Knowing how to choose a bank for your small business requires some research and understanding what questions to ask. The balance you will keep and number of transactions you intend to make per month will be important aspects in your decision. Other factors to consider will include fees the bank will charge, the bank’s history of small business lending and support, its proximity to your company, and the ability to access your accounts remotely. This article will explore the different options you have when choosing a financial institution to work with your business.
Local Banks Offer a Personal Connection
There are several advantages local banks offer to small businesses. In addition to the personal interaction and the relationships you will build with bank employees, a good banker can often serve as a consultant for some of those tough financial decisions you will eventually have to make. Local banks are often your best bet when seeking business loans. Some research indicates that local banks are the best places to procure loans during hard economic times and especially for small businesses with less credit history. Much of the advantage likely comes from regular interaction with those making the loan decisions.
Big Banks May Have More Tools
While dealing with big banks often includes a lot of hassle and impersonal service, they can have more tools at your disposal. Some services can include: invoicing, payroll services, online tax payments, and enhanced security and access. The extra service offerings of large banks can make it easier to establish a bank that is your one-stop shop for all your business' financial needs. Part of knowing how to choose a bank for your small business includes weighing factors such as the plethora of services a big bank provides against the personal interaction which might evolve into free consulting and better chances at loan approval.
Credit Unions and Internet-Only Banks are Affordable
Credit unions are non-profit financial institutions owned by the customers who bank there. They are assets to the community, offering fewer fees, lower interest rates on loans, and higher interest rates on savings accounts and certificates of deposit. Many credit unions do not offer business accounts, but with some research you may be able to locate one that does. Internet-only banks can also be an affordable option in that the simplicity of their operation allows them to cut substantial overhead costs and thus pass that savings on to their customers. Both credit unions and internet-only banks offer lower costs in exchange for more limited services than the other options.
As you get everything in order to begin your entrepreneurial journey, one of the first major decisions you will make will be choosing the financial institution with which your company will do business. Understanding how to choose a bank for your small business involves weighing the costs and services against the specific needs of your company. Hopefully, this article has been a helpful overview of the factors to consider as you decide whether a big bank, a local bank, a credit union, or internet-only bank would be the best fit for your financial needs.