Novo Bank is touted, by some, for having one of the best bank accounts for small businesses, while others say it’s a scam — that it isn’t really a legit bank. So, which group is right? Let’s investigate through this comprehensive Novo Bank review!
In this post, I cover the details of Novo’s offer in full. After that, I answer some FAQs, then give you my final verdict on whether this is a “scam” or not.
Here’s what’s in store:
- Novo Bank Company Overview
- Novo Business Banking Overview
- Frequently Asked Questions
- The Verdict: Is Novo a Legit Bank
Now, let’s go!
Novo Bank Company Overview
Novo Platform Inc (Novo Bank’s parent company) was founded in 2016, by Michael Rangel and Tyler Mcintyre. The company’s home base is in the Miami, Florida area. Since the company’s launch, it’s received $170.5 million in equity funding and is considered an “emerging unicorn” in the financial space.
Prior to starting Novo, Rangel was the Lead Trade Administrator at Fairholme Capital Management, where he worked for half a decade. While I couldn’t find much about Mcintyre’s career history, he is an accredited ACH and Payments Risk Professional who attended the University of Miami and Wharton School where he studied Entrepreneurship, Business Administration, and Management.
While the founding duo doesn’t have the strongest financial backgrounds, as far as bank founders are concerned, their history seems like a good fit for an offer like this. I see no glaring issues that would make the company seem untrustworthy.
Novo Bank is partnered with Middlesex Federal Savings, an FDIC-insured bank to offer small business checking.
Novo’s Customer Service
Before you sign up for a business checking account, you need to know if you’re going to be able to speak with someone to resolve any future issues that may arise — it’s unlikely that you would have no problems with any checking offer.
At Novo Bank, the customer service team works Monday through Friday, from 8 am to 7 pm Eastern Standard Time. These hours are beyond traditional 9 to 5, Monday through Friday banking hours. Some banks do offer 24/7 support, and there are offers everywhere in between. So, you should be able to get in touch with a real person — via email or through the app, anyway — during business hours on weekdays.
Novo currently has a cumulative 4-Star rating on Trustpilot, with lots of 5-star reviews, which are mostly pretty “general,” yet enthusiastic. For example, see Julie’s review below. She claims she hasn’t had a single issue with her Novo account and boasts about her satisfaction with the Stripe integration.
On the same day as Julie’s cheerful comments, however, another user, Paystub Hero, had nothing nice to say. Several 1-star Trustpilot reviews such as this one serve as a sort of public service announcement warning others against Novo. A common complaint is that customer service is sorely lacking.
Now, Novo does not currently publish a phone number on their website, which is at least a yellow flag. Today, you can only reach out to Novo by emailing firstname.lastname@example.org or through the Novo app.
While I can’t speak for every user’s experience, I did reach out to Novo via email asking for more information about their offer, and they replied within about 15 minutes. I didn’t see any signs that the response was written by a bot. So, this may be a case where you have to take every review you read with a grain of salt.
Novo Business Banking Overview
For the amount of hype that Novo generates as an innovative banking solution, I was surprised to find that they currently offer no savings or interest-bearing accounts, no cash deposits, no chatbot or phone number, and no business financing.
Novo does not offer loans or credit lines and instead recommends SBA’s Lender Match program. If you go this route for funding, you can get matched by the U.S. Small Business Administration with approved lenders that might be able to help you get any financing you might need. Note that these are typically traditional term loans for small businesses or the individuals who own them.
With that said, according to one rep, Novo does plan to offer lending in the future. So, if a lack of lending offers is what’s keeping you from banking with the brand, you might want to check back in on Novo’s website periodically to check for future offers.
Having said that, Novo does offer some interesting benefits, which I outline below.
Business Checking Account Features
Applying for an account with Novo apparently takes minutes, and you can do it from the comfort of your home. This is an “online checking account,” so there’s no need to go into a branch to open an account.
Along with the ease you would expect from online banking, Novo business checking accounts come with a range of features:
- Free small business checking
- No monthly fees or minimums
- Unlimited ATM refunds
- Immediate access to virtual cards
- A physical debit card
- Free, unlimited invoicing
- ACH payment transactions
- Profit-first accounting
- Multiple budgets with Novo Reserves
- Integration with Stripe, Square, and Paypal
Again, cash deposits aren’t accommodated by Novo Bank. So, while you can use ATMs to withdraw cash, and the Novo app to deposit checks, there is no way to make a traditional cash deposit into an account.
But, let’s explore what else you can do.
What is Profit-First Accounting?
If you’re not familiar with profit-first, it’s an accounting type and business mindset that enables owners to focus on the profitability of their operations.
In short, it looks like this: sales – profit = expenses and is an alternative to traditional accounting (sales – expenses = profit).
Companies that adhere to this philosophy budget for expenses after they reach their profit goals for each period, whether it be weekly, monthly, or quarterly. Profit-first essentially forces business owners to reach their revenue goals, so the idea is that it should boost cash flow.
Novo business checking accounts are set up to help businesses implement profit-first accounting through Novo Reserves.
What is Novo Reserves?
Novo Reserves is a budgeting feature built-in with Novo small business checking accounts that automatically allocate funds into “reserves” or “envelopes” based on cash flow percentages to simplify budgeting.
Novo reserves can accommodate up to ten budgets per account. The idea is that account holders can use Reserves to manage accounts with more flexibility and with financial goals in mind.
Moreover, Novo shares resources that explain the profit-first method and the benefits of Reserves on their blog, which is a nice touch — the entire small business checking offer seems to be built around this method of accounting.
Novo Software Integrations
Novo’s website shows off their Stripe integration above all, but the platform is built to integrate effortlessly with 15+ everyday eCommerce and financial apps. This makes Novo a top consideration for small and medium online merchants.
When managing your money, with a Novo account, you would no longer need to bounce back and forth between multiple platforms where you receive funds to access your money. When you get a deposit in Stripe, for example, you would have instant access to the funds in your Novo account. Plus, you’ll get different perks across some of these payment platforms for being a Novo member.
Novo Boost Summary
Another interesting feature that comes with a small business checking account is Novo Boost, developed to work with Stripe, which is worthwhile if you process most of your payments through the platform. The key benefit of Novo Boost is that you can get your Stripe payments within hours rather than days.
Obviously, quick access to cash flow is a nice option.
Please know that Novo Boost allows Novo users to access their automatic payouts from Stripe up to 2 business days early, completely free of charge. Please note that Novo Boost is neither a loan nor a purchase of any receivables.
Novo account holders can access up to $4K in savings across some of Novo’s partners. Savings are divvied out like so:
- Constant Contact – $150 in savings via a 6-month, 50% discount on the Plus plan
- Stripe – $125 in savings via $5K (transaction total) in fee-free processing
- Google Cloud – $2K worth of Google Cloud credits
- Gusto – $100 in savings via 1 free month of Gusto
- Quickbooks – $150 in savings via a 6-month, 30% discount on any plan
- Hubspot – $1.4K in savings (per seat) via 30% off first-year subscription and 15% off following years
- Google Ads – $500 in savings via $500 in Ads credit when you spend $500
The above companies often offer promotional savings, but they’re not always easy to access. So, if you use or would like to take advantage of any of the offers above, and the discounts would make it worthwhile, a Novo account might be a good opportunity (I mean, it’s free 🤷).
Business Formation Tools
Novo seems to also have a partnership with Legal Zoom, offering individuals the chance to incorporate or upgrade their business or nonprofit through the legal platform with 20% off.
With that said, Novo doesn’t offer business formation internally. However, this is a good idea for a starter-type business banking establishment, since some people need to incorporate their business before they apply, and don’t always know where to start.
Recommended: How to Create a Business Credit “Entity”
Frequently Asked Questions
Who is Novo Bank owned by?
Novo Bank was founded by Michael Rangel and Tyler Mcintyre and has received equity funding from several investors. The banking platform is FDIC-insured via Middlesex Federal Savings, United States.
Who regulates Novo Bank?
Under Middlesex Federal Savings, Novo Bank is regulated by the Federal Deposit Insurance Corporation (FDIC), which ensures all of its small business checking accounts.
Can I withdraw money from Novo?
As a Novo account holder, you can withdraw up to $1K per day from your checking account at any ATM.
Where can I withdraw money from Novo?
Middlesex Federal Savings’ ATM network is limited to the Boston area, but you can withdraw funds from any ATM across the U.S. All ATM fees will be refunded at the end of each monthly cycle.
Does Novo work with Zelle?
No. Novo checking accounts are not yet compatible with Zelle.
The Verdict: Is Novo a Legit Bank
Is Novo bank trustworthy? Yeah, I think so. While they do not offer some of the features that we’ve come to expect from business checking, and they’re a no-go for cash businesses, Novo Bank has a fairly robust feature offer.
As with all checking accounts, it’s best to weigh the pros and cons to make sure that the product meets your needs. If you need a savings account, loans, or anything else that the platform lacks, Novo isn’t the right fit for you.
But, if you’re looking for a debit card, virtual cards, budgeting, and invoicing that integrates seamlessly with Stripe and other financial tools, then this might be a fantastic company to bank with.
Personally, I prefer small community banks and credit unions for small business banking, but these institutions don’t always work for everyone. For example, if you relocate every year, smaller banks might not have all of the features you need. In this case, I might recommend you check out Bluevine’s offer.
If you’d like to learn how to obtain up to $100K in business credit in as few as 30 days, join Business Credit Workshop today.