Choosing A Bank That’s Right For Your Small Business

contract-signing-smallTrying to find a bank and lender that works best for your business can be frustrating and overwhelming. There are often several to choose from, but its important to understand that your choice can have a huge impact on your success. Here are a few helpful suggestions to make sure you’re making the right decision.

Every Bank is Different

Many think that all banks are the same – that each is just a copy of the last with a different name. While it’s true that banks share the same regulations, they are able to make several individual decisions that govern their operation procedures and form their cultures.

Each bank establishes their own policies on the types of services they offer, loan qualification criteria, account minimums, interest rates, and service charges. The truth is that each bank is very different than the next. Bank A may offer the same services as Bank B but for different fees – or maybe their fees are comparable but bank A specializes in home loans while Bank B specialize in business loans. It’s important to know this before you choose a bank so you know what you’re dealing with. Be sure to do your background research and take the time to review all your options before making a decision. Your goal is to find a bank with services and culture that are customized to fit your business, not the other way around.

Know What Your Business Requires

Before you can begin to evaluate the services offered by each bank, you must have a clear understanding of what your requirements are. Having a concrete idea of your business needs will make narrowing down banks a much easier process.

Here are some requirements to consider:

  • Checking and Savings
  • Merchant Card Accounts
  • Deposit Frequency
  • International Requirements
  • Sweep Accounts
  • Commercial Credit Cards
  • Wire Transfers
  • Payroll Services
  • Availability of SBA, SBAC, and Other Government Guaranteed Loans

Small Fees Can Add Up Fast

The fees banks charge for their services can make a big difference on their compatibility with your business. While small fees may not seem significant, over time they can really add up. Consider these scenarios:

  • Bank A charges a $25 deposit fee and Bank B charges $35. Bank A may be the smarter option for a small business with a high frequency of deposits. Over time, ten dollars here and there can eat into your profits.
  • Bank A charges a $20 wire transfer fee while Bank B has no additional fee. A business that operates internationally would most likely go with Bank B.
  • Bank A charges 1% for merchant card services while Bank B charges 2%. Any business who has a requirement for a merchant card account should think about that 1% difference. Bank A is probably the better choice.

Once you’ve narrowed down your choices based on services, make an appointment with each bank to discuss costs. A business account officer will be able to answer all your questions.

Compatibility Makes a Difference

Personal compatibility and customer service are intangible aspects of each bank that can often be overlooked or underrated. If you have a good personal connection to your bank, you’re more likely to have a successful working relationship. Take note of how you feel while working with each bank. If you feel welcome and comfortable, then you have found the right place.

Don’t be afraid to reach out to the community and ask other small business owners about their experiences with any banks you are considering. Personal accounts can sometimes be more informative than anything you could find on paper.

Source: sba.gov