What Factors Should I Consider When Choosing a Business Bank?

You already know that having the right bank on your team is essential to your business’s future. The problem is that banks can appear very similar on the surface. The key differences, of course, lie in the value-added services, and those are not always immediately obvious.

Small community banks, for example, often tout personal service just as the bigger banks do. But when crunchtime hits, smaller banks may not have enough lending power or enough specialists on board to guide you through complex processes, such as new Small Business Administration regulations. They also may not have the financial tools to give you the banking agility you need.

To find that perfect banking partner, start with a checklist of your banking needs. This will allow you to easily drill down into banking services and find what matters to your company the most. Because every business is unique in its own way, there is no one-size-fits-all list of banking must-haves. However, there are some general guidelines to help you create your own checklist for choosing the right bank for your company.

Look Beyond Online Banking to Fully Automated Services

Sure, every bank has online checking, and it’s a definite plus. However, not every bank has fully automated services to actually aid you with your day-to-day operations.

Ask about online cash-management tools. Such services are often free to small businesses, and they provide an easy means to send invoices, collect payments, scan checks for online deposits, and cut payroll checks. For a small fee, some banks offer additional services that may also be helpful.

Look for industry-specific tools, such as enhanced merchant services, that can allow you to accelerate your cash flow or that offer tips on how to stretch the cash you have on hand to bootstrap a growth spurt and thus limit or avoid debt entirely.

Some of these tools can even help you quickly and safely adhere to changes in the tax code. For example, starting January 2012 (unless Congress modifies the law before then) small businesses will be required to file 1099s on any expenditure of more than $600 to any person or company. Such filings will have to be done quarterly and carry steep fines for late filings and for error correction. This could become an administrative burden that easily overwhelms small businesses that suddenly find themselves issuing 1099s to practically everyone they do business with, from office supply companies to the electric company for the monthly power bill. Thankfully, some banks will offer automatic 1099 generation, either through a checking account or a bank credit card.

Bottom line: You need more than just online checking. You need business banking tools that will actually help you run your business efficiently and cost-effectively.

Look for Niche Expertise

Every industry has different rules and standards by which all the players operate — and different challenges, too. If your banker has experience in helping other companies in your industry, then they will have valuable advice and guidance to offer when you bump against one of those many challenges unique to your field.

You’ll also want to look for a bank with an established SBA loan guarantee department. A bank officer familiar with SBA loan requirements can be a valuable mentor and advisor who can acquaint you with other helpful SBA services as well.

There are other specialties to look for in a bank, depending on your special circumstances. For example, you can often find bank officers who specialize in women-owned or minority-owned businesses, who are highly trained in the bank’s programs and the community’s programs, or who are experienced with state and federal resources.

Steer clear of banks that offer just a friendly banker. Look for a bank that has professionally staffed niche departments. You need all of the knowledge and expertise these pros can deliver. Accept nothing less.

Look for Banking Leadership

While it certainly helps to know both the credit manager and the local branch manager when it comes time to apply for a loan (so yes, make a point to get to know them both), that isn’t the only kind of leadership you should be looking for at your bank.

You want a bank that is fast to adopt new technologies and is quick to add innovative services. For example, many small businesses find that distributing reloadable gift cards (instead of credit cards) to workers for petty cash or fueling expenses is a great way to cut credit card interest costs and cap employee spending. Some banks offer itemized use of the cards, so you can easily control expenditures and plug the numbers in to tax forms.

A good partnering bank will offer seminars, webcasts, and free white papers to keep you informed on a variety of issues, from managing cash flow and time management to the latest in fraud prevention, investment strategies, and profit enhancement.

Look for a bank that offers innovative ways to leverage bank services to your full benefit.

If you have a specific need beyond mere loans or the other services the bank commonly offers, discuss it with your banker. A knowledgeable banker often makes a great business advisor and can usually suggest ways the bank can help you. They can also introduce you to other resources and mentors, both inside and outside the bank.