How to Choose a Bank for Your Business
While it’s important to choose the right bank for your business, it’s tempting to just open an account with the most familiar name or the closest bank to your location. Carefully researching your options and choosing the best bank that suits your needs will benefit your business for years to come.
Banks differ vastly in many terms, including, but not limited to, size, location, features, and benefits. Knowing your needs and carefully researching the specifics of each prospective bank will ensure you choose one that’s right for you and your business.
Since proper financial management allows your business to exist, who you bank with sets the tone for many of your business operations. Whether you’re starting your business or you’re a seasoned pro, evaluating your banking needs and how they’re being met will contribute to financial success.
Working with a community-focused bank like Renasant offers your business the best qualities a bank can offer. It’s large enough to offer various services to accommodate your banking needs, yet small enough to provide a relationship-client focus to create custom solutions specific to your organization.
What do we need from a bank?
The demands of your business dictate your specific banking needs. If you’re limited to online sales, you will have vastly different banking needs than a cash-only food truck, which has different financial requirements than, say, a real estate business.
Figuring out your day-to-day operations will help you assess your banking needs. Knowing the type, average amount, and frequency of your sales will inform your depositing needs. You may need to take out a loan to assist with start-up costs.
While your current needs will be the driving factor when choosing a bank, you should also consider your business’s anticipated trajectory. A bank that works for your business now may not in five years. While you can always change banks later, it may be worthwhile to choose a bank with the potential to serve your needs into the foreseeable future.
If you’re just starting out with your business, you may not know many of these details. Researching comparable businesses and talking with fellow business owners can help with these estimates.
Do we need a virtual bank or a physical bank?
Recently, virtual banks have cropped up to compete with traditional financial institutions. While they lack in-person services, virtual banks promise simple and affordable financial management for its users.
However, what’s easy to set up can turn into frustration once your business requires more complex financial work. Virtual banks do not cater to special situations, and it can be difficult to get in touch with an employee for assistance. In addition, they lack flexibility in certain circumstances.
Brick-and-mortar banks recognize the importance of offering online resources as well as in-person services. Most customers appreciate the ability to handle simple transactions online, as well as the option to work with their bank in-person for more complex matters.
Establishing a relationship with your bank will allow you to take advantage of all of their offerings. Once your banker knows you and your needs, they will be able to work with you to create the best experience possible.
Does bank size and location matter?
An easy way to narrow your options is by deciding whether you want to bank with a big, national bank or a smaller, local or regional bank. You may need the resources of a bigger bank or the personal touch of a smaller one. Consider the requirements of your business and how size factors into your business’s banking needs.
However, you may learn that ultimately, it’s less about the size of the institution and more about what you are looking for in a bank. You may need both the personal touch a smaller bank can offer with a wide selection of resources, services, and options available at a larger bank.
Choosing a national bank can be tempting due to their ubiquity nationwide, or even globally. If you will need to frequent physical banks across the country as you do business, this could be the right choice. Big banks also have lots of resources, benefits, and credit offerings.
Researching banks and learning about the available services should provide you with enough knowledge to discern which bank is right for you. Sometimes banks with the services you are looking for can be too binding and rigid in their approach. The right bank will have the flexibility to create custom solutions for your needs.
It’s also important to look for a bank that understands both your business and the regional market you are working within. If your bank can’t fully grasp your needs, you will spend the majority of your relationship working overtime to close that gap.
As you shop around for banks, you should feel as if there are many people at the bank you are able to work with and trust. Since it’s so common to form a relationship with one particular banker, it can be disruptive to your business if and when they leave the bank. Forming a relationship with the bank as a whole leaves your business in a more sustainable position long-term.
What services and resources do we need?
While banks primarily facilitate your incoming and outgoing financial transactions, they offer other resources to businesses that can be beneficial. Some useful services you may look for in a new bank include:
- Checking Account
- Savings Account
- Wire Transfer
- Bill Payment
- Broad Scope of Online Access
Not all banks offer every service your business requires. Although it’s not necessary to go through one bank for all aspects of your business, doing so can simplify your operations and save money.
Should I choose a bank based on perks?
Some banks offer enticing sign-up bonuses, waived fees, and product integrations for new customers that can seem hard to pass up. While a year of free banking can seem like a great deal, it really isn’t if maintenance fees are much more costly than other banks. These types of benefits should only be considered once you’ve narrowed your potential bank options to a handful. They are useful as deciding factors only between two very similar banks, and they should be as worthwhile in the long term as they are when you sign up.
Which banks fulfill all of my needs?
Choosing a bank that offers the best of all worlds - big bank resources with the relationship focus of a smaller bank - will ultimately be the best choice for many small business owners.
Renasant encapsulates both of these types of banks. We can take care of complex banking and financial needs as well as listen to our customers and build deep relationships. With more than 194 branches spread across Alabama, Florida, Georgia, Mississippi, and Tennessee, we offer the power of a larger bank while maintaining the care and attention of a smaller one.