Making Debt Work

How to choose a bank for your business

CHOOSING A BANK to any small business owner is very important. I can’t express enough the importance of separating your personal from business finances. I suggest you use a bank that you can trust, one that is close to the location where you do business, offer competitive rates and one that allows the processing of credit card through the internet (if that’s where you do business). A bank that is fast and accurate with their information is key to online banking and bill management. I would also look at banks offering good start-up programs, like free business checking and credit cards with low or no monthly fees.

You may consider the bank that you use personally, especially if you have a long term relationship with them. Once again, if you use the same bank for personal transactions as well as business it is very important that you keep the accounts separate from each other. Don’t allow balance transfers of draft protection across business and personal accounts. This is a huge mistake that many start-up small businesses make and often results in failure including the draining of their personal accounts. You may also want to consider a bank that is a Small Business Administration (SBA) lender, which guarantees small business loans; and get a referral from and attorney or a local chamber or commerce.

BUSINESS GETS PERSONAL while considering the menu of small business services a bank offers; get to know its people, especially at the branch you expect to visit regularly. It’s important that your prospective banker wants a full relationship and will be able to help your businesses down the road.

As a business grows, it needs change. Good bankers invest the time to understand their clients and their needs. Your banker can save you money in fees, grant you a line of credit, and increase your credit via loans, performance bonds and letters of credit. With their extensive connections in the community, bankers can also provide introductions to potential customers, suppliers, employees and investors.

DOES SIZE MATTER? Many small and medium banks cater specifically to small businesses, while some larger institutions have small business divisions.

Small business owners should place a premium on personal service. This means connecting with a banking representative who will take the time to get to know you and your business. Most small businesses don’t need a bank with national presence. A community bank offers strong pros to a small-business person-proximity to the business, knowledge of the marketplace and local ownership. In addition, local banks tend to have more employment continuity. Often, a corporate banker looking to advance does a tour of duty and moves on.

Large banks, such as Wachovia and Bank of America, often employ specialists who are tuned into small business issues and offer access to the people who get things done. Also, if you require regional and national representation or branches outside of the community, a large bank might be a better choice.