Starling vs Lloyds: Business Bank Account Comparison

Starling works well if you're a limited company or LLP that wants free digital banking with strong built-in tools, but it's a poor fit if your business handles a lot of cash or needs branch access. If you're weighing up fintech options more broadly, our Tide vs Starling comparison and Starling vs HSBC comparison look at how Starling holds up against other providers.

What Lloyds Is Designed For

Lloyds is designed for businesses that want the reassurance of a high street bank: branch access, a relationship-based approach for larger accounts, and a full range of lending products alongside day-to-day banking. It suits sole traders, partnerships and limited companies that need to deposit cash regularly or may want to borrow as they grow.

Key Characteristics of Lloyds

• No monthly fee for the first 12 months for businesses with turnover under £3 million, then £10 a month

• Free electronic payments, including Direct Debits, Standing Orders and Faster Payments

• Full lending suite: overdrafts up to £50,000, business loans, asset finance and commercial mortgages

• Branch and Post Office access across England and Wales for cash and cheque handling

• Unlimited free debit cards and multi-user online access at no extra cost

• 6 months' free access to Xero accounting software, plus free HMRC-recognised Making Tax Digital software for qualifying sole traders

• £200 Amazon gift card available to eligible switchers (source: Lloyds Bank, August 2026)

• Trustpilot rating of around 4.1 out of 5 from approximately 11,000 reviews, as of August 2026

Trade-Offs to Consider

• Cash and cheque deposits carry fees even though the core account itself is free to hold

• No invoicing tools built into the account

• The £10 monthly fee applies once the free period ends, regardless of how lightly you use the account

• CHAPS payments cost £30 each

• Full applications require proof of ID, address and business details, so account opening can take longer than with a digital-only provider

Lloyds works well if your business needs cash handling, branch support or a realistic path to borrowing, but it's a less efficient choice for a low-volume digital business that will never use a branch. For providers with a similar high street footprint, our alternatives section below covers a few worth comparing.

How They Charge

Starling Pricing

Starling's core Business Account is free, with no monthly fee and no minimum balance. Costs only appear if you use optional add-ons: a EUR account at £2 a month, a USD account at £5 a month (limited companies only), or the Business Toolkit at £7 a month for invoicing, VAT estimates and tax tools. UK transfers are free and unlimited, while SWIFT international payments cost £5.50 plus an FX margin of 0.4% above the mid-market rate. Cash deposits, capped at £100,000 a year, cost 0.7% per transaction via the Post Office, with a £3 minimum charge. We checked Starling's published pricing in August 2026.

For a business that pays and receives money almost entirely by bank transfer or card, Starling can genuinely cost nothing. The cost only climbs if you need multi-currency accounts, the Business Toolkit, or regular cash deposits.

Lloyds Pricing

Lloyds waives its monthly fee for the first 12 months for businesses with turnover under £3 million, after which the standard fee is £10 a month. Electronic payments, including Direct Debits, Standing Orders and Faster Payments, are free. Cash deposits cost £0.85 per £100 via a self-service machine or £1.60 per £100 over the counter, and cheque deposits cost £0.85 via machine or app or £1.20 over the counter. BACS file submissions cost £5.50 plus 15p per item, and CHAPS payments cost £30 each. We confirmed these figures directly from Lloyds Bank's business account and tariff calculator pages in August 2026.

For a cash-heavy business such as a café or a shop, the combination of the £10 monthly fee (after year one) and per-transaction cash charges adds up faster than Starling's Post Office model, particularly at higher deposit volumes. For a business that rarely handles cash, the monthly fee is the main ongoing cost to weigh against Starling's free account.

Starling vs Lloyds: Pros and Cons Compared

Feature Comparison: Starling vs Lloyds

Payments and Transfers

Starling offers free, unlimited Faster Payments within the UK and charges £5.50 plus a 0.4% FX margin for SWIFT transfers abroad. Lloyds offers free electronic payments domestically, but charges separately for BACS files (£5.50 plus 15p per item) and CHAPS same-day payments (£30 each), which matters if your business regularly makes high-value or time-sensitive transfers.

Account Access

Starling is app-only, with no branches and support handled through in-app chat and phone. Lloyds offers online and mobile banking alongside a branch network across England and Wales and Post Office access UK-wide, which suits businesses that want the option of face-to-face support or need to pay in cash or cheques regularly.

Business Debit Cards

Both providers include a free debit card with the account: a Mastercard from Starling and a Visa from Lloyds. Starling allows each director to hold an individually permissioned virtual and physical card at no extra cost, while Lloyds includes unlimited free cards across authorised users.

Invoicing and Admin

Starling includes basic invoicing as standard, with more advanced tools such as VAT estimates available through the £7-a-month Business Toolkit. Lloyds doesn't include invoicing, so businesses that want to send invoices from their banking app will need a separate tool, or should lean on the free Xero access Lloyds provides instead.

Accounting and Tax Support

Starling integrates directly with Xero, QuickBooks and FreeAgent. Lloyds includes 6 months' free access to Xero, plus free HMRC-recognised Making Tax Digital software for qualifying sole traders, which is a meaningful saving if you'd otherwise pay for accounting software separately. For more on this trade-off, see our guide to business bank accounts with accounting built in.

Overdraft and Lending

Starling offers overdrafts of £1,000 to £50,000 and loans of £25,001 to £250,000, but only to businesses that have held a Starling account and traded for at least 24 months. Lloyds offers overdrafts up to £50,000 with an instant online decision in many cases, alongside a broader lending suite covering loans, asset finance and commercial mortgages, generally accessible earlier in a business's life.

Savings

Starling's "Spaces" let you ring-fence money within the account for tax, payroll or savings goals, with some Spaces paying interest. Lloyds doesn't offer an equivalent built-in savings tool within the business current account, so businesses wanting to set aside funds would typically need a separate Lloyds savings product.

Regulation and Protection

Both Starling and Lloyds hold full UK banking licences and are regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), which is a meaningful distinction from e-money institutions that offer safeguarding rather than deposit protection. Eligible deposits with both providers are covered by the Financial Services Compensation Scheme (FSCS) up to £120,000 per eligible depositor, following the PRA's increase to the deposit protection limit from 1 December 2025. This means your business's money is protected to the same statutory level with either provider, so the choice between them comes down to fees, features and service rather than safety.

Common Misconceptions About Starling and Lloyds

"Starling doesn't offer business loans or overdrafts." This was true in Starling's early years, but it now offers both: overdrafts from £1,000 to £50,000 and loans from £25,001 to £250,000, available to limited companies and LLPs that have traded for 24 months or more.

"Lloyds business banking is free." The 12-month free period only applies to businesses with turnover under £3 million. Once it ends, or if your turnover is above that threshold, the standard £10-a-month fee applies regardless of how you use the account.

"Sole traders can open a Starling Business Account." Starling's Business Account is only available to limited companies and LLPs. Sole traders need to apply for Starling's separate Sole Trader Account, which has its own terms and fee structure.

"Digital-only banks like Starling can't take cash." Starling accepts cash deposits via the Post Office, capped at £100,000 a year, for a 0.7% fee. It's a more limited and costlier route than a branch counter, but it isn't unavailable.

What Real Customers Say About Starling and Lloyds

Starling holds a Trustpilot rating of around 4.3 out of 5 from more than 32,000 reviews, as of August 2026. Positive reviews commonly mention fast account opening, an intuitive app and helpful in-app support. Negative reviews tend to focus on account restrictions during fraud checks and the lack of any in-person option when something goes wrong.

Lloyds holds a Trustpilot rating of around 4.1 out of 5 from approximately 11,000 reviews, as of August 2026. Positive reviews often mention branch and relationship manager support for established businesses. Negative reviews tend to focus on cash handling fees and the time it takes to resolve issues compared with app-based providers.

Who Should Consider Starling?

Starling is worth considering if your business:

• Is a limited company or LLP that's comfortable banking entirely through an app

• Wants free UK banking with no monthly fee and no minimum balance

• Doesn't need to deposit cash or cheques regularly

• Wants invoicing and fund ring-fencing tools built into the banking app

• Is trading internationally and needs low-cost multi-currency accounts

If you're also looking at other digital-first providers, our Tide vs Starling comparison is a useful next read.

Who Should Consider Lloyds?

Lloyds is worth considering if your business:

• Is a sole trader, partnership or limited company that wants access to a full high street bank

• Regularly handles cash or cheques and values Post Office or branch access

• Wants a realistic path to a business loan, overdraft or asset finance as it grows

• Would benefit from 6 months' free Xero access to offset accounting software costs

• Prefers the option of face-to-face support alongside digital banking

For businesses considering another high street option, our business bank accounts for cash handling guide covers providers built specifically around this need.

FAQs About Starling and Lloyds

Can sole traders open a Starling business account?

Not the Business Account itself, which is limited to limited companies and LLPs. Sole traders need Starling's separate Sole Trader Account, which has its own fees and features.

Is Lloyds business banking free?

Only for the first 12 months, and only for businesses with turnover under £3 million. After that, or above that turnover threshold, the standard fee is £10 a month.

Are Starling and Lloyds accounts FSCS protected? Yes. Both hold full UK banking licences, and eligible deposits with each are protected up to £120,000 per depositor under the FSCS, as of the scheme's December 2025 limit increase.

Does Starling or Lloyds offer a business overdraft?

Both do. Starling offers £1,000 to £50,000 to businesses trading for 24 months or more, while Lloyds offers up to £50,000 with an instant online decision available in many cases and no minimum trading history in the same way.

Is Starling or Lloyds cheaper?

Starling is free with no monthly fee, while Lloyds is free for 12 months and then £10 a month. Which works out cheaper overall depends on your cash handling needs, since Lloyds charges per cash and cheque deposit and Starling caps and charges for cash deposits differently.

Does Starling or Lloyds have invoicing included?

Starling includes basic invoicing as standard, with more advanced tools available through its £7-a-month Business Toolkit. Lloyds doesn't include invoicing, though it does offer 6 months' free Xero access.

Alternatives to Starling and Lloyds

• If you want a digital-first account with invoicing built in but need to compare it against another fintech, read our Tide vs Starling comparison.

• If you're weighing a digital challenger against a high street bank more broadly, our Starling vs HSBC comparison looks at that trade-off in more detail.

• If cash handling is your priority, our business bank accounts for cash handling guide rounds up providers built around that need.

• If you're planning to switch providers, our switching guide explains how the Current Account Switch Service works and what to check before you move.

Our Verdict: Starling or Lloyds?

If your business is a limited company or LLP that's happy to bank entirely through an app and rarely handles cash, Starling is the stronger starting point. It's free, its UK transfers cost nothing, and its built-in invoicing and Spaces tools cover a lot of what a small, digital-first business needs without paying for extra software.

If your business is a sole trader, partnership, or a company that wants branch access, regular cash handling or a clearer path to borrowing, Lloyds' Business Current Account is the better fit. The first year is free, and the £10-a-month fee after that buys a level of in-person support and lending access that Starling doesn't offer in the same way.

Neither is right for every business. A cash-heavy company might find Lloyds' branch network worth the monthly fee, while the same company could also hold a free Starling account for digital transfers and invoicing alongside it. It's worth checking both providers' current terms directly before you apply, since fees and eligibility criteria change.