Once you have started a business, you need to ensure that you get a reliable and supportive bank to hold your money. Regardless of the complexity of your operation,
finding the right bank for your small business is necessary. This decision does not require you to consider only the current needs of your business, but its future wellbeing as well. The nature of the bank you select can impact your business either positively or negatively. If you are looking to be on the loan market in the near future, then you need to learn a few tricks that you could use to get the right bank for your business.
Before we delve into the things to consider while finding the best bank for your business, let’s take a brief look at the different types of banks available.
The types of bank
Traditional Bank
This type of bank lets you open a business account and deposit your savings. Your business will earn interest from the savings you make. Traditional banks normally make money from loaning off your money to other companies and individuals and then charging higher interest rates than what it pays you.
Mobile Banks
These are the types of banks that let you carry out essential transactions using your mobile phone. Some of them operate through an app that you download on your phone, while some will send you a menu that you need to update. Mobile banking is ideal for small and large companies that are looking to engage in quick and urgent transactions.
Neobanks
These are the modern banks that let your business access its account and other features online. The neobank industry in the UK was spearheaded by Revolut, N26, and Monzo. These three companies primarily appeal to small businesses and solo entrepreneurs who want some flexibility in their lives. Small businesses have always faced challenges when seeking loans from traditional banks, but neobanks are more than happy to offer credit to such companies. Neobank accounts don’t usually have monthly maintenance fees, and that means they are inexpensive.
How to Pick the Right Bank for your Business
Know and Understand Your Business Needs
Before you start looking for a reputable financial institution, you must know why you need one in the first place. You might be looking for services such as investment help or some business loan. Different financial institutions have different pros and cons, which is why you have to be careful when selecting a financial institution. You can begin by browsing the net for banks that are known for providing the best services to small businesses. Some financial institutions offer traditional banking systems and they are great if you are looking to earn your business some interest for the money you deposit.
The other thing you need to keep in mind is the approximate amount of cash that will be moving in and out of your business in any given period. If you have not started a business yet, then finding the right bank to support it might be close to impossible. This is true because you will be asked to provide the name of the business and must be recognized by the relevant government institutions. This is important as you will be asked to pay tax once your business is set and running.
While some banks provide their clients with incentives to maintain a certain amount of money deposited, some provide services that are mainly focused on helping businesses make the highest profits. If you have a business but lack a reliable financial adviser and cash flow management, then it might be wise to consider getting a bank that could provide such services. If you get the right institution, they can help you to collect crucial financial information in your industry. Better still, you can appoint an experienced financial advisor to help you with crucial business decisions.
If you are looking for a bank because you think you only need to be updated on the flow of money in and out of your business, then you need to think further. What might your business need in the next ten years? You must consider the future when picking
the best financial institution to support your business. If your company does well in the future, you will need a loan to expand it. This is why it is vital to find a bank that will help you with that.
Also, your needs will not be the same according to your business structure. You should consider the differences in account management depending on whether you are a Limited Company, a
Partnerships Company or a
Sole Trader.
Compared Features of Various Banks
Since you know what you are looking for in a bank, you should examine the features and services they provide in your area. Search online for the banks that provide the services you are looking for and contact them right away. Ask them for specific information such as interest rate, additional services, and fee structures. You must review the information they provide before setting up a meeting with their representatives. Consider creating a list of questions you will ask during the meetings. You can also look into
free account offers that exist, mostly provided by Neobanks.
If you run a small business that is looking for simple account services, then you might consider researching the growing online banking industry. Many banks have what it takes to ensure that your primary business needs are serviced. However, before you consider working with them, you need to check and confirm their credibility.
Some business owners prefer having face-to-face treatment, which is still fine. If that is where you fall, then you need to find a local bank that has an extensive ATM network. Better yet, you can opt for a financial institution that would rebate foreign ATM fees. To be safe, you must be strict about your requirements and ensure that your bank provides such services at all times. A small mistake in this process might cost your company dearly, either now or in the future.
Consider the Size of the Bank
At some point, you will need a loan to expand your business, to stabilize it, or to keep it going strong. These processes might be laborious. Fortunately, if you look carefully, you will find well established financial institutions that can provide you with such services at affordable rates. The size of the bank is vital for the business owners looking to borrow some money in the future. Many small business banks believe in upcoming entrepreneurs and are willing to support their ideas. Also, if your company involves fast transactions, then you might look for a bank that allows mobile banking. Therefore, you will be able to create convenience for your clients.
Remember to Reevaluate
Even if you have managed to get the right financial institution to service your business needs, it is advisable to still shop around. This will help you in case your needs change or if your current bank alters some of its services. If any of these happen, you need to be ready with the best bank that would fit your future needs. Even if your clients are happy with the current services you provide them, you need to reevaluate your financial needs once every few years. That way, you will be in the best positions to control situations as they arise.
Final Thoughts
A good financial institution can support your small business to ensure that it achieves its primary goals. In the process of selecting the right bank, you must ensure that they provide the services you are looking for. Some financial institutions issue loans, but they charge very high-interest rates. Also, some are known to change their services regularly, and suddenly, hence they might not be reliable. Before you start looking for the best bank, you must know your needs so that you don’t sign a contract with the wrong institution. Even after you open your business bank account, you should continually reevaluate your choice and always switch to a different institution if the situation demands it.
