As a small business owner, there are no easy decisions. Each decision you make affects the bottom line. And, choosing the right bank for your business accounts is no exception.
Choosing a bank or even making a decision to leave your financial institution involves more than deciding where to open a new account. Before making that decision you need to understand what services you require and how much they cost.
Investigating the services you’ll need to rely on every day also will give you a foundation for online research and in-person conversations.
Mark Hamrick, senior economic analyst with Bankrate.com, says any business owner needs to find a banker who will take the time to explain the services they offer so you can go back and run your business.
“First thing to think about is that banking can be a lot like a marriage,” Hamrick said. “You are commingling your finances with a partner, hopefully in a long-term relationship.”
Hamrick also said before reaching any decision, a business owner would benefit from weighing the pros and cons of what a credit union, community bank or large financial institution could offer them in terms of loans, rates and other services.“You need to ask what level of service are you asking for and what are the fees associated with those services,” he said.
Here are a couple of tips on choosing a bank for your small business from the Accion U.S. Network, a nationwide nonprofit micro- and small business lending network (www.us.accion.org).
• Size matters: When it comes to banking, size matters. However, that doesn’t mean that bigger is always better. You’ll need to evaluate your business’s needs and your comfort level to decide whether you’d rather work with a small community bank or a large national bank. Big banks have lots of branches, lots of different offerings, and lots of resources. Smaller community banks may be more attuned to local market conditions and more willing to work with you based on your character and overall profile, rather than the hard numbers of a credit score.
• Check your credit: Larger banks can take their pick of what businesses they want to work with. That means it may be hard to get into a large bank if your business is very new or has a low credit score. Small, local banks may be more forgiving of new local businesses and may have less stringent credit requirements for opening accounts and lines of credit. Check out the credit requirements for the banks you’re considering to see if you’ll be able to get what you need out of your business accounts.
• What services do you need?: Certain services should be expected from all banks. At a minimum, you should look for your bank to provide the following business products:
- Basic business account services:
- Checking account
- Savings account
- Credit card/debit card
- Checks and a checkbook
- Deposit-only card
- Online business banking
- Employee checking accounts
- What are your digital needs?
•How often do you use technology for your banking needs?: Do you automate your accounts online? Do you want to be able make deposits with only your cellphone? If your work requires travel or if your company is tech-centric, you may want to have more digital options when dealing with your bank. If that’s important to you, then look for a bank that uses the latest tech and has the platforms to support your particular needs.
A good bank can prove to be an invaluable partner to a small business. Not only as a partner for borrowing capital, but also as a source of guidance for future planning and bringing stability and credibility to the business. Invest the time and effort into finding the right bank and nurturing a partnership relationship with your banker.
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