When it comes to opening a small business, it’s important to choose a bank that will work with you. You want a bank that caters to your particular needs, rather than one with more experience working with individuals or large companies. Here are 10 tips on how to choose a bank for your small business.
- Know your needs before meeting with a banker.
Before you meet with a banker, make sure you know what you need. Not understanding what you need can lead to issues down the line. You may find out later that the bank doesn’t have all the features you call for. Make a list of everything you require from a bank.
- Consider a local bank rather than a national bank.
Local banks may have a better understanding of the area, and they may be more likely to work with you and create a custom plan for your business. However, keep in mind that national banks may have better interest rates than small local banks.
- Ask if it offers a credit card.
Having a credit card is essential for start-ups and small businesses. When it comes to choosing a credit card, you want to pick one with the best rate possible. Getting a credit card with a high interest rate will only spell problems in the future. In theory, you should be able to pay off the full amount each month.
- Consider how much the bank can loan you.
While large national chains may be more difficult to navigate, you may find that they will loan more than a small local bank. However, small banks are more likely to give you loans compared to large ones. You should look carefully at how much each bank is willing to loan you and how the loan can be applied toward your business. Too little can leave you in a tight spot, and too much can leave you in huge debt.
- Carefully go over the terms of every loan.
Loan terms can be complicated, so you need someone there who can explain everything to you in layman’s terms. Going over what is expected of you will avoid issues down the line. If the bank isn’t willing to go over the loan terms with you, take your business elsewhere.
- Investigate fee structures.
When a bank states that it offers “free banking,” there may actually be some fees that can accrue. There may be fees that come from not having a certain amount of money in your account or overdraft fees that will make things worse. There is also usually a minimum amount you must deposit to open an account. Figure out the fee structure for your account before getting in over your head.
- Look into the bank's reputation.
Before you decide to bank with a company, you need to check around with friends and family to see what they have experienced with the bank. Get their opinions on the bank and decide whether it’s right for you. Don’t be afraid to look the bank up on the Better Business Bureau website to check for complaints or ratings.
- Reevaluate periodically.
Even after you have chosen a bank, you should reevaluate periodically. Once a year you should make sure your bank is still working out for you. If it isn’t, then you need to begin looking for a new bank.
- Start an ongoing relationship.
Ongoing relationships with banks make it possible to receive better deals. You’ll also have an easier time when it comes to going to the bank or dealing with issues. People will be more likely to go above and beyond for you. You’ll reap various benefits just from being a good customer.
- Ask if it offers online banking.
Online banking is great for many reasons. Not only does it decrease your carbon footprint, it offers you a clear view of your finances in an interactive way. Plus, you can view your accounts and make transactions whenever and wherever you want. It’s a 24/7 service that’s great for any small business.