Small Business Banking – Everything You Need To Know

When choosing a bank for your small business, there are many factors to consider. While it may be tempting to go with the bank down the street from your office for convenience, they may not offer the best services for your small business or startup. That’s why it’s important to understand exactly what you need from a bank, the services banks can offer a small business startup and the cost of small business banking.

Introduction to Business Banking

Business banking forms the backbone of any successful small business, offering a suite of financial solutions designed to help you manage cash flow, pay bills, and receive money efficiently. By opening a business checking account with a reputable business bank, small business owners gain access to essential services such as merchant services, credit cards, and dedicated support tailored to their unique business needs. With the rise of mobile banking, managing your business finances has never been easier—track recent transactions, make payments, and monitor your accounts from anywhere. Local expertise from your business bank can provide valuable insights, helping your business thrive and reach its goals. Whether you’re just starting out or looking to grow, the right business banking partner can make all the difference in your journey.

What Do I Need From a Bank as a Small Business?

Every small business will have specific banking needs, and there is no one-size-fits-all option. When you are deciding which bank to go with, it’s good to consider the following products and services:

What you’ll use the bank for

The services you need will depend on what you want from the bank. Are you looking to take out a loan? Do you need to set up bill payment? Get a corporate credit card? Is online banking important for your business? Are you hoping for investment advice and personalized service? All of these factors will influence your choice, so knowing what you’re looking for will help you narrow down your options.

Small vs. big banks

Larger banks typically charge lower rates for their services and are more likely to issue corporate credit cards. They also usually have lower interest rates on loans and more services to choose from overall. But smaller banks are often more flexible, and may not be as likely to impose stiff fees should your business encounter a slow period. Small banks also usually offer a personal touch that you may not find with larger banks, so you might receive more assistance and attention than you would at a larger bank. If your business has mainly regional interest, a local bank will also better understand your marketplace. Overall, your business needs and priorities will determine what size bank might be the best fit for your business.

Money movement

How is money coming in and out of your small business account and how often? How you are paid and when will help determine which bank may be best for your company. For example, if you are receiving a lot of checks and you don’t want to go back and forth to the bank frequently, an option for online banking and depositing checks via phone could be useful. However, if you are a brick and mortar store receiving cash payments and credit card transactions, online banking options may not be as important to your business.

Strong relationship

Ideally, you’ll want to find a bank that understands your business and can work with you for the long term. The ideal size and services will depend on your company needs, but whatever bank you choose, you’ll want to feel comfortable and confident in its ability to help your small business succeed.

Bank Services for Small Business

When it comes to banking for small business owners, there are many services to consider. Depending on your business, you may find the following bank services useful:

• Checking account

• Savings account

• Deposit products (including business deposit accounts)

• Debit card (with features like fraud liability and transaction security)

• Online/mobile banking, including a mobile banking app for a seamless mobile banking experience

• Corporate credit card

• Payroll

• Loans

• Wire transfers

• Payment processing and merchant services for small businesses

• Leasing

Auto repair shops and dealerships, for example, may also need specialized payment processing solutions for auto shops and dealers that integrate with their service and sales workflows.

Robust digital tools, such as mobile check deposit and accounting integrations, are essential for managing finances on the go. Your bank should function as a financial hub, offering services beyond just storing money, including merchant services and payroll support. Wells Fargo provides easy-to-use products, tools, and resources for businesses to help simplify financial life. Eligible clients can earn a 3.40% annual percentage yield (APY) with a new Truist Business Money Market account, American Express® Business Checking provides an APY of 1.30% along with rewards points, and Bluevine offers checking accounts that can earn up to 3.7% APY.

Many banks now offer a comprehensive mobile banking app, allowing you to manage your accounts, make mobile deposits, and send or receive money on the go. The U.S. Bank Mobile App allows users to track their business deposits and spending anytime, anywhere, and Keynova Group ranked U.S. Bank #1 for mobile banking apps in its Q3 2024 Mobile Banker Scorecard. Mobile Banking is offered without a fee by PNC, but third-party message and data rates may apply. Your mobile carrier’s message and data rates may also apply when using features like Zelle® or mobile deposit. A mobile number is required for certain mobile banking features and payment services.

For payment services, Zelle® is a payment service that allows users to send and receive money quickly between enrolled users. Both parties must be enrolled with Zelle® to send or receive money, and transactions typically occur in minutes between enrolled users. Zelle® should only be used to send or receive money with people you know and trust, as purchase protection is not provided. To send or receive money with a small business, both parties must be enrolled with Zelle directly through their financial institution’s online or mobile banking experience. PNC doesn’t currently charge a fee to send or receive money with Zelle®. Payment requests and sending money are fast and secure for enrolled users, but restrictions apply.

Some banks also facilitate payments to other countries, making it easier to manage international transactions.

As you decide on a bank for your small business, it’s important to know exactly what fees, limits and other costs are included with their services. What you are charged and why will vary from bank to bank, but some of the most common fees to look out for include:

• Transaction fees: Banks may charge for specific types of transactions, such as ATM withdrawals and wire transfers, as well as credit card processing fees for small businesses. These fees typically occur each time the transaction is made.

• Transaction limits: Some banks may put a limit on the number of transactions you can make over the course of a month, and will charge for exceeding that amount, especially when processing debit and credit card transactions.

• Minimum account balance: Many banks require a minimum account balance and will charge fees if your account falls below that amount.

• Monthly maintenance fees: Banks typically charge fees for maintaining your account, but the fees can usually be avoided if you maintain a certain balance or have direct deposit set up for your account. For example, the Monthly Maintenance Fees will be waived for the first three billing cycles after the account has been opened for TD Business Checking. A billing cycle is the period between the last statement date and the current statement date, and the first three billing cycles refer to the initial three periods after account opening.

Other fees you may encounter include card replacement fees, paper statement fees, account closure fees, overdraft fees and inactivity fees. It’s important to be aware of all possible bank fees, as you may need additional services down the line. But fees can also sometimes be negotiated or waived depending upon the bank and your business history, so it’s always good to ask how a bank may be able to accommodate you. Banks will often waive fees when you link accounts and bundle services as a way to incentivize people to do more business with them.

Your finances and business are in safe hands with U.S. Bank as it is an FDIC-insured bank. FDIC insurance protects deposits up to $250,000 per depositor. Look for banks that are FDIC insured and display ‘Member FDIC’ to ensure your deposits are protected. U.S. Bank provides zero fraud liability for unauthorized transactions. Please note that restrictions apply to certain features and services.

Managing Cash Flow

Managing cash flow is one of the most critical aspects of running a small business. A business checking account serves as the central hub for all your incoming and outgoing payments, giving you a clear overview of your financial health. With online banking, small business owners can easily monitor their accounts, pay vendors, and receive money from customers in real time. Setting up a merchant services account allows you to accept credit card transactions, ensuring you get paid faster and can better manage your working capital. By leveraging these financial solutions and following tips to get your funds fast every time, you can make informed decisions about your business finances, keep track of payments, and maintain the flexibility needed to adapt to changing business conditions. Effective cash flow management not only helps you cover day-to-day expenses but also positions your business for long-term growth.

Bank Account Security

Security is a top concern for small business owners when it comes to managing business finances. A trustworthy business bank will implement comprehensive security policies to safeguard your bank account against unauthorized access and fraud. Features such as secure login procedures, encryption, and zero fraud liability offer peace of mind, ensuring your business funds are protected at all times. Additionally, services like Early Warning Services’ Zelle provide an extra layer of security for sending and receiving money, helping to prevent fraudulent transactions. By choosing a bank that prioritizes security, you can focus on growing your business, knowing your accounts and sensitive information are well-protected.

Online Banking

Online banking has revolutionized the way small business owners manage their business finances. With the convenience of online and mobile banking, you can pay bills, transfer funds, and check your account balances anytime, anywhere. Many business banks offer robust mobile banking apps that include features like mobile deposit, bill pay, and real-time account alerts, making it easier to stay on top of your finances and leverage small business reporting tools for better decision-making. By embracing online banking, small business owners can streamline their financial management, reduce paperwork, and make timely payments—all of which contribute to a significant business advantage. Staying organized and having instant access to your accounts allows you to focus on what matters most: growing your business and achieving your goals.

Contact Velocity Management Services Today

Choosing the right bank is vital to a small business. With so much to manage, you need to invest in services that work best for your business. At Velocity Management Services, we specialize in payment processing, payment equipment and business solutions for small businesses, offering options that can be evaluated when comparing VMS vs. Square for payment processing. With easy and affordable options. Reach out to us today and speak with one of our small business experts to see how our suite of services can be used for your business. We will provide you with a free initial consultation and help you determine what you need.