Should I Use a Local or National Bank for My Business?

When considering your business banking options, you may be confronted with a choice between a local and a national bank. Both can provide specialized services, but in most cases, only one will be advantageous to your business — which one that is will depend on your own specific needs.

The first thing to evaluate is the location of your business. Do you run a small local business that may benefit from the face-to-face contact you'll get from a local bank, or is your company an Internet business that stands to benefit from extensive Internet service options? Additionally, are you planning to expand your business beyond your immediate area? If so, the benefits a local bank might be lost on your far-flung locations. Consider banking options for not only your immediate needs, but also for how those needs will change as your business expands.

Some of the benefits of a national bank are:

• Extensive online services. National banks typically provide robust online-banking options, and many will even provide 24-hour technical support. Some benefits to online banking include up-to-the-minute information on your accounts, no-hassle transfers, and electronic statements and bill payments. National banks generally offer better security against the risks of identity and information theft. Ask about the safeguards in place.
• Competitive interest rates. National banks often offer lower interest rates on loans, and may also offer higher interest rates for accounts you keep with them. Some national banks offer a premium of as much as one to two percent over local banks.
• Nationwide business service. If your business requires travel or has employees and customers in different parts of the country, a national bank with a strong Internet presence or locations across the country will provide you with better service than a local bank located near your business headquarters.

• Easy access. If your business has a single location or a handful of locations in one area, and does not intend to expand in the foreseeable future, you may want to select a local bank. ATM access will be more convenient, and a local bank provides a centrally located place to go if you need to address concerns or conduct banking business.
• A personal touch. A local bank can provide the personal service of individual account managers who meet with you and become familiar with your business and its future goals. Often this relationship can breed excellent opportunities for gaining advice, and provides an established "in" for future business banking needs.
• Networking opportunities.A local bank can mean better networking opportunities, especially if your goal is to expand your relationship with the bank in the future. Building a positive working relationship with one local bank, and meeting with your account manager regularly to address your needs and any new goals, will not only give you that "in" for your future banking needs, but may also open up referrals to other community services you're looking for.