Choosing a bank for your new business is not unlike choosing a doctor for your family – what’s needed is an institution that strikes the right balance of services, experience and “bedside manner.” This means the choice must be tailored to your individual business, and a clear concept of what services your business needs, how important it is for bank branches to be located locally, and whether or not online banking is available.
Traditionally, banks have avoided start-up funding. According to a study by the Kaufman Center for Entrepreneurship and Leadership at Babson College, 93% of start-ups in the United States are funded by private investors – often individuals who invest $5,000 or less. Yet, a business still requires business checking, and as it grows, investment advice and employee benefits.
In recognition of this, many banks are developing financial programs aimed at servicing a business from “cradle to grave.” According to one New Jersey bank, their policy is to develop a relationship with a business, to help develop a business plan, and to act as a conduit for the business to access funding through private investors, foundations, government programs and venture capitalists. This particular bank has created an internal team focused on technology businesses. In addition, they offer help with employee benefits and perks, an important point in attracting qualified personnel.
Other banks also offer special business programs, such as several types of checking and savings accounts geared to the company’s financial state, lines of credit, and secured term loans for equipment purchases.
Banking in any state is very competitive, with new banks constantly applying for charters. This gives a business many choices, but can also lead to confusion and uncertainty. Organizations such as regional Bankers Associations, as well as the Federal Deposit Insurance Corporation’s (FDIC) website can be helpful. There you can find information about which banks in your area are insured, quarterly financial reports on those insured banks, and legal requirements and pending changes. And in the event that your first choice turns out not to be suitable for your business, you can begin the research process again, and try another bank in your area.