Choosing the right bank is very important for a new business. Make sure that you find one with which you are comfortable and which is both established and reliable. Irrespective of how small your business is at the moment, you need to start establishing an excellent working partnership with your bank to put you in a better position of accessing financial tools should you need them in future. In this article, we explain factors that you need to consider when choosing a bank for your business.
1. Know what you want from your bank
It is important to know what you need from a bank to help narrow down your choices. Not all banks will offer all the same services. Do you want to establish a line of credit or take out a loan? Is it investment advice that you are after? What about services like credit card processing and automatic bill payment? Compare features offered by different banks.
2. Small or Large?
When it comes to business banking, larger multinational banks seem to offer interest rates that are more favorable. However, small local banks appear to have more compelling interests in promoting growth of local businesses. Local banks also will likely be more open to giving out a loan when you need it most.
Smaller local or regional banks could be better because of their deep understanding of the local market conditions. They normally offer more direct access to loan officers and put more emphasis on the character of a borrower rather than just looking at the credit score model. These banks may also be more generous in times of hardship, not necessarily penalizing things like overdrafts.
3. Are you compatible with your bank?
Although many people overlook or underrate customer service and personal compatibility, these are very important aspects of a bank. Do you enjoy a great personal connection with your bank? If yes, there are high chances that you will also have a good working relationship with it. You should feel welcome and comfortable at your bank, and at ease with the people that work there.
4. Ask around
Don’t be afraid to approach local owners of small business and find out from them what their experiences with a particular bank have been. Find out the level of satisfaction of these business owners with their bank and the willingness of a particular bank to provide great banking service and to grant loans.
Check if the bank you are considering qualifies as an SBA (Small Business Administration) lender. Should you decide to apply for SBA loan, it will be a boon to have an SBA-sponsored bank backing you up in the approval process.
5. Look into their fee structures
Fees that a bank charges for their services can add up considerably. During your research, have a serious look at the fees for various services like writing a check, ATM withdrawal and fees for getting monthly account statements. Also, consider the fees for other services that you may require in future, like credit card processing and wire transfers.
Take your time and do your due diligence to ensure that the bank you choose will not only meet your present needs but also your future needs when your business has grown. The most important things that you need to consider are fees charged, business banking services offered, your compatibility with the bank and most importantly, your business needs. Also, remember to talk to local business owners and get their opinions on local banks.