself five questions.
✔ Does the company have a functioning website or other reliable online presence?
✔ Are there any first customers or partners?
✔ Do you have at least some contracts or orders?
✔ Can you clearly explain where the company is actually run?
✔ Can you justify why the company is registered in Estonia?
The more questions you can answer “yes” to, the stronger your bank application will be.
Banks and payment institutions are not the same thing.
Many entrepreneurs simply talk about a “bank account.” In practice, there are two different solutions to choose from. Both solutions have their place.
| Estonian bank | Payment or e-money institution |
|---|---|
| Traditional bank account | Daily checking account |
| Opening an account takes longer. | Opening an account is often faster |
| More thorough check before opening an account | Most of the process is done automatically |
| Suitable for a company's main account | Suitable for everyday payments and as a backup account |
The most important recommendation:
Do not choose between a bank and a payment institution. Use both!
The bank provides the company with long-term stability.
The payment institution helps the company get up and running quickly and offers a backup solution in situations where the bank or other service provider performs additional verification procedures.
This is not a luxury. This is corporate risk management.
When should I contact an Estonian bank?
Estonian banks primarily assess the reliability of a company.
For example, the following may be important:
- actual business activity;
- existing customers;
- contracts;
- justified connection with Estonia;
- transparent corporate governance.
Banks' internal requirements change over time, and each bank assesses risks slightly differently.
Therefore, it is not worth focusing on just one bank.
It is more important to prepare a strong application.
When to use a payment institution?
Services like Wise Business, Revolut Business and other European payment institutions often allow a business to get started faster.
These are well suited for:
- for the first payments;
- for international settlements;
- for use in multiple currencies;
- as a backup account.
However, it should not be assumed that a payment institution will always replace a traditional bank.
Payment institutions may also perform additional verification procedures or temporarily restrict the use of the account.
What could be a reasonable plan of action?
In practice, we often recommend the following:
1. First open a payment institution account
This allows the company to get up and running quickly.
2. Create a reliable business history
Show that the company is actually operating.
For example:
- conclude contracts;
- submit invoices;
- organize the payment history;
- organize the documentation.
3. Submit a bank application
If a company already has a working operating history, it is much easier for the bank to assess the company's actual risk.
4. Maintain both accounts
If a company has both a bank account and a payment institution account, it is possible to continue operations even if one service provider carries out additional checks.
What strengthens a bank application?
Our experience shows that the following factors have the greatest influence on the decision.
Clear business model
The bank wants to understand how the company makes money.
Real customers
Signed contracts speak louder than the best-written business plan.
Clear management structure
The bank wants to understand where the company is actually managed and who makes important decisions.
The logical reason why the company is in Estonia
The answer “lower taxes” is mostly unconvincing.
Much stronger reasons are, for example:
- European Union market;
- digital business environment;
- international clients;
- European Union business environment.
If the bank considers you a higher-risk customer
Citizens or residents of some countries undergo more extensive background checks.
This does not automatically mean that the account will not be opened.
This simply means that:
- the check may take longer;
- more documents are requested;
- the company's activities need to be explained in more detail.
The most important thing is to be honest and provide all necessary information as soon as possible.
What to do if your account is temporarily frozen?
That can happen too.
It is important not to panic.
A practical action plan could be as follows.
- ask in writing for the reason for the freeze;
- redirect payments to a backup account if necessary;
- inform key customers and partners;
- collect all documents that the inspector may request;
- answer the questions at once and completely.
Most verification procedures end with the restoration of normal account use.
The biggest problem usually arises when the company does not have another account to use.
Can you handle it yourself?
Probably yes, if:
- the company already has actual operations;
- you have clients and contracts;
- The management of the company is clearly documented.
It is worth seeking the help of an expert if:
- the previous bank application has been rejected;
- the owners or managers of the company live outside the European Union;
- the bank has asked for additional documents, the purpose of which you do not understand;
- You would like to assess your company's readiness before submitting an application.