Choosing a bank for your business isn’t quite the same as selecting one for your personal banking. Your business requirements are different, and you’ll need to put some time into identifying a banking method to handle them. Finding a way to bank doesn’t have to be overwhelming, though. Here are four points to consider as you choose the best financial institution for your business.
1) EVALUATE YOUR BANKING NEEDS AND GOALS
You have many different options for banking. In the past, a business owner might have rounded the corner to the town bank and opened an account. Today, however, you can choose from several types of banks worldwide — retail, commercial, cooperative, and private, to name a few. Some people consider the concept of becoming your own banker. How can you decide what your business needs? Begin by thinking about your goals, both long-term and short-term, and then determine what kind of bank can help you meet them.
If you are starting a retail business in your home, for example, but have plans to open a store in the next few years, you need a bank that offers loans to small businesses. You can also consider scalability. As your business expands, the small account you began with will need an upgrade. Likewise, if your business accepts credit and debit card payments, your bank will need to accommodate the number of transactions you anticipate in a month.
Some banks may require a minimum balance, so be sure to account for your cash flow. If you think you’ll have trouble keeping a specified minimum in your account, make sure it’s not a requirement.
2) CONSIDER BANK SIZE
The size of the bank you choose is an important consideration. While you might find similar products at both small and large banks, there are differences, and you’ll need to match your requirements with their capabilities.
Large banks have many locations, with ATMs and branches across a geographic area or nationwide. If your business is mobile, this can be a significant advantage. Big-box banks can also offer a variety of products and have access to more funds.
Local or regional banks, however, might be more eager to gain your business. They are in tune with the local market and have an interest in helping it thrive. A local bank may offer you a lower rate to support your business.
If you aren’t sure what size of bank fits your needs, arrange to meet with bankers at a few different places and get more information on what each has to offer your company.
3) DECIDE IF YOU WANT IN PERSON SERVICE
Some banks operate exclusively online. You may find that an online bank’s convenience suits your needs in the startup phase, especially if you begin with a simple checking or savings account. Some internet-based banks can offer better rates because their overhead is lower than brick-and-mortar banks. However, if your business grows, you may eventually want the personal service of a traditional bank. When you’re unable to meet with your banker face to face, It can be challenging to develop a relationship and build business credit.
4) EXAMINE FEE STRUCTURES
Once you’ve narrowed your selections to a few choices, dig a little deeper and look into the fee structures each bank uses. There may be hidden or unexpected fees on the features or accounts you’ve chosen. Some to look for are:
- ATM fees
- Service fees
- Management fees
- Inactive account fees
- Withdrawal or deposit fees
It’s important to avoid any surprises by finding out upfront what you’ll pay each month.
While shopping for the best financial institution for your business might seem like a lot of work, it can pay off in the long run. Anticipating your future banking needs now can save you from the headache of switching banks down the road. You can set yourself up for growth and success by investing time today in choosing the right bank.
