Are you struggling with choosing a bank for your small business? Read this post as it will provide some guidance.
“What kind of business do you run? What banking services do you need? Which can weigh your business down at its current level?” These are the questions to ask yourself before choosing a bank to use for your business operations. Now before you make your choice, you need to understand two things.
The first is this – sticking with your personal savings account for your business operations is a no-no! This is not to say that it is illegal to carry out business transactions on your personal account, but doing so can wreak havoc and cause improper accounting of your company’s financial status. Financial experts advise that your personal and business accounts be separate to avoid these issues.
Now that that’s out of the way, the next is that banks differ in the kinds of services and products they offer. Take, for example, if you want to decide whether you should go for a commercial bank, Microfinance Institution, or even an investment banking platform, you need to ask certain questions like “What is the nature of my business?” to determine the options you should look out for.
Factors to Consider Before Choosing a Bank for Your Small Business
Here are 5 things to consider before choosing a bank for your small-scale business.
What Banking Services Does My Business Need?
This should be the first and basic question on your mind when you’re looking to choose a bank for your business operations. Are you a small startup business trying to get a bank to run basic service operations?
You need to highlight your needs first and then choose a bank that can deliver
Examples of some basic bank operations are;
- Savings account opening
- Checks and a checkbook
- Credit card/debit card
- Online business banking
- Deposit-only card
You’ll need to get more information on each of these banking services and their fees or requirements. Consider how much banks charge for monthly fees such as card maintenance. Also, find out if they give rigid policies on minimum balance. Check out if your company can afford or abide by them at its current level. These options vary among banks so it is highly advisable to do your research and compare before making a choice.
Does The Bank Provide Access To Funding And Growth Opportunities?
Having perks and incentives is a great way for banks to attract small-scale businesses. For instance, let’s say you’re a start-up business that might require growth opportunities. I’m talking about grants, loans, collaborations, rewards, and opportunities that help you thrive in your space. Take, for example, Microfinance banks could give access to loans without laying so much emphasis on collateral, unlike Commercial banks.
This is especially advantageous to small businesses who may not have access to the kind of collateral that commercial Banks demand to access credit.
Some banks also provide growth and funding opportunities for small businesses depending on the industry they fall under. Many of these industries are but are not limited to Agriculture, Health-care Information technology, and innovations.
Can The Bank Meet Your Digital Needs For Online Banking?
Is the bank up to date on relevant technological advancements to facilitate user access? In a time like this, where a lot of businesses are now adapting to the digital space and taking up this approach to meet their customer needs, you might want to consider a bank that incorporates these advancements in their operations.
The bank you choose to operate with needs to have its online banking up and running and other easy-to-use digital options to make transactions easy for your clients. This option is very important as your decision here will help your business thrive and keep up with the competition in the market and provide solutions that are up to date with technological advancements.
Location And Ease Of Access
Does your business involve daily transactions that always require you to go to the bank? Will there be urgent transaction disputes to resolve? You don’t want to be stuck in the middle of serious business and have to go miles away to resolve urgent transaction issues. You should consider how close your bank is to your office or operation site to enable easy access and operations.
If your business requires a lot of traveling and active banking operations at any location, this factor cannot be overlooked. Even if your business doesn’t involve as much traveling, in a case where deposits and withdrawals need to be made daily, weekly, or as the case may be, proximity to your operation site is still a plus as it will save time and allow ease of operations.
Customer Support System
It is important to have a working customer support structure in every business where services are provided, especially to a large clientele. You don’t want to have your operations in a bank that is slow to respond when you have inquiries or urgent transaction disputes to settle. The bank you choose needs to have a reliable customer support system. This system helps to sort transaction records, resolve issues, give advice on growth and funding opportunities to scale up your business, and more.
Bottom Line
When choosing a bank for your small-scale business, you are trying to get a bank that is the best match for your business operations and not adjust your needs to meet the bank’s services. Asking friends and colleagues to gather information during your research can help narrow down your options.
Also, you don’t have to be worried about making the wrong choice. You can always switch banks when you’ve noticed that you’re not satisfied with your current bank’s services. The only downside to this is having to go through the process of account creation again. But other than that, you’re good to go and your funds safe.
Kindly check SME360 for other articles to help you improve your business.