What Makes a Good Business Bank?
The bank you choose for your business accounts can make a major difference in how well your company operates. Your bank can control everything from how easy it is for you to get a business loan to how soon your customers' payments will actually be available for you to spend. Convenience is a factor of course, but there are considerations that may be more important than if your bank is just around the corner from your office.
There are certain services that may be necessary for you do carry out your day-to-day business. International wire transfers, online banking, payment processing and other services can certainly narrow down which banks you may consider. But many banks do have similar offerings these days, making it more important to find a good bank that will not only handle all of your needs, but that will also provide great service and reward your loyalty.
That may mean leaving the bank that handles your personal accounts or even moving an account you've already established. Many banks have very different ways of handling personal and business accounts and even the convenience of doing all of your banking in one location isn't enough to make up for other issues. Factors like how well-connected the bank is locally and the quality of their customer service for business accounts can truly influence your ability to grow your business in the years to come.
The Local Connection
Rachael Solem is the owner of Irving House at Harvard and has been in business for nearly twenty years. About ten years ago, she was looking for a mortgage and considered larger commercial banks.
Our experience with banks as mortgage lenders has been that the larger banks do not care about or know about our business as much as the local banks do. After considerable research the last time we refinanced, we got the best deal from a local bank (Cambridge Trust), for both terms and interest rate. In addition, that same bank holds our operating accounts and does our merchant credit card processing. All has worked smoothly with them for years.
Solem has built a personal connection with her bank over the years. She knows the president, along with several vice presidents and commercial lenders. That connection makes it easier for her to do business.
The bank provided more flexibility with the terms of our current loan, and it is because my partners and I could be fairly candid with our lender about our goals for the business. They had to learn about our business — hospitality — which is a niche in the lending world because evaluating hotel properties is tricky. Now that they know us, I believe we can look to them as a lender to a buyer, if and when we decide to sell.
It doesn't hurt that local banks can be crucial components of your community, offering intangible benefits on top of help managing your money. Solem is co-chair of Cambridge Local First, a local business association. She says:
We are finding generally that local banks provide very competitive services and rates for many, many small businesses. In addition, they are very generous with sponsorships and donations to charity in our community.…Cambridge Trust has for at least 100 years provided the meeting space for the Harvard Square Business Association. It offers prime marketing space in its windows (in several branches, including the most popular Harvard Square office) to its depositors for no cost. The bank has for three years sponsored a fund raiser organized by Cambridge Local First, paying for the print materials necessary to promote the event so all proceeds can go to a local not-for-profit. When I first organized this fund raiser, it took a single, short phone call to the president of the bank to make this happen. Cambridge Trust is a regular, significant presence with community efforts everywhere I turn, from housing and food, to education, cultural endeavors, hospital wings. Google Cambridge Trust, they're everywhere in Cambridge good works.
Visit the Bank
While it may be tempting to research the banks you're interested in and then make a decision from there, it's important to actually go in and visit those financial institutions that you're considering. Even if you plan to do most of your banking online, it's important to get a feel for the location. David Yale, the owner of A Healthy Relationship Press, went to each of the banks he was considering opening accounts with. Yale says:
I visited several neighborhood banks unannounced. Most were impersonal, and one was totally disorganized and incompetent. As I waited to meet with a rep, I heard lots of customers complaining bitterly, and lots of reports about fraud. But at one bank, CapitolOne, I was greeted warmly, offered coffee or tea, introduced to the branch manager, and engaged in a conversation about what my business needed from the bank. All the other customer transactions I overheard during this discussion were positive. They were so clearly competent I decided to bank with them. It's been six months now, and I'm glad I made this choice.
When you find the right bank, sticking with them can make your life easier. Bob Liggett has been handling the banking for his consulting and training business with US Bank since 2002. Not only does the bank reward his loyalty, but the customer service manager has more than wowed Liggett:
She knows me and my needs, and is always willing to take whatever time it takes to resolve my questions (and never makes me feel dumb!) …When Karen transferred to another branch location, I followed her there and drive the extra miles gladly.
That sort of connection can translate to better terms for loans, waived fees and other rewards for your willingness to stay with the bank. It can also mean that if something goes wrong, no matter whose fault it is, your bank is likely to take the steps necessary to get your account straightened out. Customer loyalty can be the key for a small business to get treated like a big company that may bring more business to the bank.