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There are many factors in play that will decide whether your small business will succeed or fail, but the foundation of any success must be financial management. As an entrepreneur, you are likely more than familiar with how important control over money and investments is, particularly in the infancy of a new start-up.
It is a bit ironic, then, that most entrepreneurs tend to stay on trend when it comes to new financial management software and various budgeting platforms, yet the majority probably don’t spend much time choosing the backbone of their business’s finances — their bank.
Choosing a bank isn’t as simple as deciding who to trust with your money, but also will affect future loans, ease of use/access, and even how much money you can save in the long run. While the majority of reputable banks will probably work for the typical small business, why settle for average when a few minutes of research can put and your business in a much better position to thrive.
For the entrepreneur growing a new business and looking to make the jump into small business banking for the first time, there are five important questions to consider:
- Will you need a loan now or in the future? It’s common for small businesses to rely on loans, especially in the first few years. Even if you don’t need a loan right away it is in your best interest to find a bank that offers SBA loans in particular.
- What branches are in your local area? There are many benefits to having a local branch for your banks right in your city. Double-check to make sure there is a branch in your local vicinity, especially if you are rurally located. The same goes for ATM networks, especially if you travel often.
- How often do you require remote access? Entrepreneurs are some of the busiest types of people, making remote access from a tablet or phone critical for money account management. Be sure the bank you’re considering has a user-friendly app that at least allows for viewing business checking accounts.
- Do you currently use financial management software? Quickbooks is the most popular financial management system for small businesses. If you rely on Quickbooks finding a bank that is compatible will be very valuable.
- What are your average/projected transactions and deposits per month? The first step in opening a small business account is selecting a business package, with the main differences between packages being how many transactions and/or deposits you will need to make on a monthly basis. Remember to plan ahead when calculating this.
Keeping your answers to these questions in mind will help eliminate banks that don’t meet your needs. Once you have a couple of banks to chose from it’s a matter of comparing monthly fees and any bonuses, such as overdraft protection, business credit cards, insurance options, etc.
Sifting through the huge number of national and local banks eats up a lot of time, so save yourself the frustration by focusing on these top five choices.
Wells Fargo not only does very well with overall customer satisfaction when it comes to personal banking but has appealing options for small businesses. For small business checking there are three choices – Business Choice Checking, Platinum Business Checking, and Analyzed Business Checking.
For most small businesses the Business Choice Checking is likely sufficient. It is designed for growing start-ups with a moderate number of transactions. The basics of this account include:
- $25 opening deposit
- $14 monthly service fee (w/ waive possibility)
- Up to 200 transactions and $7.5k in cash deposits with no charge
Other perks of going with Wells Fargo include:
- Complimentary account alerts
- Access to 6k+ branches nationwide and over 13k ATMs
- 24hr account access w/ mobile access
- Overdraft protection
- Comes with access to OptRight payroll solutions
- Quickbooks compatible
- SBA loans available
- Interest rates on loans aren’t very competitive
Overall, Wells Fargo’s Business Choice Checking is a great choice as its fee structure is very reasonable and they have a number of perks that come with an account. It is also pretty well known that Wells Fargo is one of the most active banks when it comes to small business lending. If you have plans for business growth and will need SBA loans, this is one bank you should strongly consider.
Bank of America
Bank of America is another one of the top 3 largest national banks, putting it right up there with Wells Fargo. Bank of America offers only two checking account options for small businesses, Business Fundamentals Checking and Business Advantage Checking. The former choice is the most popular.
With Business Fundamentals Checking you can expect:
- $14 monthly service fee (w/ waive possibility)
- Up to 200 transactions per month and $10k cash deposit at no charge
Other perks to consider:
- Comes with a free business investment account for savings
- Their small business online banking account is superior to many
- Complete mobile access to checking and savings accounts
- No early termination fee
- Compatible with Quickbooks
- Avoiding the monthly fee comes with steps that are a bit more intensive
- $250 expense requirement for monthly fee waiver can only be done with a BoA business debit card linked to account
The Business Fundamentals Checking account is a particularly good choice for those with a small business in an industry that is difficult to get a loan for. Not only does BoA offer the two main types of SBA loans but they are also more apt to accepting small business applications that other banks may turn down.
Another nice thing about BoA is that they often have generous new account perks, including cash bonuses or points added to debit/credit cards.
Capital One takes an interesting approach to small business checking accounts by limiting their options to just one — the Spark Business Checking account. They do have a complementing savings account for those interested.
One very interesting thing about Spark Business Checking is how much freedom it offers small businesses, which is why it’s such a tempting choice. There no limits on:
- Monthly transactions (includes deposits, withdrawals, and transactions)
- Monthly fees
- Minimum balance requirements
- Also, no ATM fees (with Capital One or Allpoint)
Downside of Spark Business Checking:
- Functions like an online bank and account can only be opened online
- Up to $5 ATM fee for non-Capital One banks
- No SBA loans for business accounts (only access to business credit cards)
You do get a free debit card when opening a Spark account and, on that topic, opening an account is super simple. Capital One’s Spark Business Checking is a great choice for entrepreneurs that don’t want to pay fees and enjoy using an online back – with this option you get all the benefits of online banking, but also get the reputation and reliability of Capital One.
If you like the simplicity of Capital One but want more options, then US Bank could be the right bank for your needs. It offers three options for an account package — Silver, Gold and Platinum. Naturally, the Silver account is the more basic option, which is ideal for small businesses.
A Silver account comes with:
- No monthly fees
- 150 transactions and 25 cash deposits per month
Other perks come in the form of:
- Free overdraft protection for the first year
- Complete access to online and mobile banking
- Free mobile and email account alerts
- Free $200 payroll bonus
- Free digital invoicing
Loan-wise you get four choices:
- SBA 7(a) and 504
- SBA Express
- SBA Division
- Transaction fee only free with US Bank ATMs (5k ATMs nationwide)
US Bank may not be as large as other banks but if you have a branch in your region and frequent areas with their ATMs then this really isn’t an issue. They offer a great selection of SBA loans, including those that will accept the more tricky industries to get loans for. Their online banking system isn’t super impressive but it works well and reliably.
Local Credit Union
While not as popular compared to national banks, local credit unions can have a number of benefits. Naturally these vary between credit unions, but for the most part you can expect lower fees, lower loan interest rates, superior customer service, and perks of being a member of a bank versus just a customer.
Unfortunately, local credit unions usually have fewer branches and some aren’t as tech-friendly as banks, which could be a problem if you rely on Quickbooks-compatibility and remote access.
That said if you have an insured, reputable local credit union and your small business is in a fixed location (brick-and-mortar), you should definitely consider this option. Credit unions are all about community and you may find that you even have an easier time getting that loan you need.
The best small business bank is the one that fits your needs and provides the services your business requires. Any one of the five featured will do well for essentially any small business, regardless of industry, but take a moment to visit each bank’s website to really make an informed decision.
Remember to keep your “must have” criteria in mind and spend some time really comparing prospective banks before deciding on who to trust with the financial well-being of your business.
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