Choosing a Small Business Bank

Your banking relationship can be one of the most important relationships your business has. In many ways, from payroll to financing and everything in between, your bank helps to keep your business running. So before you sign on, make sure the bank meets your company’s unique needs. Read on as we cover a few issues you should consider as you choose a bank.

For starters, your bank needs to offer all of the services you will need both now and in the future. Meet with your accountant and figure out what those services are and make sure your bank can deliver. As your business grows, it will need a greater array of services that not all banks can offer. Below is a short list of items your company may need now or in the future.

• Business Deposit and Cash Management
• Accounts Receivable Manager
• Real Estate and Construction Loans
• SBA Loans
• Online Banking
• Vehicle Loans
• Courier Service
• House Equity Loans
• Fraud Prevention Controls
• Online Banking
• Checking/Savings
• Merchant Credit Cards
• Cash Management
• International Banking
• Wealth Management
• Commercial Insurance
• Asset-Based Lending
• Loan Syndication
• Checking Services
• Savings Services
• Business Sweep Accounts
• Retirement Plans
• Property & Casualty Insurance
• Personal Insurance for High Net-Worth Individuals
• Telephone banking
• Letters of Credit
• Commercial loans
• Lines of credit
• Night depository
• Appropriately formatted monthly bank statements
• Commercial transactions window
• Commercial banking department

1. IS YOUR BANK GROWING?
   Find a bank that is aggressively seeking new business. This is important for many reasons including possible referrals, expansion and customer service.

2. ARE YOU COMFORTABLE WITH THE BANK’S STAFF?
   Choose a bank with which you can develop a personal relationship.

3. DO THEY UNDERSTAND YOUR NEEDS?
   Choose a bank that already serves other companies in your industry. It is important that your bank knows your industry inside and out. This way they can address your credit needs by taking into account the unique aspects of your industry.

4. DO YOU WANT A BIG BANK OR A SMALL BANK EXPERIENCE?
   Don't limit your search to large banks. Look also for smaller banks including institutions with just a few local branches. These smaller institutions tend to be more aggressive in acquiring and retaining new customers. They often will be more lenient on qualifications for financing, much friendlier, and more personalized in the services they offer. Financial institutions are under constant pressure to remain profitable, and in order to do so, many smaller institutions differentiate themselves by offering unparalleled customer service and flexibility. Also, small banks are more likely to refer business your way. You may lose out on some services such as nationwide ATMs, but it is often worth forgoing such services for an intimate banking relationship.

5. CAN YOU TRUST THE INSTITUTION?
   A financial institution can easily promise customer service and reliability in their ads, but how do you know if they will deliver such things? A quick check at your local Better Business Bureau can alert you to potential problems. You also should check your bank's financial stability rating via Bankrate.com's Safe & Sound rating feature. Also, ask around. See if any of your business colleagues have had any experience with a particular bank, currently or in the past.

6. DOES YOUR BANK OFFER EXTRAORDINARY SERVICES?
   Many financial institutions offer services that allow you to write checks, transfer funds, pay bills, and manage your account online. If you work off-hours, or just prefer the convenience of banking from home, online banking may be an option. If you already use a personal finance program, such as Quicken or Microsoft Money, many banks offer online integration with such programs. Check to see if your potential choice offers these and other services that might be of use to you.

7. TURNOVER RATE
   Find out how long your potential banking representative has been with the bank. High turnover is a bad sign for any bank, possibly indicating poor management and inherent instability within the institution. Even if management is solid, having to deal with a new bank rep will end up being a hassle for you. When your banker is replaced with another, you must educate the new rep about your business and its needs.

8. CUSTOMER FEEDBACK
   One of the best ways to gauge a bank's reputation is to go straight to the source- the bank's customers. Talk to a representative at the bank and let them know you're looking to start using them for your banking needs, but would like to talk to some of their existing customers. If they want your business bad enough, a rep can talk to existing clients and ask their permission to use them as references. If this isn't possible at a particular bank, you could always just ask people waiting in line. Be sure and ask how they feel about key issues that matter to you, but also keep in mind that most existing customers might not share the same priorities and have the same needs as you do.

9. CAN YOU GET TO THE TOP?
   See if you can obtain access to top management and decision makers. If you have a problem or a particular need that your bank rep can't attend to, or if the problem IS your bank rep, you will have to be able to climb the internal chain-of-command. If a bank's upper management is not accessible to its customers, an important issue might not be readily resolved.

10. COST VERSUS SERVICE
    Sometimes, service comes at a price. If you find a bank that offers all of the services you require, make sure the fees associated with those services are within your budget for banking. Banks should give you a representative list of their fees. Do a comparison between banks if funds for banking services are tight.

11. KNOW WHEN TO SWITCH
    Just like any other vendor, sometimes companies outgrow their bank. Don't be afraid to find a new bank if you feel that your needs are changing as a business. Communicate any plans to switch before you commit; sometimes your banker will be able to work with you and accommodate your growing needs. They want to keep your business, and will often times bend over backwards to keep you on their client list.