Finding the best bank for small business is one of the most daunting tasks when starting a business but also one of the most important. The bank you choose will essentially be handling all of your money and in any case, whether for a business or personal use, you want to ensure your bank is doing it to the best of their ability. Different banks have different public reputations and one that you like could be one that your neighbor hates. While it is important to listen to feedback with regard to what other people's experiences have been with particular banks, it is important to do your research, step into your local branches, and ask the right questions in order to find the best bank for you.
Why Is It Important to Find the Right Bank?
Finding the best bank for small business is very important for a multitude of reasons. First of all, you want to feel safe in placing your money with someone else. Deciding to put your money in a bank, opening a checking account, or opening a savings account is a very scary process especially if you have never done it before. While it is the safer place to keep your money in the long run, the idea of simply handing over your money to an institution seems very unnatural. Therefore, it is very important to find a bank that you trust completely.
Comfort and Reliability
One of the best things to do when starting to research what bank to work with is going into your local branches. Many times you will feel more comfortable with a particular bank than others. Whether that is due to its location or the staff, you want to feel welcomed when you are walking into your bank. Some tellers and staff will go out of their way to be accommodating and nice while others will not. Since handling money can be a very frustrating task at times, you want to be working with a financial institution that makes you feel comfortable and reliable.
The best banks take your input into consideration and guide you through each step of the banking process. While they should keep you in the loop and listen to all of your concerns, essentially they are the professionals and should make the final best choice in banking situations. However, a good bank really listens to its customers and their needs. What a customer wants may not be the typical protocol for the best banking practice, but a good bank knows when to listen to a customer and what they want and when to guide a customer in a different direction to make a better, and more informed decision.
Regardless of what bank you choose, you should not put as much emphasis on the bank name, but how they handle their customer service and how comfortable you feel in each branch. Aside from a few small differences, banks essentially do the same thing. The big point is that some banks do it better than others.
Essential Qualities of the Best Bank for Small Business
There are a few essential qualities of the best bank for small business that you should take into serious consideration when deciding who you work with. We have outlined some of these qualities below:
The first is probably the most obvious: safety. Banks have some of the tightest security compared to any other kind of institution in the world. In the past, keeping your money under your mattress was a risk, but it was one people were willing to take to avoid putting their money in a bank due to their fear of losing all their money. As time has evolved, you do not need to worry as much about your savings being safe with a bank. Banks are equipped with extremely high-end vaults that are nearly impossible to break into. However, this is not so much a concern anymore because most banks do not keep a lot of money on site. Instead, everything is electronic with only a few sites in the world holding a lump sum of all the money. You want to make sure whatever bank you go with has top-of-the-line cybersecurity. The chances of your account being hacked online are much higher than the chances of a bank being robbed.
One of the main reasons people begin to put their money in a bank is to start savings or retirement accounts. The difficulty when it comes to banking and using a debit or credit card versus using all cash is that it is difficult to keep track of all the money you are spending. Thanks to the technology age we live in today, pretty much all banks have virtual ways for you to check your spending and how much money you are saving. Many banks have "online banking" which allows you to see your statements in real time so you don't have to wait for your monthly statement. This helps you stay on top of your money and in control of how much you are spending. Some banks also have apps for smartphones which allow you to do the same thing and some even have technology that allows you to deposit a check from your phone. Again, thanks to technology, banking is even more in the customer's control than ever before.
A big quality you should consider when choosing the best bank for small business is how convenient the bank is for you. You should probably choose to bank with a company that has a branch nearby. You want to do this for a couple of different reasons. First of all, if you ever have issues, you can always call into customer service. It is also nice to have the convenience of just walking into your branch and talking to someone face-to-face. Second, if you need to withdraw or deposit money, it can be really cumbersome and expensive to do so without a branch near you. Taking money out of a bank that is not yours almost always comes with charges. In order to avoid these hurdles, it is best to choose a bank that has a local branch.
Choosing a bank that has the features you are looking for is important. What we mean by that is you want to choose a bank that allows you to open a saving account or checking account if you need. Further, you want to choose a bank that can put your money into a savings account or a CD that is connected to different accounts with different categories of your money. First, you should do this because it isn't good to have all of your money in the same place. Another reason we advise this is because different accounts have different interest rates. You should place money that you don't need to touch for a long time in an account that can earn you money through interest.
Lastly, a quality you should look for when looking for the best bank for small business is one that is known for having good ethics. If there have ever been cases of CEO's or other people using people's investments to increase their own capital, you should stay away from them. Go to a bank that seems to have a clean slate and a clear reputation.
Top Questions to Ask Your New Bank
There are hundreds of questions you can ask when you are looking for the best bank for small business, but here are some of the top ones you should consider:
How Are the Fees?
Does the bank have reasonable fees? There is nothing worse than putting your money into a bank and being charged to take it out. While this sounds asinine, it is very common for banks to have withdrawal fees. The good news is most banks offer free withdrawals if you bank with them; they only charge withdrawal fees to individuals taking money out of their ATM without an account. You should look for a bank that does not charge annual fees or any other type of maintenance fee. If you are looking at a bank that does, just ensure they are not astronomical or that they will charge you too many times.
What Is the Minimum Balance?
Make sure you are banking with a financial institution that has a relatively low minimum balance requirement. Many banks have a minimum amount they require your account to stay above. They do this to avoid overdrawing and other issues that could arise. There typically is a fee if you drop below that minimum. Make sure the minimum is reasonable and go for the bank that has one of the lower minimum fees or does not require a minimum balance fee.
What Are the Yield Options?
If you are looking for a bank that you can put your money in and essentially come out with more, you should look for a bank with good high yield options. There is usually a pretty high minimum you must deposit into a high yield account, but the interest return will actually help you make money in the long term as long as you keep it in. Typically, high yield accounts are not ones you can withdraw money from often nor should you want to as it defeats the purpose.
What Are the Loan Options?
When it comes to finding the best bank for small business, you should really look into their loan options. It is not uncommon for a small business to need a loan at one point or another. Ask the bank you are considering what kind of interest fees come with their loan options for small businesses.
Is There Online Banking?
Like we mentioned above with control, you should always work with a bank that has some kind of online banking option. This is for convenience and security. If you are out of town and need to check up on spending or simply need to check your account the convenience of being able to jump on a computer and check the status of all of your accounts is nonnegotiable. Even more than that, if you ever need to deposit a check or transfer money from one account to another in an instant, you need to use a bank that has online banking, or better yet, an app. You should also look into the quality and user-friendliness of the app or website. Ensure it is something that will be more beneficial than a hassle.
Are There Transfer Fees?
Speaking of being able to transfer money from one account to another, you should look for a bank that does not have a transfer fee when switching money from one account to another. Periodically, you may find yourself in need of more money in your checking account. You should be able to transfer money from your savings to checking without having to pay. Some banks, however, do have fees for transferring money from one account to another. Try to stay away from those banks. Banks that do not charge a fee for transferring money typically have a maximum number of times you can transfer money from one account to another each month. If a bank has this option, it is much better.
Finding the best bank for small business is one of the most important things you will do for your business. You want to ensure the bank you are working with has great customer service, is reliable, has a decent reputation when it comes to handling money, does not have any astronomical hidden fees, offers online banking, has a branch local to you, and so much more. There are hundreds of questions you should ask a bank before working with them to ensure you are making the best decision. Make sure to make a trip into your local branch and speak directly with a teller or other employee. They work with people every day to assist them in opening bank accounts so they are a great resource to use. They will probably answer questions you didn't even know you had as well as bring up points you want to talk about. We hope the information provided serves as a good starting point for you and your company in deciding what the best bank for small business is.