Small business owners will often spend more time researching a business gadget purchase than their choice of bank. When it’s time to open an account, they will simply head over to the bank that’s always taken care of their personal checking account.
If you’re willing to put in time to do your homework, understanding what good small business banking can do for you is money in the bank. There’s a great deal to be gained. If you need a few quick tips, here’s an introduction.
Look for a bank that has authority to lend
Many local branches of large, national banks need to check with authorities higher up before they will approve a loan. At smaller, regional banks, however, local managers carry far greater discretion. When you build a relationship with such a bank, loans can be far more forthcoming because the people able to pass approval actually know you and need no credit score to take a decision. It’s best to simply speak to the relationship manager about where approval authority lies.
Think about those interest rates
Come the day that you need to borrow, you want the bank that you have the strongest relationship with to also be able to offer you reasonable interest rates. According to the National Federation of Independent Business, the large, national banks usually charge lower rates than the smaller banks. They also tend to make far less fuss than the regional banks about approving business owners for corporate credit cards. These practices vary widely from one bank to the next, though. It’s important to speak to a couple of banks to find out where you stand the best chance of receiving understanding treatment.
How about SBA loans?
The US Small Business Administration runs a program for federally subsidized loans. These loans are available to businesses not able to offer collateral or show reasonable a cash flow history or a respectable credit score to banks offering traditional business loans. The SBA doesn’t hand out loans on its own, though — it works with individual banks. It’s important to go with a bank that is able to work with the US government’s SBA loan program.
Look for all the extras
Full-service small business accounts should offer invoice services, payroll applications, cash management services, retirement account services and discounts on office supplies. Not having access to one of these services can mean having to pay full retail elsewhere. Not every bank offers the same suite of services. It’s important to look.