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6 Things to Look for in Small Business Banking


6 Things to Look for in Small Business Banking

Small business financial services that can help your bottom line.

As a small business owner, every dollar you spend or earn is critical to your success, or failure. Developing a solid and trusting small business banking relationship can be a key piece of your budget equation. According to a J.D. Power study, fast-growing small businesses are far more likely to switch financial institutions. What you need as a start-up company will likely vary from your needs as you grow, but the best relationship will adapt with you.

While there are many variables that can make, or break, your business banking relationship, there are six things we recommend you look for when choosing your first – or next – small business banking services:

  • Convenience
  • Fees and restrictions
  • Merchant services, including credit card processing for small business
  • Traditional financial services such as business checking accounts, savings and direct deposit
  • Products to help you grow, like business loans or business lines of credit
  • Personality and responsiveness of the business banking staff

Whether you choose to go with a local credit union or a large national bank, the only services that matter are the ones you use now or think you might want to use in the future. Make a list of the products and services that are most important to you. Differentiate between those that are must-haves and non-negotiable vs. those that would be nice to have if your favorite local credit union were to offer them.

Convenience is key for large and small business owners

You probably started your own company to have more flexibility and greater freedom with your schedule. However, most large and small business owners find themselves working significantly more than before, sometimes twice as much as their employees to ensure that the business is successful. Since time is money, accessing your money should be simple, fast and convenient.

How you define convenience in large or small business banking is the first step toward assessing your current, or future, business financial institution. Consider the following:

  • Branch locations: How important is it for you to be able to walk into a branch to conduct business? If you’re a retail business, you’ll likely need to make frequent deposits or have access to change. Make sure the branch location that is closest to your business or home provides face-to-face services for business accounts, including a loan officer. Building those in-person relationships are also important when the time comes to ask for a loan or line of credit, or for other help in challenging times.
  • Hours of service: Is that branch location near you open hours that are convenient for you? Do they offer extended hours in the evening or on weekends, likely times you’ll need to make deposits?
  • Access to online services: If locations or hours aren’t convenient, does the financial institution make up for it with cutting edge technology? A growing number of credit unions and banks are offering remote access via your mobile device and desktop, including the ability to deposit checks with your phone or pay bills using an automated 24-hour bill paying service. Also find out what their philosophy on technology is – are they bleeding edge, leading edge or behind the times to be sure they can meet your needs far into the future.
  • Proximity to your personal accounts: Do you want your business accounts with the same financial institution as your personal accounts? Or, do you want to keep your work and home lives separate? Keeping all your accounts under one roof is definitely a time-saver, but building relationships with more than one financial institution might open up for more options in the future.

Be sure to consider your needs in the future too. If you have an aggressive business plan, be sure the convenience services grow with you, including those online services and locations of additional branches in other parts of the city, state or country.

How to minimize small business financial services fees

Business banking fees can be confusing. While more and more personal accounts are being positioned with low fees or no fees, small business banking is more complicated, often requiring daily transactions and much movement of cash in and out of accounts.

The move toward more convenience services with improved technology and automation has some small business financial services firms reeling. The cost to digitize banking platforms is on the rise, which might mean those costs get passed on to you via monthly or per transaction fees.

On the flip side, interest rates are rising and the regulatory environment is calming down a bit, both of which are anticipated to improve profits in the banking industry. With all these changes, it’s an important time to review your current service fees and compare to other small business financial services providers to see if you’re getting the best deal for your business.

Shop and compare the following services:

  • Monthly service fees: The amount your large or small business banking will cost on a monthly basis, primarily for your checking or debit account. A typical business bank charges an average of $8-$12 a month or requires an average daily balance of around $1,500 to waive these fees.
  • Monthly transaction and cash deposit limits: Most small business banking accounts limit the number of times you can make deposits or withdraw cash. If you own a retail business, this could get especially costly as you’ll have more frequent interactions with your financial institution. To reduce or avoid these fees, estimate the number of cash deposits you make each month and find an account with a higher limit.
  • Additional transaction fees: Some banks will put a cap on the total transactions made within a business account – including ATM access, checks you write, debit card purchases or exchanging bills for coins. Spend some time thinking through all of the ways you interact with your credit union or bank. Add these up and compare rates so that these small fees don’t get the best of your small business.
  • Penalties and potential restrictions: Ask about additional penalties for repeatedly exceeding transaction limits, or for those times your account balances might fall below the minimum requirements. These little, unexpected fees can add up and catch you off guard at the worst of times.

Be sure to asks for the specific amount of each of and find out whether some you can’t avoid are bundled in with those you want to avoid. If a fee is too high, don’t be afraid to ask for a negotiated rate. If you maintain certain monthly minimums or have a strong relationship and track record with your financial institution, many fees can be waived, or they might be willing to make concessions to keep your business.

Merchant services and credit card processing

Access to merchant services and credit card processing is a must-have for even the smallest  business owner. As our world moves more and more to paperless transactions, you need to be able to accept payments in a variety of ways, from multiple locations including a mobile phone, tablet or even a virtual terminal.

GAFCU credit card processing for small business will ideally provide: 

  • Preferred pricing, for the most cost-effective payment processing
  • Free comparative analysis
  • Next day funding
  • No application fees
  • Noearly termination fees
  • No monthly minimums
  • Exceptional customer support

The best merchant services program uses cutting edge technology to help small business owners stay one step ahead of today’s fast-paced and ever-changing business environment. Consider all these needs:

  • A system that integrates with your e-commerce, online shopping cart, payment gateways or other software processing solutions
  • A system that works with iPad®/tablet-based point-of-sale terminals
  • A system that works with Samsung PayApple Pay®or other mobile credit card processing applications
  • Virtual terminal support whether using a personal computer or Mac
  • The ability to automate recurring billing
  • The ability to sync to Quick Books or your other small business accounting system
  • Additional payment processing services tailored to meet your unique customer needs

You’ll also want to shop and compare these additional value-added business and payment processing services:

  • Does your provider accept all major credit and debit cards?
  • Does your provider offer electronic check verification, conversion and guarantee?
  • Can they handle gift and loyalty card programs?
  • Do they pay interest or dividends on connected checking or savings accounts?

For a free side-by-side comparative pricing analysis of your credit card processing, bring your two most recent processing statements to a Greater Alliance Federal Credit Union branch location or call 855-246-4096.

Business banking basics

All the locations and free services in the world won’t make a difference in your operating costs if their most basic small business banking products don’t meet your needs. At the heart of every business banking relationship, you need to be able to transact business to make money, pay bills and save the money that you make.

  • Business savings: A good business savings account charges minimal fees, reaps solid dividends on the amount you have in savings, and offers free online banking or banking-by-phone. If you’re a super small business, pay attention to the minimum amount you need to keep in that savings account, to make sure you don’t pay unexpected fees if you dip below that minimum. Optional overdraft protection for your checking account is a smart bonus to consider as well. A good savings plan is key; experts recommend setting aside 30% of each check you cash.
  • Business checking accounts: If you’re looking for a completely free option, check out this in every state. Other financial institutions, like Greater Alliance Federal Credit Union, offer dividend-bearing checking, giving you the flexibility to use your checking like a savings account and still earn interest. Be sure to investigate limits on the number of checks, ATM transactions and daily withdrawals each month.
  • Debit cards: Business guru Dave Ramsey encourages all small business owners to stick to debit cards instead of credit, because we tend to watch real cash out the door far more closely. Debit cards can work for your employees as well, instead of credit cards for business expenses.
  • Employee benefits: As an added bonus, consider if your small business bank offers financial services as an employee benefit, such as direct deposit or health savings accounts.

These are the accounts you’ll be accessing most frequently, so it’s important that they comfortably meet your wants and your needs in an ideal small business banking relationship. The right business banking products can also make a big dent in your operating costs – for the good, or not so good.

Large, medium or small business loans to help you grow

While borrowing might not be your primary reason for developing a new business banking relationship, it can prove to be the most important – and most frustrating – reason for choosing your small business bank. Unless you are a dedicated and avid saver, if growth is in your business plan you’re probably going to need a small business loan at some point in your future.

This is also where you’ll potentially see the largest difference between choosing a credit union, regional bank or national bank. Credit unions tend to be more flexible in their approval process and might offer more low interest rate options, while larger banks tend to have higher borrowing limits because they have more assets to borrow against.

Here are a few options to consider:

  • Small business loans: Good for planned expansion of your business (staffing, product lines, target audience), as well as for expanding your physical footprint, whether it’s a bigger location or a second location. Lending varies greatly from state to state, so be sure to partner with an institution that knows your region well. In addition to low rates, look for flexible rates and terms. You’ll also want to explore the availability of special loan programs for mixed-use, residential investment and owner vs. non-owner occupied properties)
  • Business line of credit: Good to establish for those “just-in-case” situations – when a critical piece of equipment breaks down or cash flow is tight or you need to acquire more inventory, fast. Most financial institutions offer both secured and unsecured line of credit options, with rates and terms varying based on the type you choose. Apply for your business line of credit upfront, so it’s available when you need.
  • SBA loans: The U.S. Small Business Administration offers a variety of loans to qualified small business owners – from microloans to disaster loans, for new start-ups or expansions, or for general needs. The SBA is not a lender. Rather, it sets guidelines for lending made by financial institutions and guarantees these loans will be repaid, encouraging lending that might otherwise be considered risky.

A strong small business banking team, like the team at Greater Alliance Federal Credit Union, will understand what it takes to operate a business and will work with you to make the right decisions for your business in both the short and long-term. understands what it takes to operate a business. We’re here to help you in making better, long-term decisions on your business banking solutions.

Personality and responsiveness of the business banking staff

If all other factors are equal when it comes to the decision to choose a new small business banking relationship, one of the most critical factors is the intangible: how do you like working with the business banking staff? Are they responsive? Are they helpful? Do they smile and show an interest in who you are and what your business does?

Small business owners tend to interact more with front-line staff, such as tellers or branch managers, than someone who uses a financial institution for personal needs. You want to be sure that the credit union or bank you choose has a team that reflects your own personality and needs, one that is enthusiastic about building a long-term relationship with you, to help you grow and prosper.  Consider these factors:

  • Employee turnover: You can’t develop a strong working relationship if the business banking team keeps changing.
  • Morale: Nationally, satisfaction in the financial services industry is nearly at its all-time highest rate, so don’t be afraid to move if you are working with a team who seems to hate coming to work every day.
  • Turnaround time: Do they pick up the phone when you call or take two days to get back to you? You can’t put your business on hold, so don’t settle for small business banking that puts you on hold.
  • Flexibility: Can or will they waive fees, adjust minimums or consider multiple factors when approving your line of credit? The best financial services are adaptive to your size, business model, growth plans and day-to-day needs.

How Do I Know If My Small Business Bank Is Right for Me?

Shop and compare all the above factors with a focus on those most important to you. It’s important to talk to the small business banking officer at any financial institution you are considering to determine if they have the right combination of services and products to help your business control operating costs, serve your customers well and be positioned well for business growth in the next one, five or ten years.

Depending upon your needs, you might find the best fit is a credit union or a big national bank, or maybe a combination of financial institutions. Consider these variables:

  • Credit unions are more likely to offer dividends on savings or checking because they are a not-for-profit.
  • Credit unions or community banks are more likely to waive fees or offer flexible services, because they can adapt their service model more easily, whereas larger banks offer economies of scale.
  • Credit unions and community banks are more likely to give loans based on your character, business model and local market conditions, whereas a big bank will have more money to loan but will make that decision based solely on the numbers.
  • Regional banks tend to be more technologically advanced, though more and more credit unions are teching up to stay competitive.
  • National banks are traditionally the best resource if you’re doing business internationally

The right small business bank will behave as if they are small enough to care and provide personalized services, yet large enough to offer the best products and services with the lowest fees.

We encourage you to contact Greater Alliance or another trusted financial institution to discuss your business model and needs, to build a small business banking relationship that will grow as your business grows. Call us at 888-554-2328 x290 or visit a Greater Alliance branch location today.