Small business owners need to choose the right bank to manage their finances, access credit, and grow their business. The wrong bank can be a drain on time and resources with high fees and poor customer service. This guide will cover the different types of banks available to small businesses, key factors to consider when choosing a bank, and a comparison of the top banks for small businesses.
Types of Banks
Small businesses can choose from three main types of banks: traditional banks, online banks, and credit unions. Each type of bank has its own unique features and benefits.
Traditional banks have physical branches and ATMs in many communities and offer a wide range of financial products and services including checking and savings accounts, credit cards, loans, and investment options. They also have strong digital platforms for online and mobile banking. One benefit of traditional banks is their long history and strong reputation, but they tend to have higher fees and rates.
Online banks operate entirely online and offer many of the same products and services as traditional banks, including checking and savings accounts, credit cards, and loans. They often have lower fees and rates due to lower overhead costs, and strong digital banking platforms for convenience. The main disadvantage is a lack of physical branches for face-to-face interactions and cash deposits.
Credit unions are non-profit financial institutions owned and controlled by their members. They offer many of the same products and services as traditional banks, including checking and savings accounts, credit cards, and loans. Credit unions are known for their focus on customer service and commitment to meeting the needs of their members. They often have lower fees and rates than traditional banks and may be more willing to work with small businesses considered higher risk. Credit unions may have less resources and services than larger banks and may not be available in all areas, but they have a strong presence in their communities with programs supporting local businesses and entrepreneurs.
Key Factors to Consider
When choosing a bank for your small business, consider:
- Fees: Small businesses are sensitive to fees that can add up and reduce profits. Look for a bank with low fees for services such as checking accounts, credit cards, and loans.
- Rates: Interest rates impact the cost of borrowing money or using credit. Look for a bank with competitive rates on loans and credit cards.
- Customer service: Good customer service is essential for small businesses that may need support and guidance. Look for a bank with a reputation for good customer service and a team of business banking specialists.
- Digital banking capabilities: Small business owners are often on the go and need strong online and mobile banking capabilities to easily access accounts and manage finances from anywhere.
- Access to financial products and services: As your business grows, you may need access to additional financial products and services. Look for a bank with a range of options to meet your needs.
- Location: Consider the location of the bank and its branches, as well as the availability of ATMs.
Top Banks for Small Businesses:
Here is a comparison of some of the top banks for small businesses:
- Bank of America: Offers the Business Advantage Small Business Credit Card, Business Advantage Term Loan, and Business Advantage Relationship Rewards. Has a strong reputation and a wide range of financial products and services.
- Chase: Offers the Ink Business Cash Credit Card, Ink Business Unlimited Credit Card, and SBA loans. Has a strong digital presence and a wide range of financial products and services.
- Wells Fargo: Offers the Business Choice Checking, Business Secured Credit Card, and Business Credit Card with Rewards. Has a strong reputation and a wide range of financial products and services.
- Citibank: Offers the CitiBusiness Credit Card, CitiBusiness Term Loan, and CitiBusiness Line of Credit. Has a strong reputation and a wide range of financial products and services.
- US Bank: Offers the Silver Business Checking, Platinum Business Checking, and Business Credit Card. Has a strong reputation and a wide range of financial products and services.
- Capital One: Offers the Spark Cash for Business, Spark Miles for Business, and Spark Classic for Business. Has a strong digital presence and a range of financial products and services.
Choosing the right bank for your small business is an important decision that can have a big impact on the success of your business. Consider the types of banks available, key factors such as fees, rates, and customer service, and compare the top banks to find the one that best meets your needs.