In my last post, I listed 10 notoriously ridiculous fees that many of the big banks are charging these days. If you are a small business owner then choosing the right bank is all the more important. As you make an effort to maintain a healthy cash flow and get financing when you need it, you want a bank that will work with you and not look for ways to swindle your hard earned dollars. Here are five tips to consider when looking for the right bank for your small business:
1. Understand your needs
The very first tip to finding the right bank for your small business is to have some idea of what your business banking needs are. If this is your first business, then it may be a bit of a guessing game. In that case, it pays to ask another business owner, a qualified professional, or business consultant what services you will need to keep your business running smoothly.
2. Understand the trending in lending
The banking sector is currently dominated by the big mega banks, such as Bank of America, Capital One, and Chase, and this applies even in the suburbs and rural communities. Though according to the latest NFIB small business reports, the majority of small business owners are not seeking financing, access to small amounts of credit is essential to maintaining a healthy cash flow.
Some are quick to point out that large banks used computerised models to calculate the risk of lending on a national level, whereas small banks are more likely to understand the nuances of the local area much better and so are more likely to lend to viable local businesses that the bigger banks may overlook.
3. Search for SBA Certified Preferred Lenders
Even if you are not looking for an SBA loan, you may want to do a search for SBA Certified or Preferred Lenders in your area. This means that they have a contractual relationship with the SBA and are members of the Certified Preferred Lender (CPL) programs. Why is this important? The SBA loan process is known to be drawn out, and paperwork heavy. By being a CPL, it shows that the financial institution is making a commitment to the small businesses in that area- one that is not so profitable either.
4. Make sure you are in the know
Before you sign on with a bank, make sure you have read and understand their banking fees, hours and methods of operation, and what services they provide. Most banks these days have this information online.
You should also make it a point to go down to your local branch and see for yourself what kind of service you get as well as the overall feel of the place. When it comes to banking, you want a place that will build a long-term relationship with you, not treat you like a number.
5. What are customers saying?
In these days of social networking, it would be a good idea to spend a few minutes looking at what customers say about the financial institution you’re considering. Just a caveat: there are always bound to be complainers even where a business provides a good product or service. You want to get the sum total of consumer sentiment. It may also be a good idea to ask your business contacts of those in your social network who them recommend.