skip to Main Content

Selecting a Bank For Your Business

By Kemp Coady

Choosing a bank for your business involves more than opening a new account at your personal bank or finding a place with a nearby branch office. You need to understand what services you require and how much they cost. Ideally, you will find a banker who will take the time to help you access any necessary services or resolve any problems, allowing you to go back to running your business with peace of mind.

Questions to Ask 

What lending authority do you have?

Check to see what loans the bank offers. Ask them how large a loan they can extend to you without checking in with executives. 

Relationship managers at community-based banks often have more discretion than those at a big institution, and they may consider small business lending to be their bread and butter. But lately, the distinctions between “large” and “small” banks have blurred with the industry’s consolidation. 

Still, you might find that smaller, regionally focused banks may be better because they know local market conditions. They often provide more one-on-one access to a loan officer and put more emphasis on a borrower’s character rather than just applying a credit score model. And they can be more flexible during tough times, such as covering overdrawn accounts without imposing stiff penalties.

What services do you have for small businesses?

Banks may offer various loan types geared toward small businesses, such as working capital or asset purchase loans. They may also have experience in areas such as commercial real estate, equipment leases, business credit cards and savings accounts, or payroll services.

Assess what services you’ll need for your business to succeed. Finding a bank that can offer multiple services can help you streamline your efforts while you start and build your business.

What rates are you charging?

Rates charged by large financial institutions “are systematically lower” than those charged by community ones, according to a study co-written by the National Federation of Independent Business, an advocacy group. Larger banks are more likely to approve small business owners for corporate credit cards, which can be used for financing.

Is your bank comfortable working with the U.S. Small Business Administration (SBA) loan system?

Federally subsidized loans help protect the bank against default, which makes it easier for banks to lend money. SBA loans are available to businesses whose credit histories, cash flows, or collateral would be inadequate for them to obtain traditional bank loans. The SBA typically offers more flexible repayment terms than traditional lenders. 

Larger institutions are more likely to make loans backed by the SBA, which lets them accept riskier borrowers.

What extras are available with your account?

While they typically have stiffer lending procedures, larger banks may also offer added benefits such as online services that help save time and money on tax and accounting assistance. These services may include sending invoices, collecting payments, and payroll and loan applications. However, some banks may charge a fee for these services or tie them to requirements such as having your employees use direct deposit channels. 

But keep in mind that banking is a competitive business. It rarely takes more than a year for a new product or service to be copied by banks across the country. First and foremost, you should trust and feel comfortable with your bank. 

Compile a list of banks which cater to small businesses your area

Bank Types

  • Local
  • Regional
  • National

For example, in the State of Connecticut some banks that cater to small businesses include:

  • Bank of America
  • CitiBank
  • Webster Bank
  • Ion Bank
  • Thomaston Savings Bank
  • Connecticut Community Bank National Association
  • Fairfield County Bank
  • Quinnipiac Bank and Trust
  • The First National Bank of Suffield

Considering Your Options

Start by compiling a list of banks in your area that cater to small businesses. Most areas will have a mix of local, regional, and national banks. For example, Connecticut options include Fairfield County Bank (local), Webster Bank (regional), and Bank of America (national). 

Call your local banks to see if they have a person you can contact about their small business services. Get their name, telephone number, and e-mail. After you contact them, see how quickly they respond to your inquiries; you should ideally be able to find someone who offers prompt follow-ups to any questions or concerns you have.

Create a one-page information sheet for each bank you contact. This document should summarize all of the services they offer, including:

Basic Services

  • Checking account 
  • Business savings account 
  • Credit card 
  • Deposit-only card 
  • Discounted employee checking accounts
  • Online banking

Lending Services

  • Lines of credit 
  • Working capital, term-loans 
  • Commercial real estate 
  • Equipment leasing
  •  SBA loans

Cash Management 

  • Wire transfers 
  • Wholesale lockbox
  • Merchant services

Other 

  • Import/export 
  • Payroll 
  • Retirement accounts 
  • Insurance 
  • Discounts on hotels, car, and other services
  • Awards programs

This Business Insight is © InnovatorsLINK. For republishing, please contact dlangeveld@innovatorslink.com.

Spread the Word

Share on facebook
Share on linkedin
Share on twitter
Share on email

More To Explore

B2B

Creating a LinkedIn Business Page

By Kempton Coady

LinkedIn is like a social network for the business world. Individuals set up professional profiles to share their work experience,

Join the InnovatorsLINK Community

Register a FREE account to take advantage of our member benefits. Create a business directory listing for B2B exposure, receive the daily MSJ Newsletter, participate in forums and more.

News

Latest news on local, state, and federal business trends.
In-person and online events from state and local organizations.

Resources

Major topics facing the entrepreneur explained.
Government and foundation organizations that can assist your business.
Improve your business knowledge.
Learn how to access local, state and federal funding sources.
Discover where your business plan might need improvement.
Business courses for comprehensive learning.
Learn more about the region’s Blue Economy.

Community

Search thousands of listings to find the right businesses and services to help your enterprise.
Share your story, ask questions, or pitch partnerships to improve collaboration among the local small business community.
Get personalized resources and make connections with other businesses with a free account.

News

Latest news on local, state, and federal business trends.
In-person and online events from state and local organizations.

Resources

Major topics facing the entrepreneur explained.
Government and foundation organizations that can assist your business.
Improve your business knowledge.
Learn how to access local, state and federal funding sources.
Discover where your business plan might need improvement.
Business courses for comprehensive learning.
Learn more about the region’s Blue Economy.

Community

Search thousands of listings to find the right businesses and services to help your enterprise.
Share your story, ask questions, or pitch partnerships to improve collaboration among the local small business community.
Get personalized resources and make connections with other businesses with a free account.