Best Banks for Small Business

Starting and running a small business can be challenging, and one of the most important decisions a small business owner must make is choosing the right bank to meet their financial needs. With so many options available, it can be overwhelming to determine which bank is the best fit for your business. That’s why we have created this guide to help small business owners make an informed decision about which bank to choose. We’ve researched and analyzed various banks to identify the best ones for small businesses based on factors such as account options, fees, interest rates, customer service, and convenience. Whether you’re just starting out or looking to switch to a new bank, this guide will provide you with the information you need to make the best decision for your small business.

What are banks for small business?

Banks for small businesses are financial institutions that offer products and services specifically designed for the needs of small businesses. These banks provide a range of banking services that can help small business owners manage their finances, including business checking and savings accounts, business loans, lines of credit, merchant services, and credit cards.

In addition to traditional banking services, banks for small businesses often offer specialized services such as payroll processing, bookkeeping, and tax preparation to help small business owners manage their finances more efficiently. Some banks also provide business advisory services, such as financial planning and investment advice, to help small business owners make informed decisions and grow their businesses.

Overall, banks for small businesses can provide valuable financial support and expertise to help small business owners succeed.

Common features of the best banks for small business

The best banks for small businesses offer a range of features and services that can help small business owners manage their finances more effectively. Here are some common features that you should look for when choosing a bank for your small business:

1. Business checking and savings accounts: A good bank for small business should offer a range of checking and savings accounts that are tailored to the needs of small businesses, with features such as low fees, easy online account management, and mobile banking.
2. Business loans and lines of credit: Small businesses often need access to financing to grow and expand, so a good bank for small business should offer a variety of loan and credit options, such as term loans, SBA loans, lines of credit, and equipment financing.
3. Merchant services: A good bank for small business should offer merchant services that enable small businesses to accept payments from customers through a variety of channels, such as credit cards, debit cards, and mobile payments.
4. Online and mobile banking: Small business owners are often on the go and need to access their accounts from anywhere, so a good bank for small business should offer robust online and mobile banking options that enable small business owners to manage their finances from their smartphones or tablets.
5. Customer service: A good bank for small business should have a responsive and knowledgeable customer service team that can provide guidance and support to small business owners whenever they need it.
6. Specialized services: Some banks offer specialized services that can help small businesses with specific needs, such as payroll processing, bookkeeping, tax preparation, and business advisory services.

Overall, the best banks for small business are those that offer a range of features and services that are tailored to the unique needs of small business owners.

Benefits of banks for small business

Banks for small businesses can provide a variety of benefits to small business owners. Here are some of the most important benefits of using a bank that caters to small businesses:

1. Access to financing: Banks for small businesses often offer a range of loan and credit options, such as term loans, lines of credit, and SBA loans, which can provide small business owners with the funding they need to grow and expand their businesses.
2. Merchant services: Many banks for small businesses offer merchant services that enable small business owners to accept payments from customers through a variety of channels, such as credit cards, debit cards, and mobile payments. This can make it easier for small businesses to manage their cash flow and expand their customer base.
3. Online and mobile banking: Banks for small businesses often offer robust online and mobile banking options that enable small business owners to manage their finances from anywhere, at any time. This can make it easier for small business owners to stay on top of their finances and manage their businesses more efficiently.
4. Lower fees: Some banks for small businesses offer lower fees and higher interest rates on business accounts than traditional banks, which can help small business owners save money and keep more of their profits.
5. Business advisory services: Some banks for small businesses offer business advisory services, such as financial planning and investment advice, which can help small business owners make informed decisions and grow their businesses.

Overall, banks for small businesses can provide valuable financial support, guidance, and expertise to help small business owners succeed and grow their businesses.

Downsides of banks for small business

While banks for small businesses offer many benefits, there are also some downsides that small business owners should be aware of when choosing a bank. Here are some potential downsides:

1. Limited branch network: Banks for small businesses may have a more limited branch network than larger banks, which could make it difficult for small business owners to access their accounts or get in-person support.
2. Higher interest rates: While some banks for small businesses offer higher interest rates on business accounts, others may charge higher interest rates on loans and lines of credit, which could make it more expensive for small businesses to borrow money.
3. Limited services: Some banks for small businesses may not offer the same range of services as larger banks, which could limit small business owners’ options when it comes to managing their finances.
4. Less established: Banks for small businesses may be less established and have less brand recognition than larger banks, which could make some small business owners hesitant to trust them with their financial needs.
5. Higher fees: Some banks for small businesses may charge higher fees on business accounts and services, which could eat into small business owners’ profits.

Overall, small business owners should carefully consider the pros and cons of banks for small businesses before choosing a bank to work with. It’s important to evaluate each bank’s offerings, fees, and customer service to find the best fit for your business’s unique needs.

How to choose the best bank for small business

Choosing the best bank for small business requires careful consideration of several factors. Here are some steps you can take to choose the best bank for your small business:

1. Assess your business’s needs: Determine what types of banking services your business needs, such as checking and savings accounts, loans and lines of credit, merchant services, and online banking. Consider what features are most important to your business, such as low fees, mobile banking, and good customer service.
2. Research banks: Research banks that cater to small businesses and compare their offerings, fees, and customer service. Consider factors such as interest rates, fees, account minimums, online and mobile banking options, and specialized services.
3. Read reviews: Look for reviews of banks from other small business owners to see what they like and dislike about each bank. Online review sites such as Yelp, Google, and Trustpilot can be a good resource for finding reviews from other small business owners.
4. Consider location: Consider the location of the bank’s branches and whether they are convenient for you to visit. Some banks may offer online banking and remote deposit options, which can make it easier to bank from anywhere.
5. Evaluate customer service: Evaluate the quality of each bank’s customer service by calling or visiting a branch. Ask questions about their services and fees, and see how responsive and helpful their representatives are.
6. Consider the bank’s reputation: Consider the bank’s reputation and financial stability. Look at the bank’s ratings from third-party rating agencies, such as Moody’s or Standard & Poor’s, and check for any history of legal or regulatory issues.

Overall, choosing the best bank for small business requires careful consideration of your business’s needs, the bank’s offerings, and the quality of their customer service and reputation. Take the time to research and compare different banks to find the best fit for your small business.

Types of banks for small business

There are several types of banks that cater to small businesses. Here are some of the most common types:

1. Community banks: Community banks are local banks that serve the needs of individuals and small businesses within a specific geographic area. They often offer personalized service and may be more willing to work with small businesses that may not meet the strict lending criteria of larger banks.
2. Regional banks: Regional banks are larger than community banks but smaller than national banks. They serve a specific geographic region and offer a range of services to small businesses, including checking and savings accounts, loans, and merchant services.
3. Online banks: Online banks offer banking services exclusively through their website or mobile app. They often have lower fees and higher interest rates than traditional banks, and may be a good option for small businesses that prefer to manage their finances online.
4. Credit unions: Credit unions are non-profit financial institutions owned by their members. They often offer lower fees and higher interest rates on loans and savings accounts than traditional banks, and may be a good option for small businesses that are looking for a more community-oriented banking experience.
5. National banks: National banks are large, national banks that offer a wide range of services to small businesses. They often have a larger branch network than community or regional banks, but may also have higher fees and more strict lending criteria.

Overall, small business owners should consider the services, fees, and customer service of each type of bank when choosing the best option for their business.

Pros and cons of banks for small business

Banks for small businesses offer several benefits, but there are also some potential drawbacks to consider. Here are some pros and cons of banks for small business:

Pros:

1. Banking services tailored to small businesses: Banks for small businesses offer a range of services tailored to the unique needs of small businesses, such as business checking and savings accounts, loans and lines of credit, and merchant services.
2. Personalized service: Smaller banks may offer more personalized service to small business owners, as they often have a better understanding of the local business community and may be more willing to work with small businesses.
3. Specialized expertise: Banks that cater to small businesses often have specialized expertise in small business lending and can offer advice and guidance to help small businesses grow and succeed.
4. Access to credit: Small businesses may have difficulty obtaining credit from larger banks, but banks that cater to small businesses may be more willing to extend credit to small businesses with less established credit histories.

Cons:

1. Higher fees: Some banks that cater to small businesses may charge higher fees for their services than larger banks, which can eat into a small business’s profits.
2. Limited services: Some banks that cater to small businesses may have a more limited range of services than larger banks, which could limit small business owners’ options when it comes to managing their finances.
3. Less established: Banks that cater to small businesses may be less established and have less brand recognition than larger banks, which could make some small business owners hesitant to trust them with their financial needs.
4. Limited branch network: Banks that cater to small businesses may have a more limited branch network than larger banks, which could make it difficult for small business owners to access their accounts or get in-person support.

Overall, small business owners should weigh the pros and cons of banks that cater to small businesses when choosing a bank to work with. It’s important to evaluate each bank’s offerings, fees, and customer service to find the best fit for your business’s unique needs.

How to compare the best banks for small business

When comparing banks for small businesses, there are several factors to consider. Here are some key considerations to keep in mind:

1. Services offered: Look for a bank that offers the services your small business needs, such as business checking and savings accounts, loans, lines of credit, and merchant services. Some banks may also offer additional services, such as payroll processing or invoicing.
2. Fees: Compare the fees charged by different banks, including monthly maintenance fees, transaction fees, ATM fees, and overdraft fees. Consider the impact these fees could have on your small business’s bottom line.
3. Interest rates: If you plan to keep a balance in your business savings or checking account, consider the interest rates offered by different banks. Higher interest rates can help your business earn more on its deposits.
4. Lending policies: If your small business needs to borrow money, consider the lending policies of different banks. Look for a bank that is willing to work with small businesses and offers reasonable interest rates and repayment terms.
5. Online and mobile banking: Many small business owners prefer the convenience of online and mobile banking. Look for a bank that offers robust online and mobile banking options, including the ability to manage accounts, pay bills, and deposit checks remotely.
6. Customer service: Consider the quality of customer service offered by different banks, including the availability of in-person support, telephone support, and online support.
7. Reputation: Look for a bank with a strong reputation in the community. Consider factors such as the bank’s financial stability, its track record of serving small businesses, and any awards or recognition it has received.

By considering these factors, small business owners can compare different banks and choose the one that best meets their needs. It’s important to evaluate each bank’s offerings and policies carefully to ensure that it’s the right fit for your business.

Glossary for banks for small business

Here are some common terms and definitions related to banks for small businesses:

1. Business checking account: A type of bank account designed specifically for small businesses. It typically has features such as low fees, high transaction limits, and the ability to deposit checks remotely.
2. Business savings account: A bank account that allows small businesses to save money and earn interest on their deposits.
3. Merchant services: A range of services offered by banks to help small businesses accept credit and debit card payments from customers.
4. Line of credit: A type of loan that allows small businesses to borrow money as needed up to a predetermined credit limit.
5. Loan: A sum of money borrowed from a bank or other lender, typically with interest, that must be repaid over time.
6. Interest rate: The percentage of a loan or deposit that is charged or earned in interest over a period of time.
7. Monthly maintenance fee: A fee charged by some banks for maintaining a business account.
8. Transaction fee: A fee charged by some banks for each transaction made on a business account, such as a check deposit or withdrawal.
9. Overdraft fee: A fee charged by some banks when a business account has insufficient funds to cover a transaction.
10. Online banking: A service offered by banks that allows small business owners to manage their accounts online, such as checking balances, paying bills, and transferring funds.
11. Mobile banking: A service offered by banks that allows small business owners to manage their accounts using a mobile device, such as a smartphone or tablet.
12. Small Business Administration (SBA) loans: Loans offered by the US Small Business Administration to help small businesses grow and succeed. These loans are often easier to qualify for than traditional bank loans.

By familiarizing themselves with these terms, small business owners can better understand the products and services offered by banks for small businesses and make informed decisions about their banking needs.

How to get the most out of banks for small business

To get the most out of a bank for small business, consider the following tips:

1. Choose the right bank: Look for a bank that offers the services and features that are most important to your business. Consider factors such as fees, interest rates, lending policies, and online and mobile banking options.
2. Keep your accounts in good standing: Make sure you keep your accounts in good standing by paying fees on time, avoiding overdrafts, and staying within any credit limits.
3. Build a relationship with your banker: Get to know your banker and keep them updated on your business’s goals and needs. A good relationship can help you access financing, get better rates and fees, and receive personalized advice.
4. Use online and mobile banking: Take advantage of online and mobile banking to manage your accounts, make payments, and deposit checks remotely. This can save time and make banking more convenient.
5. Optimize your cash flow: Use your bank’s services and tools to optimize your business’s cash flow, such as cash management tools, merchant services, and lines of credit.
6. Shop around for loans: If you need to borrow money, don’t settle for the first loan offer you receive. Shop around for the best rates and terms and negotiate with lenders to get the best deal.
7. Stay informed: Stay up-to-date on the latest banking trends and regulations that could affect your business. Attend industry events, read industry publications, and stay in touch with your banker to stay informed.

By following these tips, small business owners can get the most out of their banking relationships and use their banks to help them grow and succeed.

How to best use banks for small business

To best use banks for small business, consider the following tips:

1. Open a business checking account: A business checking account allows you to separate your personal and business finances and makes it easier to track your business expenses and income.
2. Set up online and mobile banking: Online and mobile banking allows you to manage your accounts, pay bills, and deposit checks remotely, saving you time and making banking more convenient.
3. Use merchant services: Accepting credit and debit card payments from customers can help increase sales and improve cash flow. Most banks offer merchant services to small businesses.
4. Use cash management tools: Cash management tools offered by banks can help you better manage your cash flow, monitor account balances, and automate payments.
5. Apply for a line of credit: A line of credit can provide your business with access to funds when you need them, helping you manage cash flow and seize business opportunities.
6. Explore financing options: Banks offer a variety of financing options for small businesses, such as term loans, SBA loans, and equipment financing. Research the different options and choose the one that best fits your business needs.
7. Build a relationship with your banker: Building a relationship with your banker can help you access financing, get better rates and fees, and receive personalized advice.
8. Review your accounts regularly: Review your accounts regularly to make sure you are not paying unnecessary fees or charges, and to make sure your accounts are meeting your business needs.

By following these tips, small business owners can best use their banks to manage their finances, access financing, and grow their businesses.

Alternatives to banks for small business

There are several alternatives to banks for small business financing and banking services. Some of these alternatives include:

1. Credit unions: Credit unions are member-owned financial institutions that offer many of the same services as banks, but with typically lower fees and interest rates.
2. Online lenders: Online lenders offer fast and convenient access to financing for small businesses. They typically have fewer requirements than traditional banks and can provide funding in as little as 24 hours.
3. Microfinance institutions: Microfinance institutions provide small loans to low-income and underserved communities, including small business owners who may not have access to traditional financing.
4. Crowdfunding: Crowdfunding platforms allow small businesses to raise money from a large number of individuals in exchange for equity or rewards.
5. Peer-to-peer lending: Peer-to-peer lending platforms connect small business borrowers with individual investors who fund the loan. This can be a faster and more flexible option than traditional bank loans.
6. Community development financial institutions (CDFIs): CDFIs are community-based organizations that provide affordable financing and other financial services to low-income and underserved communities, including small business owners.
7. Invoice financing: Invoice financing allows small businesses to borrow money against their outstanding invoices, providing them with cash flow to meet immediate needs.

When considering alternatives to banks for small business financing and banking services, it is important to do your research and carefully evaluate the costs, requirements, and terms of each option.

Are banks for small business worth it?

Yes, banks for small business can be worth it for many reasons. Banks offer a range of financial products and services that can help small business owners manage their finances, access financing, and grow their businesses. Here are some benefits of banks for small businesses:

1. Access to financing: Banks can provide small businesses with access to a variety of financing options, including lines of credit, term loans, and SBA loans. These financing options can help small businesses manage cash flow, purchase equipment or inventory, and fund business expansion.
2. Business checking and savings accounts: Banks offer business checking and savings accounts that can help small business owners separate their personal and business finances, track business expenses, and earn interest on their savings.
3. Merchant services: Banks can provide small businesses with merchant services, such as credit card processing, that can help increase sales and improve cash flow.
4. Cash management tools: Banks offer cash management tools that can help small businesses better manage their cash flow, monitor account balances, and automate payments.
5. Personalized advice: Banks can provide small business owners with personalized advice and support, including help with financial planning, managing cash flow, and navigating tax and regulatory requirements.

While there are some downsides to working with banks, such as fees and strict lending requirements, the benefits of banks for small businesses often outweigh the costs. It’s important to carefully evaluate your options and choose a bank that offers the products, services, and support that best meet your business needs.

The future of banks for small business

The future of banks for small business is likely to be shaped by several trends, including:

1. Digital transformation: Banks are investing heavily in digital transformation to meet the changing needs of small businesses. This includes developing digital banking platforms, mobile apps, and other digital tools that make it easier for small business owners to manage their finances and access banking services.
2. Open banking: Open banking is a regulatory framework that requires banks to share customer data with third-party providers. This is expected to create new opportunities for small businesses to access innovative financial products and services from a variety of providers.
3. Personalization: Banks are increasingly using data analytics and artificial intelligence to offer personalized financial products and services to small businesses. This can help small businesses better manage their finances and improve their chances of success.
4. Alternative financing: Alternative financing options, such as online lending and crowdfunding, are becoming increasingly popular among small businesses. Banks are likely to continue to face competition from these alternative providers, and may need to adapt their offerings to remain competitive.
5. Sustainability: Small businesses are becoming increasingly focused on sustainability and social responsibility. Banks are likely to respond by offering financial products and services that support sustainable practices and help small businesses achieve their sustainability goals.

Overall, the future of banks for small business is likely to be characterized by increased digitalization, innovation, and competition. Small business owners should stay informed about these trends and explore their options for accessing banking services and financing that best meet their needs.

What types of bank accounts do I need for my small business?

As a small business owner, it’s important to keep your personal and business finances separate. To do this, you’ll need to open at least one dedicated bank account for your business. Here are some common types of bank accounts you may need for your small business:

1. Business checking account: This account is used for day-to-day business transactions, such as paying bills, receiving payments, and making purchases. It can help you keep track of your business expenses and income and simplify your accounting processes.
2. Business savings account: This account is used to save money for future business needs, such as unexpected expenses, expansion, or investments. It can also earn interest on your savings, helping your money grow over time.
3. Merchant services account: This account allows you to accept credit and debit card payments from your customers. It can help you expand your payment options and improve your cash flow.
4. Business credit card account: This account allows you to make business purchases and track your expenses. It can also help you build your business credit score and earn rewards for your spending.
5. Business loan account: If you take out a business loan, you may need to open a separate account to manage your loan payments and track your loan balance.

Before opening any bank account for your small business, be sure to research and compare different banks and account options to find the best fit for your business needs and budget.

What financing options are available for small businesses?

There are several financing options available for small businesses, including:

1. Lines of credit: A line of credit is a flexible financing option that allows you to borrow money up to a certain limit and pay interest only on the amount you use. This can be a good option if you have short-term cash flow needs or want to have access to funds in case of unexpected expenses.
2. Term loans: A term loan is a type of loan that is repaid over a set period of time, typically with a fixed interest rate and regular payments. This can be a good option if you need to make a large purchase or investment in your business.
3. Small Business Administration (SBA) loans: The SBA offers several loan programs for small businesses, including 7(a) loans, which can be used for a variety of business purposes, and 504 loans, which are specifically designed for real estate and equipment purchases.
4. Equipment financing: Equipment financing allows you to purchase or lease equipment for your business and pay for it over time with fixed payments. This can be a good option if you need to invest in equipment to grow your business.
5. Crowdfunding: Crowdfunding allows you to raise funds for your business by soliciting small contributions from a large number of people, typically through online platforms. This can be a good option if you have a product or service that appeals to a wide audience.
6. Online lending: Online lenders offer a variety of financing options, including lines of credit, term loans, and invoice financing. These lenders typically have faster application processes and may be more flexible in their lending criteria than traditional banks.

When choosing a financing option for your small business, it’s important to carefully evaluate the terms and fees associated with each option and choose one that meets your business needs and budget. It’s also a good idea to consult with a financial advisor or accountant to help you make an informed decision.

What is the Small Business Administration (SBA)

The Small Business Administration (SBA) is a United States government agency that provides support to small businesses and entrepreneurs. The SBA was created in 1953 to help small businesses start, grow, and succeed. The agency offers a variety of resources, including loans, business counseling, and training programs, to help small businesses overcome the challenges of starting and running a business.

One of the main functions of the SBA is to provide access to capital for small businesses. The agency offers several loan programs, including the 7(a) loan program, which is the SBA’s primary program for providing financial assistance to small businesses. The SBA guarantees a portion of these loans, which helps lenders offer more favorable terms and lower interest rates to small business owners who may not otherwise qualify for traditional bank loans.

In addition to loans, the SBA provides resources and support for small business owners through its network of Small Business Development Centers (SBDCs) and SCORE chapters. These organizations offer free business counseling, training, and other resources to help small business owners start and grow their businesses.

Overall, the SBA plays an important role in supporting small businesses and promoting economic growth. Whether you are just starting out or looking to grow your existing business, the SBA can be a valuable resource to help you achieve your goals.

FAQs about the best banks for small business