Starting a small business requires a lot of decision making, including those around finances. When it comes to selecting the best bank for small business, there are specific areas to review and evaluate with care. While many banks are capable and willing to take your business, the small business banks operate with you in mind. 

Whether you are just thinking about a business or ready to find your banking partner, this article can help guide you to the right selection.

Which Bank Is Best For Small Business?

As a small business, if you’ve ever tried to get a loan from a big bank you’ll know it’s not an easy task. The truth of the matter is that those banks are generally busy dealing with larger clients seeking larger loans and thus making more money for the bank. Unfortunately, as consumers, most of the time the banks we are most familiar with are the big banks. So how do you go about finding the best bank for small business? First, you need to understand the features of banks so you can decide which features you’re most interested in for your small businesses.

Small Business Loans

Some banks work with small business clients more than others. If you’re looking for a small business loan, you’ll want to find a bank that often works with small businesses similar to your size and regularly gives them loans. When speaking with your bank options, ask them how frequently they work with businesses of your size. You may even consider asking local businesses you know for referrals. Doing so could help you and them if the bank has referral promotions.

Brick and Mortar Banks

Many banks today offer online banking with limited physical locations. Additionally, there are some banks that are completely online. Though these options are convenient to the personal consumer, as a business they may not be ideal. If your business has a lot of physical cash that needs to be deposited or you simply prefer to work with bankers in-person you may want to choose a bank with ample brick and mortar locations.

Interest Bearing Checking Accounts

If your business regularly keeps large amounts of cash in checking accounts you may want a checking account that bears interest. You’ll want to find a bank that provides the highest interest possible for a business checking account. If you cannot easily find this information on the bank’s website, be sure to ask the bank manager for interest rate information and compare who would provide the best option to you. On the other side, you’ll also want to know and understand any fees associated with the account related to balance minimums, management, etc.

Online Business Checking Account

If your business has you traveling a lot, a bank with an easy-to-use online business checking account is a must. Banks that provide mobile apps may be even more beneficial, as they provide faster access to your finances. As previously mentioned, some online banks may not have physical locations. However, if physical locations are not needed for your business then not a problem. When you need access to cash, virtual banks generally allow you to use other banks’ ATMs to withdraw money and they reimburse you for the transaction fee.

Rewards

Some banks offer rewards to incentivize business owners to bank with them. These rewards can look like cash bonuses for setting up new accounts and meeting certain minimums. If these incentives are important to you you’ll want to find a bank that offers them. For example, Chase has their New Chase Total Business Checking Accounts, which gives a $300 bonus if you deposit $1,500 within 20 days of opening the account and maintain a $1,000 balance for 60 days. For the specific details on their program click here.

Number of Transactions

Many business bank accounts have limits to the amount of transactions you can have per month without an additional fee. If your business has a large amount of transactions you’ll want to select a bank that allows the largest amount of transactions at no additional charge. Consider running the numbers with estimated transactions to get a sense of which bank is a better fit in this area.

Business Analysis

Ideally, when working with a bank for your business, you should feel like they are somewhat of a trusted advisor. The best banks for small business do this without cost to you. Look for banks that provide free or low fee business reviews of your financials on a routine basis. This type of benefit can save you money that you might otherwise have to pay someone else to do and keep you on track with your business goals.

Use Online Bank Grading Tools

Keeping track of all your options can be done in a spreadsheet or with pen and paper. However, the best way to compare and contrast all your options in one view is to use online bank grading tools. Once you understand the features you are looking for, you need to find a bank with those features. Online grading tools will help you find the perfect bank for you based on your location and your businesses size in a few clicks.

The Multifunding Bank Grades Tool

With this tool, simply enter a zip code or your city and state into the search tool. It will then return a ranked list of all the banks in your area based on their record of small business lending. (A small business loan is defined as under a million dollars.) Banks with a grade of A use 25% or more of deposit assets to make small business loans, those with an average grade of C use 6-10%, and failing banks with a grade of F use under 3%.

The FDIC Bank Find Tool

Once you’ve narrowed down your list of possible banks, you can do further research on them using this tool. Enter the name of the bank, along with its city and state in the form and click “Find.” If the bank is governed by the FDIC you’ll see the Your Bank at a Glance screen. If it is not found, you can make the search broader by removing the city and state. If it is still not found, then it isn’t FDIC insured, and you should probably look elsewhere.

Community Reinvestment Act (CRA) Performance Rating Search Tool

The CRA is an evaluation of a bank’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. Banks are rated from 1 (Outstanding) to 4 (Substantial Noncompliance). You can also add fields to the report to view a bank’s rating for Lending, Investment, and Service. Use the tool to search banks by city and state, or just state. You can also limit the search by rating. For example, you could search for all banks in Colorado rated outstanding. The resulting report will display data about each bank, and the final column will provide a link to the latest CRA report if available.

Other FDIC Tools

In addition to the tools listed above, the FDIC has a myriad of tools to help you do your due diligence on various banks. Click the link above to explore the tools and be well informed about the bank you’re considering to go with before you select them.

Consider Your Other Options

Sometimes you find the best bank for you, but they still don’t offer (or won’t approve) of everything your business wants or needs. If that is the case don’t be afraid to consider other options like leveraging personal credit cards, advances, short-term lines of credit, or peer-to-peer lending. For detailed information on these options, click here.

How To Find The Best Bank For Your Small Business

Finding the best bank for your small business is an important task that can help support your business for years to come. In addition to having good banking practices, don’t forget to streamline financial tasks by using a tool like PaySimple. For a free trial, click below.

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