Business Banking Tips For Your Home Startup

Posted on 26. Apr, 2012 by in Business Wealth

Small business banking
In addition to a number of other valuable business lessons, working in a small business for a number of years taught me the value of having access to money and being able to process transactions with relative ease.  Any small business is difficult to float if you try to do it without a loan, but small business loans can be difficult to secure at any stage in business.

Financing a small business

Before you start making any decisions, remember that all banks are different.  Just because you do your personal banking with one, doesn’t mean you should use them for your business banking as well.  Different banking institutions will have slightly different target markets and undertake their economic research accordingly.  For example, some of the best savings rates are offered by banks that are online and have no physical shop front.  This is great for your personal finances, but securing a business loan often requires developing a relationship with your bank and getting them to understand your business so they are comfortable with loaning you money.

What banking features do you need?

Fortunately the rise of online banks has increased the level of competition and as a result the number of banking features now available are extensive.  Ultimately though there are only a small number of features that your business may require.  Perhaps you need to write checks, so need you a good checking without additional fees.  Maybe you need multiple accounts and want to view them online all in the one place, perhaps you just need a low interest credit card which shows your transactions quickly so you can keep on top of everything.  Consider all of your small business needs and look for the relevant features at the best rate.

At some point, quite likely sooner than later, you are going to need to borrow money.  All of the features in the world aren’t going to help you with this, it ultimately comes down to what you can offer the bank in terms of collateral, but developing a good working relationship with them will help.  There are pros and cons to using bigger or smaller banking institutions in this case, so it is worth spending time developing an understanding of their requirements before you go too far.  Some of the bigger banks tend to very focused on corporate finance and may not be very flexible, while smaller banks might be more flexible but don’t have the same leverage as a bigger bank.

Smart business banking

As I’m sure you do with your personal finances, it is always good practice to shop around every so often to ensure you are getting the best service available.  Finding a better deal doesn’t always mean moving all of your finances, it might be as simple as talking to your bank about how they can service you better.  This is certainly where a good relationship is helpful, I’ve been able to negotiate some very significant reductions with banks simply by asking if they can do better or at least match a competitor.

A good bank can be an invaluable part of your small business, not only by supplying capital, but also by working with them to plan for the future. Spend the time finding the right bank for your needs and build a good relationship with your banker, it’s definitely a worthwhile investment.

What business banking features do you value the most?

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13 Responses to “Business Banking Tips For Your Home Startup”

  1. I’ve found – personally and professionally – that homegrown banks (the ones that make their loan decisions in house, and tend not to sell their loans to other institutions) are the best choice for me. They get to know me better, instead of at the larger banks, where I feel like a number.

    Reply to this comment
    • Money Cactus

      02. May, 2012

      I like to try and support those smaller players if I can, without them the big guys just end up doing whatever they want. It is stil important to find what works for you though.

      Reply to this comment
  2. Jai Catalano

    29. Apr, 2012

    Thankfully I have a family that could back me up if I need.

    Reply to this comment
    • Money Cactus

      02. May, 2012

      Family bank, nice one! To be honest I think that there would be a few people that would be willing to back me into a business if I approached them about it too.

      Reply to this comment
  3. Bret @ Hope to Prosper

    30. Apr, 2012

    I have been with my bank (WF) for almost 30 years. But, banks don’t value and respect their customers like they used to. I have my business account with them as well, simply because it’s convenient to have all of my accounts in one place. Even though they are often impersonal, their online services are great and they have the most ATMs.

    Reply to this comment
    • Money Cactus

      02. May, 2012

      It can be a double edged sword can’t it? I think that it is really important to find the balance between service and features, convenience is really important but so is someone that will listen.

      Reply to this comment
  4. Simple Finance Blog

    04. May, 2012

    I think borrowing money from family can be really dicey – you’ve got to set down limits in an official way, like a contract, to make sure that everyone knows exactly what they’re getting out of the deal… and whether the deal gives them any way as to how the business is operated.

    Reply to this comment
  5. I guess in bank dealings, it is also essential to be updated with new government regulations which are usually stricter. The probability of obtaining a good deal may then be estimated based on particular bank practices.

    Reply to this comment
  6. When I started a small business, I opened an account with the same local bank as I am banking with privately for years. The people there know me and my history and that makes everything much easier.

    Reply to this comment
  7. Aaron Hung

    10. May, 2012

    I work in the small business department at my bank so it got its perk if whenever I want to start my own business. Providing collateral is an important point because if your credit is kinda shaky, that one piece of collateral might make or break the deal.

    Reply to this comment
  8. Women and Money

    12. May, 2012

    It is wise to have an established relationship with the bank if you are planning on getting a business loan at some point. Banks with no physical locations are not good for this purpose.

    Reply to this comment
  9. Canada Debt Solutions

    30. Jun, 2012

    Our company has incurred tens of thousand of dollars in banking fees last year. Ouch! We are reducing our bank fees this year by switching to more efficient client management software. Yay!

    Reply to this comment

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