5 Tips to Help You Choose the Right Bank for Your Small Business
There are different considerations involved with choosing a bank for your small business financial needs as opposed to one that you would use for your personal finances. You will get the best out of a bank if you take the time to research the different services they offer, the costs associated with those services, and the chances of establishing a trusting relationship with the bank.
These are five tips that will help you select the right bank to support your business.
1. Find out what you want from your bank
What do you need from the bank? Do you want to get a loan? Are you looking for investment advice? Are there other services that banks offer, such as automatic bill payments or credit-card processing, that your business will need? It will be easier to narrow down your options if you know exactly what you want from a bank.
For example, if personalized customer service is important to you, then don’t hesitate to put a bank to the test by calling them. What is the average time it takes to reach a knowledgeable representative? Try emailing them or filling out a contact form on their website. Are you able to get a reply within 24 hours? Before choosing a bank, see how fast and comprehensive their customer service is.
2. Compare Small Banks With Larger Ones
While national banks might offer better interest rates and more products, smaller or regional banks may be more likely to be interested in local business growth. Local banks might be more open to lending loans when they are most needed.
Because they are more familiar with local market conditions, smaller banks that are regionally focused may be more advantageous. These banks often offer more personal access to loan officers and place more emphasis on the borrower’s character than applying a credit score model. They can also be more flexible in tough times (for example, they may cover overdrawn accounts without imposing harsh penalties).
3. Examine Fee Structures
There’s the old saying that “nothing in life is free.” Banking is no different, so be sure to investigate banks’ fees. For example, are you required to maintain a minimum balance to avoid a monthly fee? Will the bank cover ATM fees if you’re using a different bank’s ATM machine? How much does it cost to send a wire transfer? Be sure to consider all fees before choosing a bank for your business.
4. Check out the Bank’s Reputation
Your professional network may have business owners who can share their experiences and guide you in the right direction. Find out what bank customers think about their bank’s willingness to lend funds or provide advice.
You should also check to see if a local bank is a Small Business Administration (SBA) lender. A relationship with an SBA-sponsored lender can help you get approved for an SBA loan.
The SBA’s Preferred Lender Program can help you identify banks that do high volumes of SBA loans. These lenders use streamlined paperwork to make it easier for small-business owners to get loans approved.
5. Establish an ongoing relationship
Once you have chosen a bank to support your small business, it is important to establish a trusting relationship with the bank employees. You may even be assigned a dedicated banking professional who can help you identify potential ways to support your company that you didn’t know about and may also be a valuable resource in case of a financial emergency. A banker can help you predict the type of banking services that you will need in the next year.
Before selecting a bank for your business, make sure you follow the tips above.