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There were at least 6,799 commercial banks operating in the US as of the last count in February 2014 by the FDIC. This figure is in fact, minus the hundreds, if not thousands of online banks that are looking to completely digitalize the banking sector. With this kind of competition, it’s obvious that finding the best financial partner for your small business can pose a great challenge. So are you still looking for that perfect bank to effectively handle your business needs?
Here are the crucial factors to consider. Let’s get started!
1. Compare Large and Small Banks
From large, established national banks to small community banks, there’s definitely no shortage of options. To help you out, you should carefully select your bank instead of simply opting for an established brand. This is because smaller banks will tend to offer more compelling interests as they look to promote local business growth as well as grow their own brand. On the other hand, you’ll get a wide array of products to choose from and more favorable interest rates with big, national banks.
That being said, you should seriously consider the smaller, regionally focused banks because they have inside knowledge about the local market conditions, according to The Wall Street Journal. Don’t forget that they tend to be more flexible when those dreaded tough times kick in.
2. Location Matters
Where is your bank located? This should be one of the first questions you should answer before settling for a specific bank. That aside, you should seriously consider the bank’s proximity to your office, home, or any other place you might choose to work from. The main reasons why we say this is because you will definitely need to make deposits and withdrawals for your business from time to time. In addition, you might need to use the national ATMs when you travel for work or you might need bank-issued certified checks.
All in all, the type of business you’re in will greatly determine how often you’ll frequent the bank. So if you’ll need to physically visit the bank – let’s say daily or weekly, then make your choice accordingly.
3. Credit Cards
Your bank’s ability to offer you a credit card is very crucial to the success of your business. The thing is, finding a bank to open an account with can be easy, but finding a bank to lend you money is a different ball game altogether. To begin with, a credit card typically designed for business owners isn’t that different from a personal credit card. Just like the personal credit cards, business credit cards allow cardholders to build credit (a major plus), earn rewards, and track expenses.
Well, here’s the difference, a business credit card tailors its reward program for common office expenses like phone bills, and supplies. On the other hand, a personal credit card tends to skew more towards rewarding typical consumer spending like entertainment, groceries, etc.
But don’t just focus on the rewards and forget to investigate the associated fees attached to your business credit card. To help you out, here’re the basic credit card charges that you should expect:
- Balance transfer fee – Fee for moving an outstanding balance between credit cards.
- Annual Fee – Yearly service charge.
- Cash Advance Fee – Charge for transacting from an ATM or taking cash.
- Foreign Transaction Fee – Charge for transacting in a foreign currency. However, most credit cards don’t charge this fee, but those that do, charge 3 percent of the transaction amount.
All said and done, we recommend you take your time and learn more about this comparison on different credit card charges and rewards. Another thing, don’t ignore the small incentives because they could just be what your business needs to make it to the next level.
4. The Bank’s Reputation
It’s important to look for reviews from fellow business owners operating in your industry because this will help you narrow down to the best bank. Ask them if they are satisfied with their bank’s services and how willing are their banks to grant loans as well as banking advice. In addition, investigate if the local bank qualifies to be a Small Business Administration (SBA) lender. This is because the approval process of an SBA loan will be much quicker with an SBA sponsored bank.
Technology is an area where, most big, national banks have specialized in due to their connected networks and deep pockets. This has really put them ahead of smaller community banks in terms of online banking convenience. And yes, most national banks will offer you a portal where you can be able to handle almost all of your banking tasks.
On the flipside, most of these online banking systems don’t offer flexibility for businesses with more complicated needs. Therefore, it’s paramount that you select a bank that can offer you a user-friendly platform to carry out simple banking tasks without involving a banker. This can save you lots of valuable time and money.
Selecting a bank that you’ll trust with handling your business’s financial needs is not as straightforward as choosing the one to handle your personal needs. Just take your time and investigate more about the bank services, the fees charged, and most importantly additional features like credit cards and ATMs.