Choosing a bank is one of the most important decisions when starting a small business.
It’s as important as choosing where you’ll set up a brick-and-mortar store, developing a business strategy or deciding who you’ll partner with.
Choosing a bank should be the start of a long and fruitful business relationship.
With so many banks out there claiming to have your business’ needs at the forefront, it can be hard to choose which one is the right choice for your business. Here are five things to consider when making this difficult decision.
Technology
The financial institutions that embrace technology help small businesses by streamlining core operational functions. In evaluating this factor, it’s important to understand the bank’s basic capabilities – does the prospective bank have an easy-to-use mobile app? – performing the evaluation before making a commitment can save frustration later down the road.
The right bank for a small business should easily integrate with crucial third-party applications like your accounting software. Ensuring there is virtual synchronicity between the software you will be using everyday will save time in the future.
Product Offering
Take stock of all the financial products you will need and ensure your prospective bank has all of them. By simply considering whether you need a large or a small bank, you may narrow down your decision quite quickly.
Large national and regional banks may be a better fit if your business needs access to a robust suite of financial products such as checking, savings, line of credit, lending, merchant processing and insurance. Smaller banks can have limited product suites, however, a lot of small business loans come from community banks.
Customer Service
Your local community bank likely prides itself on offering personalized service that is too costly for most of the big banks to provide to all of their clients.
When interviewing different banks, find out what level of customer service they offer and understand their capabilities. A large bank may be able to offer you round-the-clock customer service over-the-phone and online, but again, most of them don’t have enough relationship managers available to know all the nuances of your business.
Retail Presence
Branch locations might not be too relevant for most local businesses, but if you want to be able to walk into a branch and deposit a check, then you may need to consider this proximity. If this is the case and you have multiple locations across states where your bank does not, then the decision has already been made for you.
Fee Structure
Sometimes getting advice from someone who really knows numbers is the way to go when choosing a financial institution. Every bank and every product will have different fees. I recommend that the business owner, and their financial advisor – like an accountant – outline the financial products that are needed over the next 3 years. Once you understand what you need, it’s easier to comparison shop each of those products and find the banks that meet your needs.
Once you’ve considered all these elements you’ll be in a much stronger position to choose the right bank for your business.