Whether you’re a startup, small business owner, or managing a growing enterprise, finding the perfect banking partner is essential. This guide will walk you through the key factors to consider when choosing a bank for your business, helping you make an informed decision that aligns with your company’s needs and goals.
Choosing a bank that fosters a meaningful, long-term relationship with your business is crucial for sustained success. Look for a financial institution that not only meets your immediate needs but also offers personalized support in setting up services like merchant accounts for credit card processing. Prioritize banks with competitive fee structures to minimize costs and ensure they are easy to communicate with, providing responsive customer service when you need it. Additionally, select a bank that is committed to supporting your growth through flexible lending options and financial products tailored to your industry.
A banking partner that understands and invests in your business can become a valuable ally, offering guidance and resources as your company evolves.
Action Items: Finding the Perfect Bank For You
- Use the ideal traits checklist below to determine what is important to you. Make a list of these traits
- Find 3 banks that have all or most of the traits from the previous step
- Read reviews online of each of these banks
- Test out the customer service by calling/messaging each bank
- Decide on a bank for your business
Some Ideal Traits Your Bank Should Have
Accounts have low or no monthly maintenance fees
A sufficient number of transactions can be performed without incurring additional fees
A monthly minimum balance that you can comfortably maintain
Compare interest rates across banks to find what works for you (if applicable)
If you want to be able to go for in-person appointments, opt for a brick-and-mortar bank. If you prefer online banking, choose a virtual bank
Build this as you would any relationship, with the right person who has your best interest in mind. People do business with people, not with banks.
Why Do You Need A Business Bank Account?
A business bank account helps you:
- Separate personal and business finances
- Maintain accurate financial records
- Simplify tax preparation and reporting
- Build business credit
- Project a professional image for clients and vendors
- Protect your corporate veil and minimizes personal risk
What to Look for in a Bank for Your Business
Account Fees
Look for accounts with low or no monthly maintenance fees. Some banks waive these fees if you maintain a minimum balance or meet other criteria. Many small business owners consider this to be the most important factor when it comes to considering banks.
Transaction Limits
Ensure the account allows for a sufficient number of transactions (deposits, withdrawals, transfers) without incurring additional fees.
Minimum Balance Requirements
Consider whether you can comfortably maintain the required minimum balance to avoid fees or qualify for certain benefits.
Interest Rates
While many business checking accounts don’t offer interest, some do. Compare rates if this is important to you.
Virtual vs Brick-and-Mortar Bank
In today’s digital age, robust online and mobile banking capabilities are crucial for efficient business management.
Some business owners like the 100% virtual banks, whereas others prefer to have a physical bank they can go to and get in-person 1-on-1 help. When it comes to choosing a bank for your business, there’s no one-size-fits-all.
Integration with Accounting Software
Look for banks that offer seamless integration with accounting softwares like Xero.
Additional Services
Consider what other services you might need, such as merchant services, payroll processing, or business loans.
Tips for Choosing A Bank for Your Business
- Assess your business needs: Consider your typical banking activities, cash flow, and future growth plans.
- Compare multiple options: Don’t settle for the first bank you find. Research and compare at least three to five options.
- Read the fine print: Carefully review account agreements, fee schedules, and terms and conditions.
- Consider scalability: Choose a bank that can accommodate your business as it grows.
- Ask about lending options: Even if you don’t need a loan now, it’s good to know what’s available for future needs.
- Evaluate customer support: Test out each bank’s customer service channels to ensure they meet your expectations.
- Seek recommendations: Ask fellow business owners or industry colleagues about their banking experiences.
- Consider industry specialization: Some banks have expertise in specific industries, which can be beneficial.
- Digital Banking Tools: Evaluate the bank’s online and mobile banking platforms. Make sure they offer user-friendly interfaces and essential tools like account integration with accounting software, bill pay, and mobile deposits.
What is the Best Bank for Small Businesses?
The “best” bank for small businesses can vary depending on your specific needs, location, and industry. However, some banks consistently rank high for their small business offerings:
Chase Bank
Chase offers a range of business checking accounts with competitive features and a vast network of branches and ATMs.
M&T Bank
M&T Bank provides comprehensive business checking solutions with personalized service and a strong presence throughout the Northeast and Mid-Atlantic regions.
Enterprise Bank
Enterprise Bank specializes in local business banking services with customizable checking accounts and dedicated relationship managers serving communities throughout Massachusetts and New Hampshire.
Reading Cooperative Bank
Reading Cooperative Bank delivers community-focused business checking accounts with personalized attention and competitive features, primarily serving businesses in Boston’s northern suburbs.
When choosing the best bank for your small business, consider factors such as:
- Location and accessibility of branches and ATMs
- Fees and minimum balance requirements
- Available business services and products
- Customer support quality and availability
- Online and mobile banking capabilities
- Integration with your existing financial tools and software
Brick-and-Mortar Banks vs. Online Banks
As you search for the right bank for your business, you’ll likely encounter both traditional brick-and-mortar banks and online-only banks. Each has its advantages and drawbacks:
Traditional Banks
Pros:
- Face-to-face customer service
- Full range of financial products and services
- Cash deposits are easy
- Established reputations
Cons:
- Higher fees and minimum balance requirements
- Limited operating hours
- Slower to adopt new technologies (their apps and websites are not always the best)
Online Banks
Pros:
- Lower fees and minimum balance requirements
- 24/7 access to banking services
- Advanced digital features and integrations
- Higher interest rates on savings accounts
Cons:
- No physical branches for in-person service
- Challenges with cash deposits
- Limited product offerings compared to traditional banks
Consider your business’s specific needs when deciding between traditional and online banks.
Final Thoughts
By evaluating factors such as fees, services, accessibility, and customer support, you can find a banking partner that aligns with your business goals and operational needs.
Remember that your banking needs may change as your business grows, so it’s essential to review your banking relationship periodically. Don’t hesitate to switch banks if you find that your current one no longer meets your needs.
Ultimately, the best bank for your business is one that provides the services you need at a cost you can afford, with the level of support and accessibility that helps your business thrive. Take the time to research and compare options, and you’ll be well on your way to establishing a strong financial foundation for your business.
If you have additional questions on choosing a bank for your business, contact us!
