Choosing a Business Bank

When selecting a bank, minding your own business is crucial. All financial institutions are not created equal — each bank has distinct capital resources, loan criteria, balance requirements, services charges, and interest rates. Before you choose a bank, you should know what services you need and whether the bank can provide them.

Products and Services
You may need help with cash management, payroll assistance, investment products, credit counseling, or industry intelligence (such as RMA Annual Statement Studies and Dun & Bradstreet reports). These are only a few of the numerous small business products and services banks now provide. An easy way to get acquainted with the full range of banking products and services is to check out some bank Web sites, like those from Wells Fargo or Bank of America.

You should also ask friends, business associates, accountants, attorneys, and other trusted advisors about their banking recommendations. The Service Corps of Retired Executives (SCORE), which has worked with the U.S. Small Business Administration for 35 years, is yet another source of potential information. The group has nearly 13,000 volunteers across the country and offers counseling and advice to small-business owners.

It's smart to try and find a bank that is aggressively seeking new customers. You may get a special deal or extra value for your business. You should also consider smaller banks with just a few offices. They may have more relaxed rules and offer more personalized service, and they are less likely to have highly bureaucratized loan procedures.

Price is another critical issue. Though price alone probably won't decide your choice of bank, you should at least compare interest rates on deposit accounts and basic consumer loans. Because most business loans are negotiated, the rates won't be posted. You should also look carefully for hidden charges on commercial accounts, such as fees for using a teller or writing more than a certain number of checks per month.

The Human Element
After compiling a list of potential banks, interview loan officers, business development officers, or banking center managers — the people who hold the purse strings. Chat with them and see if you make a connection. How long have they been in the business? Do they know your industry? Find people you feel comfortable dealing with.

Keep in mind that you're trying to establish a trusting, long-term business relationship. Don't be shy about selling them on what makes your business unique and how you're going to reach your goals. It's best if you can establish a banking relationship before you need a loan.

Finally, don't be afraid to ask for references. You want to know as much about your bank as it will ultimately want to know about you. Once you've found the right combination of rates, services and personnel, you've got the makings of a beautiful banking relationship.