Choosing a commercial bank is a crucial step to make early in your business's life cycle. Often, the first transaction between businesses and commercial banks involves significant loans, so investigating financial institutions' lending practices is a must.
To secure a loan from US commercial banks, small businesses must submit an application and a business plan. Before banking on you, a financial institution needs to understand your personal credit history and your business' objectives, viability and potential for success.
Although commercial banks make potentially life-changing decisions about your business, they don't hold all the cards. The goal is to build a positive relationship. Gather information on commercial banks to make sure their practices, culture, interest rates and services meet your business needs.
When comparing commercial banking institutions, pay particular attention to:
1. Your financial needs. Assess current needs and project future needs to find a good banking partner.
2. Lending history. Some commercial banks are more likely to lend to certain business types.
3. Banking culture. Avoid institutions with high turnover or poor customer service.
4. Available services and associated fees. Make sure a bank can meet your needs at a price you can afford.
Action Steps
The best contacts and resources to help you get it done
Focus on commercial banks that fit your business needs
Not all US commercial banks are a good fit for every small business. You must find a bank that meets your lending needs, offers the services you desire and the quality of customer service you deserve. Doing some legwork on the front end can save you from entering a suboptimal relationship.
I recommend: Business Finance provides a commercial banking matching service to businesses who enter lending requirements online. The
Small Business Times features a guide to US commercial banks, including information on their lending specialties, available loan types and overall strengths.
ING DIRECT offers good rates on business savings accounts.
Find a commercial banking partner with technological savvy
Although financial institutions are old school compared to most other industry, the banking world is responding to the technological revolution. To save time, hassle and mounds of paper, choose a bank that offers web-based solutions to small business clients.
I recommend: Wells Fargo offers a number of online banking services to business customers, including bill payment, statement review and tax services.
Bank of America also offers several online small business solutions for merchant reporting, payroll and invoicing.
Wachovia and
Affinity Bank both have similar online services for small businesses.
Examine ratings of commercial banks
Banks spend a lot of time and money conducting research about your personal and business financial history before providing some services, they deserve the same scrutiny. Get information about commercial banks' operations, financial strength and customer service quality before making a decision.
I recommend: AMBest provides numerical bank ratings, with advanced search features to narrow down commercial banks according to business needs.
Bankrate.com rates banks on a five-point system, using information about commercial banks' overall performance and health.
Tips & Tactics
Helpful advice for making the most of this Guide
- Seek advice from your legal counsel and financial advisers when making commercial banking decisions.
The official source of Commercial Banks is the Commercial Banks page at Business.com
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