How To Choose A Bank For Your Small Business

Whether you’re starting a business or you’re looking to change banking services, knowing how to choose the best business bank account for your small business is critical to setting your company up for success. Different banks offer different account types, services, and levels of national coverage. Before you start your search, you need to determine what your banking needs are and the banking services and features you’ll require to meet those needs.

We put together this list of steps to follow when conducting your search for a business bank account.

Step 1: Know The Type Of Bank Account You Need

One good way to immediately cull your list of banking options is to exclude banks that don’t offer the type of account you’re looking for. Generally, the big national banks offer the widest variety of account types, while smaller community banks and online-only banking services are more likely to specialize.

Here are the most common types of business bank accounts.

Business Checking Accounts

As you might expect, a business checking account is best used for everyday business spending and making deposits. The best business checking accounts offer rewards and perks specific to businesses like cash-back and business pending category rewards, business partner discounts, and more.

Business Savings Accounts

A business savings account closely resembles a personal savings account. Most business owners shouldn’t use their personal savings accounts for business purposes for the same reasons listed above.

Keeping funds in your business savings account is a convenient way to store funds in the short term.

High-Yield Savings Accounts

A high-yield business savings account operates similarly to a traditional savings account but allows you to earn much higher interest on your savings balance. The top high-yield business savings accounts offer an APY of 2%-4%.

Certificates Of Deposit

Certificates of deposit (CDs) are unique savings accounts into which you store money for a predetermined amount of time. In exchange for relinquishing control of your funds for the full length of the term, you’ll earn higher interest rates than you would with ordinary savings accounts that let you make withdrawals whenever you wish.

Business owners seeking to earn extra interest on reserve funds they won’t need access to in the near future should consider making use of a CD.

Money Market Accounts

A money market account is an interest-bearing account that resembles a savings account in some ways, though money market accounts typically let you pay bills, write checks, and use a debit card tied to your account. What’s more, interest rates tied to money market accounts are normally tiered, meaning the larger your balance, the higher interest rates you’ll earn.

Money market accounts may sound like checking accounts with higher interest rates. However, most money market accounts offered by banks limit the number of withdrawals and transfers you can make per month, so it’s not really suitable as a checking account replacement.

Step 2: Determine How To Choose A Bank That Meets Your Business Goals

From the big national banks to credit unions to online-only banks, many types of institutions now offer banking services. Each form of banking has its own set of pros and cons for the small business owner.

No single banking option offers the best of everything, so finding the business bank account that fits your needs is a matter of your priorities. Let’s go through the business scenarios that might lead you to choose one type of business banking over another.

• If you want all manners of financial services available from a bank with physical branches and you’re not prioritizing finding the absolute lowest fees and highest interest rates on savings accounts, choose a national bank or a regional/community bank.
• If you intend to make payments using checks, cashier’s checks, or another legacy form of physical payment, or if you want to use a safe deposit box, choose a national bank, regional/community bank, or credit union.
• If you want banking with a particular connection to the needs of your community or career field, go with a regional/community bank or credit union.
• If you want business banking with no minimum balance requirements, no overdraft fees, and low (or no) monthly maintenance fees, choose a credit union or online bank.
• If you want the highest possible APYs on savings accounts and CDs, choose an online bank, or perhaps a credit union.
• If you want unique perks such as early access to direct deposits, credit-building accounts, and/or other budgeting tools, have a look at online banks.

Step 3: Answer How Important In-Person Services Are To You

Regarding banking and other services, some business owners prefer the personal touch. If you want the ability to walk into a familiar bank branch and speak to live human beings who can access your accounts, discuss loan options, and help resolve any issues you have, the advantages that can come with online-only banks, like lower fees, higher interest-earning on deposits, and budgeting tools (in the case of neobanks) won’t be worth it for you.

On the other hand, if you have no desire to have real-world interactions with representatives of your bank and are comfortable with doing everything online, you’ll enjoy the advantages of online-only banking, and you won’t mind the lack of personal relationship-building or access to services like insurance and brokerage accounts.

Step 4: Determine Which Banking Features Are Most Important To You

Next, you’ll want to choose which banking features are most important to you. Every business is different and requires different features and perks. here are some of the most common features to take into consideration. Aks yourself:

• How much can I afford in monthly fees?
• Do I need cash deposits?
• Do I need ATM availability?
• Do I send a large number of wire transfers or foreign transactions?
• What deposit and withdrawal limits does my business need?
• What perks and rewards do I want from my business bank account?

Answering these questions will help you narrow down the exact parameters you need a business bank account to meet.

Step 5: Begin The Hunt For The Best Business Bank Account

Now that you know what type of bank account/s you need and the features that matter most to your business, it’s time to compare this criterion to actual banks.

Take a look at the best business bank accounts to get started, or you can look specifically at the best business checking accounts or the best business savings accounts. Evaluate each banking option based on how you answered the previous questions to narrow down the options.

Step 6: Don’t Forget To Check The Eligibility Requirements

Once you’ve found the most promising business bank accounts that align with your business’s needs, don’t forget to check the bank’s eligibility requirements before moving forward.

Once you know you’re qualified for the bank account and have found the right option for your bank, learn more about how to open a business bank account smoothly.

To make managing your finances even easier, remember to connect your new business bank account to your small business accounting software so that you can start managing your business’s cash flow with ease.