As a newly-established startup, There are certain key elements your business needs to be successful in the short- and long-term. The right talent, early funding, and equity from the founders, along with a detailed business plan and launch plan are all essential ingredients to get a new startup off the floor.
Many small business owners and entrepreneurs often overlook the importance of finding the best bank and matching it with the correct bank account during the induction phase.
After the collapse of California’s Silicon Valley Bank (SVB), in early March 2023. Startups and organizations caught in the middle showed other entrepreneurs the importance of working with the right financial institution.
The fall of SVB sent shockwaves through the banking and economic sectors. However, it is crucial for many small businesses to find a bank that can offer them a variety of tailored products and services. Other than financial backing and support, banks provide businesses with the tools and resources they need. Can help small startups to leverage financial capital in order to achieve a long-term objective.
The broader economy continues to struggle with high-interest rates and stubbornly high inflation. Startup owners should consider certain key factors when choosing a bank to help them with their business.
Industry Authority
The size of the bank and its authority within the financial system are important factors when it comes to choosing the best bank for your business.
Many large banks provide capital resources to specific businesses based on their industry. Some banks, especially those that are more established, will offer a variety of services and products to cater to different types of businesses. It doesn’t matter if they are small-scale e-commerce businesses or early-stage biotech startups.
Even though smaller community banks are geared towards the direct market and focus on providing local businesses with the necessary capital and resources, placing long-term wagers on them can be riskier, especially if your company is considering expansion in the next few months or years.
Find banks that have a proven track record and provide customers with the services they need to start their businesses.
Also read: 10 Ways To Get Startup Funding For Your Business
Location. Location. Location
The location of the bank is another thing to think about. If you live in a rural area and you have limited access to ATMs and bank branches, you may want to partner with a bank in your region.
Even though many banks today offer online banking, small businesses, and startups are better off choosing a local bank in the event of a dispute or discrepancy.
Different Products and Services
Not all banks offer the same services to their customers. Some providers offer a variety of products for businesses and less on personal banking.
Some banks offer low-interest business loans, but their product range may be limited. List a few of the services your business may need and then match them with banks that offer affordable solutions.
Taxes and Other Costs
When choosing a bank, you should also consider how much money you’ll end up spending on fees and other bank charges. The fees charged to open a bank account are not standardized and will vary from one bank to another.
Some banks have pricing structures that are tailored to new businesses and small businesses. These services and products are usually more affordable, have fewer costs, and have a smaller selection of banking services.
Digital Features
Digital infrastructure is a vital part of the banking and finance ecosystem. It’s crucial to consider how digital features can enhance your business and its performance, and forward-going growth.
It’s better for startups to choose a bank with native digital tools. These include a platform for online banking transactions and other digital integrations. These services allow startups and small businesses to easily communicate with institutions, and they can access the tools that are needed in their daily operations.
Interest Rates
Many new businesses and startups have found it difficult to navigate the ongoing interest rate increases, particularly those who took out loans in the early months of the pandemic when rates were close to zero percent.
It’s hard to choose a bank and financial organization that offers interest rates that will help businesses and individuals grow their savings now that the era of free cash is over.
Online banks offer attractive rates of interest, but they should be approached with caution, especially by new businesses. Compare interest rates and find the bank that offers you the lowest rate. This will not only help you choose the best bank for your needs but also allow you to compare different options.
Customer Support
Another aspect to consider is customer service. Some banks do not have physical stores but rely solely on digital communication, such as chatbots and artificial intelligence.
Consider your options carefully if you are comfortable using these tools to solve any issues or problems before being placed in contact with an agent.
It’s important to have the best possible customer service agent to assist you with any questions or disputes. Some banks offer 24/7 service while others limit their operations to specific business hours.
Also read: Top 10 Business Credit Cards for Startups
Check Your Credit
If you have a low credit score, it may mean that your options for products and services are limited. The opposite is true of those with a high credit score.
The larger banks are more likely to want to work with companies and business owners who have a strong credit line. Some smaller, community-oriented banks are more flexible with locals who have low credit scores.
The interest rates and loans that you are offered will be based on your credit score. Startup entrepreneurs and small-business owners are often advised to check their bank’s credit requirements to determine if they qualify for services.
Final Thoughts
It can be difficult to find the right bank when many household names are in financial trouble. This can make any business owner or startup entrepreneur feel uneasy. It is better to have a few options and ensure that your startup is partnered with the right people who will grow it while building a lasting relationship.
You should consider the needs of your business and the products and services that these banks can offer. Shop around to find out what’s available and to get a better idea of your options.
You will find it easier to locate a bank that can provide you with financial services that are tailored specifically for your new startup if you know exactly what you need.
