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Banks provide business-specific financial services to help you manage your money. However, selecting the right bank for your small business can be similar to choosing any other business partner. Your bank needs to have the right qualities and expertise to help you reach your banking goals. While some banks only offer basic checking account services, other banks provide a variety of business-specific banking services. Short-term and long-term loans and treasury management are just a few banking services that can help you manage your money more effectively and improve your cash flow and business operations. Bank services can also automate tasks, which can reduce processing days.
If you’re looking to open a small business account, there are some important services you should consider. In this guide, you’ll learn about six banking services and how each can help support your financial success.
1. Mobile Banking
Business Mobile Banking has become a service that small business owners expect from their bank. With this service, you can transfer funds, check account balances, receive account statements and much more via a mobile app. When you use a mobile banking app, you can make deposits or receive payments with a few clicks rather than driving to your bank. This saves you or your employees valuable time and money. You can also approve transactions, including automated clearing house (ACH) transfers for payroll, payments and receivables, and you can wire transactions directly from your phone. This feature is extremely beneficial if you travel frequently or don’t spend a lot of time in front of a computer. It takes about two days to process; however, there are same-day ACH services available that can help if you need to wire a payment to a vendor.
Another perk of mobile banking is customization. You can customize the level of access and control an employee has. For example, you can allow them to deposit checks on their smartphone without giving them access to view account numbers and balances or other sensitive data. Banking apps also provide multiple levels of security to keep your business account secure. Many banks will send you account notifications about suspicious activity or access control from cybersecurity threats or fraudulent transactions.
2. Small Business Checking and Savings Accounts
Keeping your business finances separate from your personal finances doesn’t have to be difficult when starting your business. Open a business checking account and savings account to simplify your accounting and have better organization come tax time. According to the Small Business Administration, business checking accounts can also offer limited liability protection to business owners. Keeping your personal assets separate from business assets can be an advantage if your business is sued or you default on a debt. A business bank account offers you more payment options for your customers as well as granting business partners or trusted employees access to the account to pay bills or collect payments.
3. Small Business Credit Cards
When used responsibly, business credit cards can be a great way to support your day-to-day business operations and expenses. There are multiple advantages of using a credit card to finance your small business, including immediate access to a line of credit. You can cover temporary cash flow gaps and pay off short-term business expenses without taking out a loan. With a credit card, you can give employees access to make approved purchases without requiring them to be a signer on the account, and you can set specific spending limits. Most business credit cards allow you to take advantage of cash-back rewards and other perks such as free online expense reporting tools and mobile payment capabilities. Banks can often offer you a flexible and low-cost line of credit or a 0% introductory rate.
4. Small Business Loan Options
If you need to borrow funds to cover company-related purchases and operating expenses, small business loans can help you obtain the capital your business needs to grow. Banks offer several short-term and long-term loan options, including:
Equipment Loan
An equipment loan can help you buy or lease equipment, from heavy construction equipment to office equipment. Buying or leasing equipment can be a large investment, so before applying for a loan, it’s important to look at your current budget and let it serve as a financial road map to help guide your purchase decision. Most equipment loans have lending terms between six months and seven years.
Real Estate Construction Loan
A real estate loan can help you acquire or develop residential properties and construction lines of credit or purchase income-producing properties, including office buildings, industrial buildings, self-storage and more.
Working Capital Loan
A working capital loan is money borrowed from your bank or lender to keep cash flowing in your startup or expanding business. A working capital loan matures in one year and has monthly interest payments. There are two ways to obtain a working capital loan: from the assets you already have with accounts receivable or by applying for a loan. A commercial lender like Northwest Bank can work with you to apply.
SBA Loan
The U.S. Small Business Administration (SBA) provides resources — including loans — to business owners to help them grow and succeed. The most common SBA loan program is SBA 7(a). This type of loan can be used to set up a new business but can also support an acquisition or expansion of an established business. There are many benefits of an SBA loan, and the specific terms can be negotiated between you and an SBA-approved lender like Northwest Bank.
Another common SBA program is a 504 loan, which is geared toward small businesses looking to finance commercial real estate or large equipment to use in their operations. Additionally, a 504 loan can be used to finance land acquisition, construction or improvements to an existing building.
The SBA can offer loans with longer repayment terms and higher borrowing limits. For example, you can get up to 25 years for repayment on a real estate loan and up to 10 years on an equipment loan through the SBA.
5. Treasury Management Services
Banks understand there’s no one-size-fits-all financial solution for your small business. That’s why many financial institutions offer a variety of treasury management tools so you can select the services that fit best and make the best use of your available funds. Here are some products and services that can benefit your small business.
ACH Manager
ACH services can be used to pay your employees via direct deposit and to make and receive payments to and from your vendors and suppliers. This is faster than a check, cheaper than a credit card and more secure than checks, credit cards or wire transfers. Ultimately it gives you more control over when cash leaves your account.
Check Fraud Protection
Make sure your bank has solutions, like Positive Pay, to protect your business against unauthorized transactions. With Positive Pay, you can take control of your business banking account and monitor checks and ACH debits for potential fraud.
Remote Deposit Capture
Instead of letting undeposited checks pile up, deposit them to your accounts from your computer or mobile device with Remote Deposit Capture. This eliminates travel time and any liability associated with an employee taking the check to the bank. Remote Deposit Capture has helped out many small businesses, including Frontier Bag Company, a custom manufacturer and wholesaler of bags and burlap products in Omaha, Nebraska. With this service, the company can scan checks and issue bank deposits electronically, allowing them to become more efficient with time and cash flow management.
Lockbox Payment Processing Solutions
If you receive a large volume of payments, you can enlist in timesaving banking services like lockbox payment processing solutions. Instead of payments being mailed to your business, they are sent to a physical post office (P.O.) box where they’re collected by a third-party processing team. There are many perks of using this service, but the biggest is that it gives you more flexibility with your cash. Payments are delivered directly to your bank account after processing, speeding up the receipt of payments and improving cash flow. With a faster payment schedule, accounts receivables are more rapidly up to date, providing you with better insight into which customers or services are more profitable.
Payroll Cards
With dash™ Payroll Cards, you can simplify and streamline your payroll process to deliver more value to your employees. The payroll cards are prepaid cards that replace paper paychecks. Each card has an account number that enables direct deposit. Cards can be used to withdraw cash at ATMs and to conduct both PIN-based and signature-based transactions. They are safer than carrying cash, eliminate costly check-cashing fees, and can be used anywhere debit cards are accepted – in stores and online.
Bookkeeping Software
Chances are that accounting and bookkeeping are some of the many tasks on your plate every day. Business banking services are compatible with accounting software Quicken® and QuickBooks® to help you more easily manage your finances, invoice your customers, pay bills, generate reports and much more — so you can better track your profitability and cash flow.
6. Small Business Insurance
As a small business owner, it’s important for you to think about business insurance. Insurance helps provide the security you need to protect your business in an event of an accident or lawsuit. There are several types of business insurance, including workers’ compensation, unemployment and disability insurance. Requirements for other insurance types vary by state, so contact your local government’s office to find out what requirements will impact your business.
It’s also good to consider insurance that will provide coverage for items you would not be able to replace on your own. This could include coverage of commercial property, equipment or potential natural disasters. Reach out to your commercial banker or a licensed insurance agent for advice on what small business insurance you may need as you grow.
When it comes to choosing a bank for your small business, make sure you are considering your financial needs and business goals. Banks offer many solutions to help you better track your profits, plan for future expenses and figure out if you have enough capital to expand your business.
Reach out to one of our Northwest Bank Business Bankers today to learn what financial services can help streamline your business and help you plan for the future.
Small Business Financing for the Next Step
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