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How to Choose the Best Bank for Your Small Business

Why Banks are Crucial to Small Business Success

When considering all various components that go into running a small business, choosing a bank account may seem unimportant. A secondary or even tertiary concern.  But if you searched for a guide on small business banking, chances are you have a notion of the importance of choosing the right small business bank. And we’re here to let you know that the role of a commercial bank is crucial to the macro and micro-operations of a small business. And as your business grows, can lead to smooth sailing or tons of headaches in the future.

One way in which banks are important to small businesses is that they provide a range of incentives and perks that each fit specific small business types. Some offer enough value to justify tailoring business plans simply to meet their terms of fulfillment. Similarly, the terms of one’s bank will determine how the transactions of a small business are priced and tracked, usually aimed at either benefiting large-batch transactions or fewer transactions of greater amounts respectively. 

In the same vein, many banks will prioritize in-person transaction support over online transactions. Such divergent offerings require small business owners to do a serious amount of research in order to make the right choice. And with this many variables in play the differential between a small business owner who has chosen a bank well suited to their goals versus one who has not will be tremendous. 

How to Choose the Best Bank for Your Small Business

What are the Unique Needs of your Small Business? 

Before you can know what bank will most benefit your small business pursuits it will be necessary to know which of your pursuits benefit most from banking. If you are having trouble thinking of the overlaps here, don’t worry we will spend the majority of this guide helping you figure it out. To start though the most important point is that each small business is unique and thus conveys unique demands in pursuing its success. 

To determine the needs of your small business ask yourself these five questions: 

  1. What makes my business different from other businesses? 
  1. Will my customer base be large or small, local or abroad, in-person or online? 
  1. Will my daily transactions reach a count of 50 or more? 
  1. Will single transactions reach an amount of $500 or more? 
  1. Are there financial risks involved that may lead to a higher number of returns or transaction disputes?

If you do not yet know the answers to these questions don’t worry, just hold these questions in mind as your business develops but more importantly keep these questions in mind as you continue through this guide. The importance of these questions is that they are directed at helping you determine which type of bank account will best suit your unique business goals. 

What are the Benefits of Choosing a Good Bank?

Choosing the right bank for small businesses encourages a host of beneficial outcomes. While not totally exhaustive, this list will give you a good idea of what kind of benefits you can expect. As noted above, however, many of the benefits of choosing the right bank might be subtle or hard to track. Regardless here are the most notable: 

  • Helpful customer service and supportive bank management 
  • Financial incentives in the form of perks and rewards 
  • Beneficial terms on small business loans 
  • Support for fast scaling business operations 
  • Long Term relationships (after working with a bank for an extended period of time relationships will be built with individuals who have an interest in your success)
  • Security and insurance in the case of a property theft, identity fraud, etc. 
  • Company perks in the form on company credit or debit card accounts 

Perhaps the most important benefit of choosing the right bank, however, is the ease of use and comfort that follows partnering with a financial institution that you can trust. Small business owners often work under tremendous stress, so if said stress is lessened even a modicum by working with a supportive bank then that is no small benefit. 

Similarly, small business owners appreciate efficiency and respect time management. No entrepreneur wants to spend hours on the phone with a bank’s frustrating customer service department to fix a simple problem. In this guide, we will show you how to evaluate your banking options to find the best available choice for your business, so that you experience the most tangible benefits listed above as well as the more subtle benefits of time management and customer service described in these paragraphs. 

How to Choose the Best Bank for Your Small Business

The Most Important Banking Services to a Small Business

In order to accurately assess the banking options for your small business, it is first necessary to build a solid understanding of banking service terminology. In this list, we will explore the most common banking terms as well as the services most conducive to small business operations. While not a totally comprehensive list–that would take up the lion’s share of this guide–it is a sufficient foundation needed to move on to other areas of this guide and will prepare you for making the right choice when choosing a bank. 

Important Terms: Types of Accounts and Interest 

  • FDIC (Federal Deposit Insurance Corporation): a government run organization that ensures bank deposits up to $250,000 if the bank fails.
  • APY (Annual Percentage Yield): The percentage of earnings on money kept in a bank account for one year, including all forms of interest (including compound interest).
  • APR (Annual Percentage Rate): The interest rate on money kept in a bank account for one year, not including compound interest.
  • Accrued Interest: An ‘accrued interest’ refers to interest gains on an account that has not yet been paid.
  • Compound Interest: Refers to interest gains calculated from the original deposit in addition to any interest gains, so 5% on $200 would yield a total of $210 in the first year. Compound interest would see customer’s build interest on the new total of $210 where traditional interest rates would only build off the original deposit. 
  • Variable Interest Rate: Interest rate that changes periodically in fulfillment of the account’s unique terms.
  • Routing Number: A nine-digit number that identifies your financial banking institution, or might refer to a geographic location of a branch location of a larger national bank. 
  • Certificate of Deposit: Commonly referred to as a ‘CD’, this account accepts deposits that will remain untouched for an agreed upon period of time. (CD accounts allow banks to boost the amount of financial capital for a period of time. Benefits are passed to the customer through higher interest payments than a savings or checking account.)
  • Business Savings Account: An interest-bearing account designed to hold money for short or long term periods of time. The amount and frequency of withdrawals will depend on your bank’s terms of use.
  • Business Checking Account: Some business checking accounts build interest while others do not. These bank accounts are designed as the primary account of business transactions and daily operations. The terms regarding business checking account activity will be of primary importance to small business owners.
  • Discounted Employee Checking Account: Many larger national banks and some smaller local banks will offer businesses incentives in the form of discounted checking accounts for the business’ employees. 

Important Terms: Actions, Debts, and Loan Services

  • Adverse Action: Under the Equal Credit Opportunity Act, any disfavorable action taken by your banking institution to refuse a credit request, terminate an existing account, or change the terms of an existing account.
  • Debt: An outstanding payment due on accounts–credit accounts, loans, or banking services–that will become a delinquent debt if it is not paid when due. 
  • Amortization: Process of making regular payments on a small business loan that will result in resolving the loan by the time it reaches maturity–in other words, the process of paying off debts on time. 
  • Collateral: Assets offered to secure a bank loan. A small business might offer up some of its existing physical assets as collateral to secure a loan for a renovation or expansion. 
  • Credit Application: An application for a credit account. 
  • Co-Signer: An individual’s signature to include their credit score to be associated with the designated account or application.
  • Direct Deposit: A payment that is electronically deposited into an individual’s account. 
  • Fixed-Rate Loan: A loan with a schedule of loan payments at a set rate scheduled from the time of the loan’s initiation until its resolution. (A popular choice for small businesses)
  • Guarantor: Much like a co-signer, a guarantor takes on the liability of an account or loan and agrees to accept responsibility for payments should the original signee default (fail to make payments on time).
  • Line of Credit: A line of credit functions like a pre-approved loan for small businesses who successfully obtain a small business loan and then fully resolve it without issue; the line of credit allows the business to then obtain a loan for an equitable amount without having to go through a reapplication process.
  • Offset, Right of Set-Off: A bank’s legal right to seize funds of a debtor or guarantor, who has defaulted on a loan. 

How to Evaluate Banking Terms and Services 

The first step to evaluating banking options for small businesses is to fully understand the needs of the business. A primary distinction between personal checking accounts and business checking accounts is that business accounts often have transaction limits and fees associated with exceeding them. This means that the best starting point for evaluating banking options is determining the transaction requirements of your business. 

Michael Kern, CEO and founder of Talent Financial, explains a common problem when small businesses fail to accurately predict their transaction load: 

 “Make sure the bank account aligns with the realities of your business. If it only allows for 50 transactions a month without a fee but you’re regularly doing 200, then that’s not a good fit. If it requires a balance of $5,000 in the account and your business always has tight cash flow then you may need a bank with a lower minimum balance.”

How do you evaluate the transaction requirements of your bank’s business checking accounts? Review these two questions: 

What are the transaction caps of the bank’s business checking accounts? 

  • These transaction caps may be placed specifically on the total number of monthly transactions and/or total cash deposits. 

What are the ‘additional fees’ associated with transaction overages? 

  • The terms of your business checking account will convey the fees associated with exceeding transaction limits or cash deposits.
  • Pay attention to whether fees are associated with the number of transactions or the amount of money associated with these transactions. 

How To Determine Business Checking Account Compatibility

  1. Does your business deal primarily in checks, cash, or credit card transactions?
  • Each of these types of transactions can be weighted differently in the terms of the fees associated with your business checking account. Some banks will have higher fees associated with large batch credit card transactions, however others will charge more for large batch cash deposits.  
  1. What do you predict as your business’ average number of monthly transactions? 
  • It is important to distinguish between a business plan that is highly demanding of transactions from one that isn’t. Some small businesses operate with a large number of small value transactions and others operate with a smaller number of large value transactions. 
  • Be sure that your business checking account is designed to accommodate your transaction load because an account designed for a large transaction load can have fees that will penalize ill-suited business models of fewer but larger value transactions.  
How to Choose the Best Bank for Your Small Business
  1. How will this account accommodate your business should transactions drop? 
  • No matter how prepared you are or how strong your business model is, life is unpredictable. Be sure to analyze the business checking account’s fees to ensure you will be able to afford them even in slower months. 
  1. How will this account accommodate your business if you get really busy and transactions surge one month? 
  • As mentioned above many bank accounts will come with fees and penalties associated with transaction overages. If your monthly transactions were to double would your business be able to afford the resulting fees? For this reason, it might be necessary to throttle certain transaction types during periods of surging business. 
  • It’s important to note that resulting fees will differ according to types of transaction. For instance, the fees associated with a doubled number of credit card transactions might present crippling fees whereas those associated with a doubled number of cash transactions might be negligible. 
  1. If your business deals in sizable cash transactions, will you need a courier service (protected service for delivering large quantities of money to your bank)?
  • Unfortunately, it is not always a good thing for a business to suddenly accrue large cash sums. Some high-value businesses like jewelers require a courier service to deliver large cash deposits to the bank in a secure manner (often in the presence of multiple armed guards). 
  • If unplanned for, securing a courier can be expensive, and holding large amounts of cash can be extremely dangerous. So be sure to calculate what your top-end revenues might look like–even if those situations might be unlikely. 
  1. Do you prefer online banking and mobile banking? 
  • This question is aimed at helping business owners decide their preferred method of banking management. Do you prefer to check account activity or perform banking maneuvers on your computer or on your phone? 
  • Banks are businesses, too, and as such many of them showcase proprietary technology aimed at improving online or mobile functionalities. Ask your bank manager for a demonstration in order to get a good look at how their technology functions in action. 
How to Choose the Best Bank for Your Small Business
  1. Is your business in need of a loan? 
  • It is important to note that while you may not currently need a loan, you may want to consider keeping the option open for your business in the future. With this in mind, local banks often offer small businesses more favorable terms in loans and borrowing options than large national banking chains. 
  • A large portion of smaller local banks’ business is in partnering with local businesses, so they want to work with you. In fact, if you demonstrate early success or public notoriety, local banks will often compete with each other to earn your business. 
  1. Do any other banking services offer value to your operation? 
  • Both local banks and national bank chains will offer unique services and perks to small business owners. These services can range from merchant card processing options to employee payroll services to tax preparation. 
  • While these services often function as icing on the cake in some cases services offered can provide enough financial benefit to outweigh higher fees elsewhere in the contract. So be sure to weigh the value of your banks ‘extra service’ offerings carefully. 

Should My Small Business Work With a Local or National Bank?

Loaning Ability: Be sure to check whether your local banker has the authority to issue loans and if so, to determine the ceiling on their lending capability. Historically, smaller local banks had the ability to issue smaller loans at their discretion, while larger loans were typically offered at national bank chains. 

Today though, differences between local banks and national banks are highly variable. This is because many local banks have undergone mergers, which have opened up offered services to match or even succeed those of their national chain counterparts. 

Character Versus Credit Score: In many cases, a local bank will offer greater benefit to local businesses in terms of flexibility, particularly in the case of borrowing potential. National banks often prioritize a credit score over everything else when evaluating a customer’s small business. Local banks, however, are much more likely to take into consideration the small business owner’s character as well as the local market conditions that might influence the outcomes of the business venture. 

Given the validity of the business model, this can translate to a customer landing a loan that would otherwise be considered too risky by national banking institutions. While this example points specifically to the benefits in terms of pursuing a loan, this points to a general rule in dealing with local banks: you are more likely to build a relationship of mutual respect that translates into available options and perks

National Bank Perks: On the other hand there are a number of benefits that only a national bank can support. For instance, because of their larger customer count, national banks can afford to offer lower fees, rates, and charges on average than community banks. Similarly, national banking institutions are much more likely to offer benefit packages for smaller businesses such as issuing a company credit card, which in turn can be used to finance future expenses or business investments. Overall, national banking institutions are more likely to offer robust perks and incentive packages. 

How to Choose the Best Bank for Your Small Business

Loans For Small Businesses: When is the Right Time to Start Looking?

When to Start with Your Bank

  • Ideally, you will want to find the bank needed for your small business accounts as soon as you finish the paperwork for creating the LLC or infrastructure-format of your business. Also, a business license will be needed in order to create your business’ bank account, so be sure to set that up before shopping for your bank accounts. 
  • As mentioned in previous sections, there is a good bit of prediction involved when choosing the best banking options. Predicting transaction load, transaction amounts, and other business operations can be difficult, particularly if your business represents a break into new markets. If this is the case or if you just generally face difficulty in answering the questions of the above sections, just factor in this uncertainty into your decision-making process. In the case of uncertainty, it is likely best to not rely on extremes. 
  • For instance, you will likely not want to set up an account designed for extremely high transaction counts or extremely low transaction counts, but somewhere in the middle. Similarly, you might want to set up checking accounts with two different banks whose terms represent either polarity. And once you begin a business and can better predict your daily business activity and transaction load, you can choose to activate or deactivate each accordingly, keeping the one that best matches your operation. 

When to Secure a Small Business Loan

  • Many lenders will tell you that the best time to secure a small business loan is before you need one. ‘Why not get a loan when business is good?’ they ask. Unless the market of your small business indicates an extremely fortuitous forecast however, market volatility is a reason to practice restraint. In our view, a small business owner should not hold the same ‘all or nothing’ mindset of money lenders but should take a more tempered yet goal-minded approach. 
  • In this view, the best time to secure a small business loan is when you have a surplus of revenue that could pay off the loan outright, or at least most of it. This practice will ensure that no matter the ups and downs of the market, your business will be able to pay off the loan. This is particularly important for small businesses, who need good credit in order to invest in times of plenty or to bolster operations in times of proverbial famine. In other words, the best time to secure a small business loan is when revenue is up, expenses are down, and when you do not predict any changes any time soon–the more stability the better.
How to Choose the Best Bank for Your Small Business
  • If you wish to take a more aggressive approach, at least be sure to wait to secure your loan until revenue predictions will put you in the black for a least one quarter. Many business owners find success by playing the market aggressively, and while risky there is nothing intrinsically wrong with that. If you count yourself among these types, then be sure to at least confirm that your revenue predictions foresee 3-4 months of financial prosperity. In other words, do not pursue a small business loan to try to compensate for a failing business model–this is how businesses get in too deep and end up selling off business assets to pay off their debts–and in such a situation it is often best to sell off assets while you can still recoup some money. 

When to Change Banks

  • Put simply, the best time to change banks is as soon as you perceive a problem with your current bank. In 2020 it is easier than ever to shop banks, at least in areas of more developed cities. But even in more rural areas, there are usually enough options available to justify switching if your bank is not a good match. 
  • A follow-up point here is that an ideal time to change banks is when you foresee a major business change-up coming down the pike. Maybe you are partnering up with another business or are about to see a major jump in transaction numbers due to tapping into a new pipeline of customers. If this is the case in your business, it might be time to go back to bank shopping to make sure your accounts will accommodate these changes.
  • If you are franchising your small business or are looking to open another location, it might be time to switch banks as well. Both local banks and national banks have varying terms for handling franchise businesses and/or businesses with several accounts and locations. In other words, some banks are equipped to handle the unique demands that come with these business operations and some are not. If yours is not,  be sure to set up your new accounts before initiating the second location or franchising operations.
How to Choose the Best Bank for Your Small Business

13 Steps for Choosing the Right Bank for Your Small Business

  1. Choose Ideal Location
  • A good way to narrow your initial search for banking options is to choose a certain geographical range that you would consider ‘convenient’ and review the banks within that range. 
  1. Fire up Google and search for banks in the desired area 
  • Get out a notepad and jot down the names of banks that pop up and their contact information. Give them a ring and ask to speak to the bank manager, though most banking professionals should be able to answer the relevant questions.
  1. Choose Ideal Size
  • The second step to narrowing your search should be filtering by size–that is if you know which size will benefit your operation most. If you have a business that operates with a very high level of daily activity (large numbers of transactions of varying value, more than ten employees, etc.) then a large bank might be best suited to help you. 
  • If you run a smaller operation where you wish to take advantage of the more personalized support offered by smaller banks, then that might be your best option. And oftentimes an honest bank manager can tell you whether they are best-fitted towards your business model.
  1. Determine Borrowing Needs 
  • After determining size and location, the next step should be to filter by lending capability. Do you have immediate needs in this area, or do you expect to in the near future? 
  • Particularly if you are interested in an SBA loan, you will need to make sure your institution is able to accommodate this loan type. 
  1. Run a Credit Check
  • Depending on your desire to secure a loan in the near future this might need to be your first step. A credit report is a helpful tool for any small business owner, however, as it helps one to have a better grasp of how financial institutions will evaluate both the business owner and the business itself, which in turn can help business owners to better understand what borrowing options are available to them. 
  1. Determine Most Valuable Perks 
  • Certain perks and incentives will benefit certain businesses more than others. For instance, if you have a large group of employees, it might be worthwhile to pursue employee perks of a large bank such as a company credit card. Conversely, a smaller team might benefit from a tax preparation service to save money. 
  1. Determine Digital Needs 
  • Some banks are quicker to adapt to the digital age than others. Be sure to make sure that your bank is capable of meeting the needs of your digital banking needs, such as mobile banking or online transfers/withdrawals. 
  1. Remember that not all “free checking accounts” are truly free
  • Many banks will look to sneak fine print by prospective customers with some shiny deal that clouds the customer’s judgment. ‘Free’ is one of those magic words that do just that, so just remember that in many cases a free business checking account is paid for in fees and penalties concealed in the fine print of the contract. 
  1. Practice Caution in Dealing with Internet Banks 
  • In response to the demands of the digital age, a large number of internet banks have spawned into existence–many of which are sketchy and some of which are outright predatory. That is not to say that good internet banks do not exist, however, a small business owner should practice extreme caution when considering them.
  1. Determine Most Important Banking Services 
  • As broken down in this guide, banks offer a wide range of services. What services are most important to your small business venture will depend on your unique goals and desires as a business owner. 
  1. Look into a Credit Union
  • Credit unions can offer a strong alternative to banks if you have a simple financial problem and value customer service. Because community-run credit unions are much smaller than national banks, small business owners often find the personalized level of support and customer service they are looking for at a credit union. 
How to Choose the Best Bank for Your Small Business
  1. Determine Level of Support You Need
  • Not all business owners are created equal; some will be first-timers in business and might need a wider range of support than someone who has a track record of launching and running small businesses. Self-knowledge is key so that you can lean on the professionals at your bank to get the support you need.
  1. Trust your Instincts
  • The last and potentially most important step before choosing the bank for your small business is to trust your instincts. As a businessperson sometimes you need to rely on gut feeling over analytical thought; and this is not some new age mumbo jumbo–there’s plenty of research that demonstrates the stomach’s ability to signal cues recognized by the unconscious mind. In short, trust your gut. 
How to Choose the Best Bank for Your Small Business

Additional Tips for Bank Shopping and Evaluating Business Needs

Let’s go over some tips to aid you in finding the ideal bank for your small business and evaluating the unique demands of your operation. Jacob Dayan, CEO and co-founder of Community Tax and Finance Pal, explains the importance of understanding your business needs: 

“Small business owners will need to understand what type of services their business will require before they begin their search. Finding the right bank will take some time, so small businesses should do themselves a favor by setting aside special criteria that they will want out of their bank.”

  • Your first deposit does not have to be large 
    • This deposit simply serves as a starting place for your account, so you do not need to overextend yourself to make your first deposit.  
  • Establish a relationship with your bank early 
    • In many cases, you will not know how a bank fits your needs until you start working with them. Do not hesitate to start building a relationship early, so that you can determine compatibility.
  • It is okay to work with several banks at once to determine which works best for you
    • Despite popular conceptions, there is no such thing as monogamy in banking. Feel free to operate accounts with separate banks–either for perks, convenience, or just to shop around. 
  • Choose accounting tools that match your bank’s software 
    • Ask your bank manager what accounting tools best match their software, this can make your accounting chores infinitely more convenient and rewarding. 
  • -Or- Choose a bank that matches your accounting tools 
    • -Or- if you are set on your business’ current accounting tools then shop around for a bank that can accommodate them.
  • Estimate your month-to-month account balance in business checking
    • This will help you determine if you need a business savings account in addition to your checking account, or if surplus funds can be put to better use elsewhere. 
  • Estimate your average monthly transaction load 
    • This will help you understand what fee structure is best suited for your business operation. 
  • From these estimations, estimate monthly banking fees and expenses 
    • After calculating the estimated transaction load and necessary accounts required, you can predict the monthly baking expenses from frees and any accrued overages. 
  • You can secure a loan from an institution separate from your bank
    • If you found a great bank that doesn’t meet your borrowing needs, you do not need to switch banks–you can simply pursue a loan with a more accommodating institution while keeping your original bank accounts.
  • Employee perks at a national bank can go a long way
    • Banking perks can really add up when multiplied by a large pool of employees. If you have the organizational infrastructure to justify it, be sure to look out for employee perks. 
  • Factor in the convenience of banking into your daily regimen
    • Go through a few practice runs with your bank. How long did it take to drive there in heavy traffic? How long did it take to get the service you needed during peak business hours? 
  • If your bank is inconvenient, considering switching 
    • Ultimately, finding the right bank is about efficiency. If the bank has great financial terms but terrible service, factor in the cost of your time and stress. Is it still worth it?
  • Explore a bank’s reputation (any current or previous customers you might know personally, check online reviews, etc.) 
    • People use banks for different things, so talk to as many fellow customers as you can reach in order to get a good grasp on the bank’s reputation.
How to Choose the Best Bank for Your Small Business
  • A bank that is popular for its personal banking might be unpopular with small businesses 
    • When exploring a bank’s reputation make sure you speak with fellow small business owners to compare their experiences. 
  • -And- a bank that is popular with small businesses might be unpopular for its personal banking 
    • Small banks often choose between catering more to local businesses or more to personal banking. Most banks technically do both, but just be sure that small business is a focus of yours. 
  • If you have a business competitor in your area, see if you can find out what bank they use and why
    • Doing so might give you a leg up on making a better decision for your business, either by understanding why those that bank specifically or why they decided against others.
How to Choose the Best Bank for Your Small Business

Financial Goals and Knowing your Business

In order to choose the right bank and then make the most of available banking services, it is crucial to set achievable goals for your small business. To this end, there are two types of goal setting practices to consider: 

Short-term financial goals – This type of goal refers to the desired outcome set in the immediate future. As a small business owner, this might look something like this: “my short-term goal for this week is to double last week’s revenue.” Or “my goal is to land ‘x’ number of new clients this month.

Long-term financial goals – This type of goal refers to the desired outcome to achieve after a long period of continued effort toward that goal. Long-term goals are usually loftier for this reason as they represent the culmination of months of hard work. An example might be, “my long-term goal is to reach ‘x’ level of yearly revenue.”

 Long term goals do not necessarily need to be difficult to obtain, however, small business owners often set long term goals that represent a shift in mindset, such as being more patient, spending more time with employees, etc. 

Leveraging Business Goals in Banking

Why are financial goals important for choosing a bank? One of the most common problems for small business owners is that they choose a bank account that matches their current business needs without considering how those needs will evolve or change in the coming weeks. Michael Kern, CPA, and founder of Talent Financial, explains this problem: 

“One mistake businesses make is choosing a bank that is not scalable. A certain account may seem right at the time but if your business increases in size you may outgrow it — without the ability to upgrade to a higher account.”

Similarly, setting good financial goals will help you better understand the borrowing needs of your small business. Brian Caims, CEO of ProStrategic Consulting, explains how choosing the wrong bank can hinder you in reaching such goals:  

“Your personal bank might not be small business-friendly or offer the best small business rates, or may have high hurdle rates for loans.” 

What Type of Business Owner are You?

In order to further evaluate the bank that will make your life easier as a small business owner, you will first need to know what kind of small business owner you are and what needs you will want to be met by your bank. In an egregious simplification, let’s narrow it down to two types of business owners–’the control freaks’ and ‘the pantsers.’ 

The Control Freak

Control freak business owners like to micromanage all parts of their business. They not only want their bank to take care of problems, but they also want to understand how they do so and wish to offer feedback accordingly. In this way, they want their feedback to be heard and it is important to these professionals that their banks adapt to their needs and demands. 

While ‘control freak’ might have a negative connotation it is important to note that some of the most successful businessmen and businesswomen on the face of the earth fall into this category.

If you suspect you might also fall into this category, then you will likely want to look for a small community bank or a credit union–where your voice will be heard, your needs adapted to, and your demands met. Community banks deal with a lot of old school business owners who believe that banking is a two-way partnership to be earned and respected. So in this way community banks give a large amount of control back to the small business owner, which is an important benefit to the ‘control freak’ archetype. 

The Pantser

The pantser business owner is one who flies by the seat of one’s pants. Unlike the control freak, the pantser deals with problems as they arise and develops plans of action on the fly. They do not care so much about how a problem is solved so much as they do that it is solved, to begin with. These professionals are highly adaptive to the various demands and challenges of running a business but are happy to outsource problem-solving wherever appropriate. 

If you suspect that you fall into this category, then you will likely want to consider working with a larger national bank. You will not need to work with these banking professionals closely in order for them to help you. While you will have much less one-on-one support and your feedback will likely go unnoticed, if you are simply looking for the bank with the most problem-solving abilities that will not require micromanagement then a larger bank is your best bet. 


The two archetypes of business personality obviously represent polar extremes, and while many will relate to one over the other others will relate to aspects of both. In other words, many business owners will fall somewhere in the middle. In this case, it is important to understand the above example illustrates the relationship between the size of the bank and the level of control you would like to exercise over your relationship with that bank–with smaller banks offering a larger amount of control as compared to their national counterparts which offer relatively little control.  

How to Choose the Best Bank for Your Small Business

5 of the Best Checking Accounts for Small Business

  1. Chase Total Business Checking 
  • Chase Bank is the consumer banking branch of JP Morgan and boasts over $2.5 trillion in assets carried by over 4,600 branches worldwide. As such they are one of the most notable national banking heavyweights for small business owners to consider. 
  • They take the number one spot for small business banking due to their extensive reward and perk systems. These rewards and perks however are mostly designed to benefit larger business infrastructure. So Chase Total Business Checking accounts might be best-suited for larger business operations.
  1. Wells Fargo Business Platinum Checking 
  • Wells Fargo is another one of those banking institutions which likely every reader of this guide has heard of at one point or another. Their advertisements are everywhere and their influence is massive and in some cases, they may be able to provide industry-appropriate advice for your small business. 
  • Wells Fargo Platinum checking takes the number two spot on this list due to its extensive strengths in lending ability and cash deposits system. This bank is one of the best options for a small business operation that will rely heavily on consistent loan processes or lines of credit. Similarly, a small business designed around large batch cash deposits will find Wells Fargo’s deposit-fee system highly beneficial. 
  1. U.S. Banking Silver Business Checking
  • Founded in 1863 U.S. Bank is now the fifth-largest bank in America with around $467 billion in assets. Despite being one of the largest banks, its specialty is small business. U.S. Bank delivers this small-business-facing strategy through its 4,600 branches located throughout the United States.
  • While U.S. Bank takes the number three spot, it might be the best suited for small business owners who want a well-developed brick and mortar bank that is designed to meet the unique needs of small businesses. In this way, US Bank offers the best of both worlds–the immense infrastructure of a national bank combined with the personalized care and on-site offerings of a community bank. 
  1. BBVA Compass Clear Connect for Business Checking
  • BBVA Compass is a bank that specializes in providing small businesses with helpful services such as checking accounts, savings accounts, which come with zero monthly service charges and no limit on debit transactions. This makes it an excellent choice for small businesses that will rely on consistent large batch debit transactions. 
  • BBVA Compass is a great option for sole proprietors whose cash processing needs are relatively low. The $5,000 limit in monthly processing will put a cap on growth and goals for large-minded businesses, but for those who can still grow within this limit–it represents an amazing option. 
  1. Comerica Basic Business Checking 
  • Comerica is an up and coming national bank chain with locations in Texas, Arizona, California, Florida, and Michigan. If you have one of these chains near you, they have a host of small-business-minded services available. Comerica supports up to 75 transactions per month at the base level and allows deposits of $2,500. 
  • One of the best features for small businesses, however, is the seamless upgrade feature. That is, as a small business grows and their transaction and depositing needs increase, Comerica allows for small business owners to upgrade existing accounts using the existing account number for a painless transition. 
How to Choose the Best Bank for Your Small Business

A Note About Pros, Cons, and Red Flags For Small Business Banks

If you are the type of business owner who doesn’t mind automated customer service menus or long lines at your brick and mortar bank location then some of the above pros, cons, and red flags might not apply to your decision making process in choosing a bank. In this same context the only pros, cons, or red flags of importance are those that business owners interpret as meaningful in terms of impacting their particular business pursuits. 

Similarly, if there is something that is not listed above but strikes you as important then feel free to focus on that. For many old school business owners, it will be exceedingly important to establish a mutual rapport with their banking institution. Other business owners might not dislike automated customer support, or may even prefer it. In other words, the process of choosing the ideal bank will look totally different case to case. 

As we have laid out in the guide however, there are some universal principles and guidelines to aid you in the process. While the process will depend on your unique perspective and goals as a business owner, the process does gravitate toward commonly experienced norms. These will be laid out below. 

How to Choose the Best Bank for Your Small Business

Pros and Cons of the Best Bank Features

Choosing the best bank for your small business will come down to understanding the give-and-take between different types of service. As discussed above many of the larger national banks will have more resources to offer with more perks and incentives, but the tradeoff is that these banks often have lower standards for personalized customer support. Smaller banks on the other hand will be better equipped to work one-on-one with customers. Let’s look at some of the other correlative pros and cons between the best banks.

Brick and Mortar Offerings V. Number of Branch Offerings 

There is a typical give-and-take in banks where there are either higher quality but fewer brick and mortar options, or there are more chain locations of less extensive offerings. In the above ranking, US Bank was of such notable quality because they are the exception to this rule, offering both extensive branch offerings of a national banking chain in combination with extensive brick and mortar offerings of a community bank. In most cases, however, you will need to decide which option is more important to your operation–the number of branch locations or personalized offerings. 

Pros of Brick and Mortar Focus – Small business owners can expect a higher level of customer support and personalized care at a localized banking institution. Small business owners will also be more likely to develop lasting relationships at banks with this focus. 

Pros of Numerous Branch Offerings – Small business owners will likely find larger bank chains with extensive branch offerings more convenient, particularly in the case of having multiple business locations.

Cons of Brick and Mortar Focus – Brick and mortar focused banks will also likely have higher fees and rates in exchange for the more extensive one-on-one customer support for individual clients. 

Cons of Numerous Branch Offerings – With more numerous branch locations comes the increasing unlikeliness that the branch location will develop individual relationships with customers.  

Upgradable Accounts V. More Lenient Fee Structures

Another set of bank features that typically conflict with each other is that of upgradable accounts in relation to a lenient fee structure. That is, most banks will either entice customers into an account by offering a lenient fee structure on deposits and transactions or by balancing a more rigid fee structure with the benefits of an upgradable account. Comerica made the ranking above because they are the exception to this rule, offering a lenient fee structure on an upgradable account. 

How to Choose the Best Bank for Your Small Business

In most cases, however, small business owners will want to choose between targeting either feature. The right choice for you will depend on whether an upgradable account is more valuable to your operation than the money saved in an account with a more lenient fee structure. To make that judgment take a look at these pros and cons:

Pros of Upgradable AccountsFor newly established businesses that have a high potential for growth or change, an upgradable will offer great benefit, since their transaction loads and depositing requirements are likely to increase as the business grows. 

Pros of Lenient Fee StructuresFor established businesses with predictable transaction loads and deposit counts, it can be financially beneficial to target a banking account with the most affordable fee structure for the business’ specific level of daily operations–increasing revenue by decreasing banking expense. 

Cons of Upgradable Accounts Upgradable accounts usually come with a more rigid fee structure and an upgradable account’s value really only lies in the ability to upgrade it in the first place, which is entirely contingent on business growth and scale of daily operations.

Cons of Lenient Fee Structures – As insinuated time and again throughout this guide, there is no such thing as a free lunch. If a bank account offers lenient fee structures, be on the lookout for service deficits that balance out the affordable pricing. 

Red Flags to Avoid 

How to Choose the Best Bank for Your Small Business
  • The bank has a bad ‘word of mouth’ reputation with local small businesses. 
  • There have been reports of cybersecurity breaches of bank or client information. 
  • You can never get a hold of a bank manager (either on the phone or in person).
  • Kiosks are always empty even when the bank is filled with customers.
  • The bank has not worked with small businesses before yours. 
  • You can’t find customer reviews online–this can be evidence of suppressing bad reviews or a lack of customer review altogether, which is equally problematic. 
  • The bank’s fee structure or incentives seem too good to be true–chances are that if it seems too good to be true it probably isn’t true. 
  • Customer service is fully automated and it is disproportionately difficult to speak to a human. 
  • You notice ‘ghost fees’ on your account reports, that is, the bank is charging fees, penalties, or anything else that was not previously presented in your contract or discussed by a bank representative. 
How to Choose the Best Bank for Your Small Business

Small Business Banking in Conclusion

Trust your Gut and Personal Preferences.

While the process of choosing an ideal bank for a small business will vary from person to person there are some universals to make note of before you get to work and lock in your choice. The most notable of these is that the best choice for your business will be the one that best suits the goals of the business owner. 

This might sound overly obvious, but the distinction here is that two businesses might resemble each other in every aspect and characteristic, but according to the goals of their business owners what represents an ideal bank might differ drastically. 

So as much as it is important to understand the needs and goals of one’s small business when choosing a bank, it is in the end a process of personal preference. That is not to say, however, that there is no need to do research or to complete all the questions and evaluations suggested in this guide. Instead, we are simply suggesting that the right answer will be the answer that is most conducive to you as an individual. 

Don’t be Afraid to Make Changes.

So many of the banking and financial problems that small business owners encounter could have been avoided if they had taken certain actions. If you are experiencing problems with your bank, do not wait to start working with another bank. As mentioned earlier in this guide, it is totally reasonable and fairly easy to manage accounts at separate institutions. 

In this same vein, many business owners wrongly assume that the problems they experience in their banking endeavors are universal problems of the banking industry, rather than a problem with their bank in particular. 

If you follow the steps of this guide and consider these conclusions you will be well-prepared to evaluate and choose the right bank for your small business. So with this in mind, there is no reason to ever remain with a banking institution that is not meeting your requirements. Because with the right preparation there will always be a better option for you to find if you are willing to do the necessary research–a chore we have narrowed down considerably in the sections above.