How to Choose a Bank for Your Small Business

One of the most important decisions you can make for your small business is choosing the right bank to work with.  This bank should provide guidance as well as affordable services and products to help the overall financial success of your business.  It takes a lot of research and comparing of different business banks in order to be able to make the best choice for your small business.

As you begin your search for the right small business bank, you will find that every bank is different.  As a result, you must take the time to thoroughly evaluate the specific financial needs of your small business before you start inquiring and comparing services.  The first step you must take is to learn about what a business bank can do for your company's financial operations.

What Your Small Business Bank Can Do For You

• Offer basic checking accounts that allow you to pay suppliers and deposit revenues from customers.
• Offer loan programs for small businesses such as the SBA loan program, government loans, and agency loans.  Majority of banks offer advice on how to qualify for a loan that meets the needs of your business.
• Offer investment services of both varying risks and varying maturities.
• Provide advice and assistance on financial information based on your industry.

Because all banks are different, finding out what each bank specializes in is important.  Some banks offer only basic deposit accounts and services while other banks will provide extra features.  Banks are governed by specific laws and regulations regarding activity, but each bank has the liberty to set its own policies. 

Some differentiating factors include, but are not limited to, fees for certain services, interest rates, minimum account balances, and loan qualification requirements.  Banks also offer different types of services and products, which should be considered when doing research and comparing banks.

Shop Around

Once you find a bank offer that is in your best interest, start shopping around to see if other banks offer something better.  When comparing banks, be sure to pay attention to banks that will provide assistance and support during the early stages of your business.  If you already have a running business, you may even want to research the latest services and consider switching banks.  Comparing banks can be time-consuming and daunting; however, taking the time to consider the various factors will help you choose the right match.

Build Relationships

Channeling through all the friendly dispositions and finding a banker who makes you feel comfortable is an important part of the process.  It is helpful to work with a banker whom you can build a relationship with so that your experience is a positive one. Get to know your lending officer, introduce yourself to the branch manager and make a good impression.  These are critical steps to take towards long-term success.  Once a positive working relationship is established, both parties will have a better time doing business together.

Online Banking Services

Most major banks now offer online services, but the specific features of online banking differ from one bank to another.  Some banks charge fees for additional online services including money transfers between two different banks.  Most online services allow you to send invoices, collect payments and cut payroll checks.  The specific online banking services will make one small business bank stand apart from the others.

Industry experience

Knowing whether a bank has the right industry expertise for your business is crucial for your experience.  Banks will have branches that cater to specific industries and programs that serve businesses in a certain stage of the growth cycle.  Additionally, there are loans dedicated to small businesses and it will be to your advantage to find out information about these.  By knowing the industry your business falls in, the bank will not just offer the right products and services that meet your needs, but also give you valuable advice.

Comparing Prices

Although pricing and fees are not the only deciding factors, they play important roles in choosing a small business bank.  Many times, banks will not offer direct pricing and this makes it difficult to get complete comparisons.  Regardless, you must compare interest rates, account fees, and other service charges.  While banks tend to use similar products and services, they may offer packages that bundle different services together at a more affordable price.  Some packages require annual fees while others charge monthly fees.  The general rule of thumb for finding the right business bank is to talk to as many people as you can and ask questions.