Perhaps the most critical aspect of your business is financial - how the money comes in, where it is stored, and how the money goes out. For starters, banks and credit unions are not all the same. Different products, services, and cost structure sets them apart from one another. Choosing the right fit for your business can make your life easier and make your business more profitable. Below, we’ve provided some important questions to ask when choosing a bank:
Does the bank have convenient locations and hours?
Are the bank’s branches nearby and easy for you to access? When you’ve just been paid and you’ve got a pocket full of cash or checks, it’s important to get that to the bank. Finding a bank with locations in the neighborhoods where you operate is vital.
Are the bank’s hours convenient for you? Most banks let you make deposits after hours, but if you’re the kind of person who prefers to make deposits face-to-face, having a bank that’s open when you need them may be important to you. At the end of the day, you need to be comfortable with the transaction.
Do the services they offer fit your business’s needs?
Maybe your business only requires basic banking services like the ability to make deposits and withdrawals, and having checking and savings accounts. However, you may need a bank that offers more services like interest-bearing checking accounts, online services, and mobile deposits. Typically, smaller banking institutions offer more basic services, which may be all you need. Conversely, larger banking institutions can have a much wider menu of services and offer more “horsepower”. You can usually review all of a bank’s services by looking them up online, and then consult a banker at a branch to talk about what type of account might fit your business best.
Do they pay interest on your business checking account?
Naturally, you want a bank that maximizes your assets (your money) and minimizes costs. Ideally, you want a bank that is going to pay interest on your business’s checking account. However, in many states, it is illegal for a bank to pay interest on a simple business checking account. Interest can only be paid if the money in your account is attached to a Sweep Account, which transfers your money into a separate interest-bearing account overnight and puts it back in your checking account the next morning. Sweep Accounts come with different features and investment options that pay different interest rates, and carry different costs. Talk to a banker to determine the most cost-effective option for your business.
What additional fees are there?
In general, every bank or credit union will charge you fees. Excessive fees can be a burden on your business. Before opening an account with any bank, make sure you find out about the fees associated with their accounts. Keep in mind that fees can be charged on almost anything from balance minimums to deposits. In general, the fancier the product, the more it will cost you in fees. While each fee may not look significant on its own, they can add up quickly and have a huge effect on your profits.
A small, hometown bank and a big, national bank can do many of the same things. Make sure you ask the right questions up front to find the trusted financial partner that will help your business grow.