Someone looking for a bank for personal funds has limited needs—they may just need a savings or checking account. Pretty much anyone will fit the bill, and the most important factor may be a convenient location. A business, on the other hand, needs to put a little more thought into the matter, as its needs are a bit more extensive. Here are a few things to consider in your search.
Don’t Think All Banks are the Same
Sure, all banks operate under the same extensive regulations, and provide the same core services, but this does not equate with them all being the same. There are many differences amongst them.
They have the power to make decisions that affect what type of services they offer, qualification criteria for loans, minimum account requirements, service charges and interest rates. The same service at two different banks can come with two very different sets of fees; one bank may specialize in certain types of loans.
Clarify Your Requirements
When choosing a bank for your business, it is imperative you give some careful thought to what it is exactly you need from your bank. Once you have figured this out, you will be in a better position to evaluate potential candidates—you will make your decision with greater confidence. Just having a vague want of somewhere to put your money, and maybe get a credit card, won’t cut it.
Here are a few things to think about:
- Savings and checking accounts’
- Merchant card accounts
- International requirements
- Frequency of deposits
- Sweep accounts (managing funds between your primary cash account and secondary investment accounts)
- Wire transfers
- Commercial credit cards
- Payroll services
- Government guaranteed loans
Local Banks or National Banks?
This decision can be tough, and is not a question that can be answered in absolute terms. It really depends on so many individual factors, and only you can know what you think is best for your business. Community-based banks have several advantages, such as greater discretion in lending, considering more personal factors in approving loans, and not just strictly financial data and credit scores, greater flexibility during tough financial times and more extensive knowledge of local market conditions.
Larger banks may be able to approve loans for larger amounts of money, offer more services, are more likely to offer corporate credit cards and typically have lower fees than community institutions.
Carefully Consider Fees
The difference in fees between banks may not seem great, but over time, can result in paying a lot more. Think about a mortgage—a slightly higher interest rate can lead to paying tens of thousands of dollars more over the life of the loan. If you make deposits frequently, for example, the bank only charging 25 may be better than the one charging 35—paying that extra 10 dollars each time, over years, can really add up. If you do frequent international wire transfers, the bank that does them for free may be the better option than one that charges 20 dollars each time. You need to carefully think about how often you use the particular services to get an idea of what banks are better bets than others.
If you are considering a bank where you already have a personal account, do not make any assumptions about fees based on this—a business account is a whole different animal.
Using these helpful tips will guide you in choosing the best bank for your needs.