One of the first things you need to do when you start a small business is open a business bank account. Many small business owners and entrepreneurs choose the bank where they have their personal account. But you may want to shop around for the best fees and the bank that can best fit your needs.
The right bank can be a big asset to your business, if you choose the right one. But it’s not easy. A 2013 Business Banking Gallup Poll found that 32% of businesses were “actively antagonistic” about their bank. When you think about how much you will be dealing with this bank and how important the financial piece of your business is, you might begin to rethink what’s the best business bank account for you! In this article, we’ll outline what to look for in a business bank and the best ones in the area!
As you search for a bank, you want to look for one that meets your current needs and your needs as you grow and expand.
The most basic needs are checking and savings accounts. But even with those accounts, you want to think about the number of transactions you will be making and how much cash flow is available in your business as well as your budget for banking costs or fees. Some banks have penalties for suppressing transaction limits or falling below minimum balances so being clear on how many transactions or how much you plan on having in reserve is important.
Will you need a business loan, either currently or in the future? Some banks offer SBA loans, which is a loan that the government guarantees up to 75% of the loan. This often influences banks to lend to small business owners who may not be considered otherwise. You may also want to ask about the lending limit the bank can authorize and how high it is.
You may also want to consider the level of customer service and the features you want in your bank. Is there a brick and mortar location close to you? How often are you able to meet with a representative and how long does it take their representatives to get back to you? While many larger banks offer 24 hour customer service, many of the smaller banks do not. Or perhaps you know your business will have you traveling and mobile is important to you. What type of mobile access or technology would you like? Will you need international services? Will you need investment advice or will someday want to purchase real estate for your business? Do you need credit card processing?
There are generally two types of banks: small local banks and big, national banks. Smaller banks can usually provide more personalized one on one access with a loan officer or banker. Additionally, you may be more likely to obtain loans from smaller banks as they can put more emphasis on the borrower’s character than a credit score. Big banks, while not as personal, will often change lower fees and rates. Bigger banks also tend to have more features and services, including international options.
Once you are clear on what you are looking for in a bank and if you want to start looking at large or small bank, you will want to go in and speak with different banks. You may also want to test calling banks on off-hours or emailing to see how long it takes to get a response. Your business bank is going to be a long term relationship so you want to be sure that you take your time and feel comfortable with your bank and your banker.
If you need help with your cash projections or understanding small business loans, schedule a complimentary initial consultation with O’Connor & Desmarais. We will help you determine your business needs and how to set yourself up for success.
Looking to start and grow your business but feeling overwhelmed about finances? Grab our FREE Small Business Financial Checklist and learn the 8 financial steps you need to take to grow your business!