What Should a Small Business Look For in a Bank?
Small businesses are always in need of funds and — initially — in need of starter capital to survive. Banks are the most logical place to turn to for those funds. However, not all banks are created equally. Some banks will treat a small business owner much better than others and may offer more favorable services for small businesses. Here are some factors to keep in mind when considering a bank for a small business loan or account.
Watch For Fees
One factor that every small business should look for in a bank is low fees. Some banks can be notorious for trying to nickel and dime individuals on their accounts. For example, they may have massive overdraft protection fees or high account fees. Missing one payment may cause a cascade of interest. Fortunately, this is not a required way of doing business. Some banks are able to charge a flat, understandable fee that is clearly communicated up front. For those banks, the small upfront fee also comes with a wide range of services. Instead of simply providing an account, community banks and others with good business practices offer a wide range of accounts, ways to boost funds, investment packages, and more. All of these opportunities come with benefits and interest rates that are much more favorable than those from large banks.
Supporting Business Customers
Another key factor is customer support. Customer support is important for the health and success of any small business. Small businesses may not have a wealth of experience running and operating their business. They may have questions about cash flow, debt servicing, and lines of credit. Their bank is usually their first stop in trying to figure out the answers to these questions. Some banks do not respect the time and needs of their many clients. These banks, usually the largest and most expansive in the United States, set aside most of their time for their largest investors. A small business that has borrowed a few hundred thousand dollars means as much to them as an account holder with ten thousand dollars. They may only be available for limited meetings or may provide boilerplate advice during those meetings.
What This Means For You
It is up to the owners of small businesses to properly evaluate and vet their banks. These owners should look for customer reviews and consider the size of their bank in making that choice. Smaller banks keep funds within the community and truly value even the lowest small business loans that they lend. Make sure to consider all of these factors before deciding which bank is best for you.