How to Choose the Right Bank for Your Small Business

Running a small business is much easier when you separate personal and business finances. You may even want to set up these accounts at separate banks to keep everything organized. For your small business banking account, it's essential to choose the right banking partner since not all banks accommodate the needs of small businesses. Pinpointing your financial needs, comparing account options, and doing thorough research will simplify choosing the best fit for your business.

Clarify your business banking needs

Take time to write down everything your business needs from a bank. This will require talking to all department managers and reviewing current workflows. You may also want to get feedback from employees and vendors to further refine your list.

Your list will likely include several of the following:

• Checking accounts
• Savings accounts
• Payroll services
• Merchant tools
• Online banking
• Mobile deposits
• Wire transfers
• Cash management
• Business credit cards
• Term loans
• Lines of credit
• Treasury services

You must review all of your operations to clearly outline your banking requirements. No two businesses are the same, so there is no universal checklist. As you do the assessment, keep in mind that your needs will change as your business grows. Once you know what matters most, this takes us to the next step, which entails comparing banking options so you can find the best fit.

Compare core banking products and lending options

The first thing you need to compare are the account types. Small businesses need accounts with flexibility, convenience, and fraud monitoring to safeguard transactions. Flexible accounts are those that come with options for increasing transaction limits and added support during expansion phases.

Many banks provide credit offerings in the form of term loans, credit cards, or lines of credit. You can evaluate each one to see whether you would benefit from any of them. Some banks will offer lower interest rates and better repayment terms.

If you employ several workers, you'll want an account with payroll support. This may look like direct deposit or automated payroll tools to assist with timely employee payments.

As you compare products at different banks, keep in mind that traditional banks, credit unions, and online lenders each have their pros and cons.

• Traditional banks: Broad services but slower approvals for small businesses
• Credit unions: Lower rates but fewer products for growing companies
• Online lenders: Fast funding but higher costs than traditional banks

No matter the banking partner you choose, it's imperative to make sure it has services that help small businesses achieve greater growth.

Evaluate digital tools and day-to-day banking experience

Most of today's banks offer digital tools and technologies that make it easy to scale your company. The right banking partner will provide customers with access to mobile banking platforms featuring online dashboards and payment tools. You can use these features to pay vendors, receive payments from customers, fund your operations, and more.

Make sure to choose a bank that lets you have full control over the account management. This way, you can set up permissions for different users. For example, if you want your accountant to have access to reports but not the ability to move money, you can customize this with the bank’s dashboard. Or maybe you have a manager who you want to manage your equipment financing. With custom permissions, you can assign the level of access needed.

Choosing a banking partner that provides automatic alerts for account activity is another smart move. Whenever there is unusual activity, you'll get an alert letting you know to take action. This type of monitoring is helpful for small businesses in all sectors.

You'll also want a banking partner that simplifies integrating software and apps with your business banking account. Let's say you're a retail company that uses inventory tools to fulfill orders. By syncing the platform with your account, you'll have a clear view of your cash flow. You can then use the data to guide your marketing and budgeting to achieve better sales.

Assess service quality and relationship support

Products and loan rates matter when selecting a banking partner, but you must also look for reliable customer service. You don't want a bank that takes days on end to respond to questions or one that primarily deals with mobile banking issues. Small businesses need banks that provide fast support for everyday needs and quick solutions for urgent financial concerns.

When choosing among the many different types of banking institutions, it's crucial to understand how they differ:

• Community banks: Local accessibility, personalized service, limited product range
• Regional banks: Broader access, balanced service model, moderate product selection
• National banks: Wide accessibility, structured service, extensive product offerings
• Credit unions: Member-focused access, relationship-driven service, fewer business products
• Online lenders: Fully digital access, streamlined service, limited long-term products

When reviewing each type of institution, look for consistency and how they treat clients. Do customers get a personal representative to guide them through questions, or does the bank just redirect them to a call center? You'll want to continue your search until you find an institution that has dedicated support for your business.

Review security, fees, and transparency

When you are looking for a bank to work with, it's important to prioritize security, costs, and openness. First things first: Familiarize yourself with the whole pricing structure of each account. Think about the transaction fees, monthly maintenance fees, and service charges that might crop up as your company expands.

Examine the bank's security features once you've reviewed the costs. Encryption, real-time warnings, and multifactor authentication are security elements that strong organizations provide. Your financial data is better protected against fraud thanks to these measures.

Another crucial aspect of assessing a banking partner is their level of transparency. A trustworthy financial institution does not bury its rules, terms, and products in obscure small print; instead, it makes all of this information readily available. You should be able to trust that any policy updates or modifications will be conveyed to you honestly and transparently at all times.

Consider scalability and long-term fit

Next, you need to find a bank that supports you throughout all phases of your company's growth. Having to change banks just because your needs expand can be a huge disruption that involves lots of paperwork. By choosing a bank that already has solutions in place to support future growth, you won't have to stress about switching providers later on.

You're not looking for a bank to simply open an account with. You want a bank that's a good long-term fit and that will accommodate your needs as you scale. This type of bank isn't going to disappear when your operations become more complex. It will have around-the-clock support for onboarding, troubleshooting, and other time-sensitive requests.

Banks equipped for evolving businesses usually provide:

• Multi-location account management
• Centralized cash flow oversight
• Scalable credit lines
• Expansion-friendly loan programs
• Multi-user account permissions
• Integrated payroll for larger teams
• Systems that support higher transaction volumes

Choosing a banking partner that supports your next stage of growth

What do you want your next stage of business growth to look like? Do you want it to include opening additional locations after you expand your customer base? Or maybe you want it to scale faster so you can fund a new product line? Whatever it looks like, you must have the right banking partner in your corner to support that vision.

The right bank will boost your confidence in managing daily operations. You won't have to worry about fraudulent transactions or tracking down missing payment information. You'll have everything you need in an online dashboard that lets you monitor activity and change account permissions as needed.

There's never been a better time to reassess your banking situation. Small businesses that achieve success are those that carefully evaluate their financial partnerships. Reach out to Centrust® today to discuss your business banking needs.