[How To] Choose A Small Business Bank

31 October 2011 Start-Up


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As an entrepreneur, I need to make many decision everyday. What names shall I use for my new idea? How do I file for a trademark? Which corporate structure do I use? The list goes on. Another question is, which bank do I choose? There are a ton of choices and one size does not fit all. 

Choosing a bank depends more on you than on the bank. Is Bank of America a good bank? Depends. Many will argue for and against. Would a local bank be better? Possibly. When you set out to open a bank account for your small business, there are a few things to ask yourself and the bank you decide to use. While doing some research on small business checking accounts, I thought I had walked into a Baskin Robbins 31 Flavors ice cream shop. Each bank I called had not just one or two different types of checking account but many.

I was a bit overwhelmed and decided I can’t possibly read through every banks plethora of small business checking account types, so I called up each bank. Before I called these banks, I thought to myself, “What do I need to know about each bank and the services they provide?” I used the following check list so that when I called the bank, I would ask them about the exact same information.

Banking Features

From my experiences with banks I know that the following are key features of checking accounts:

  • Initial deposit
  • Daily and Monthly Balances
  • Transaction per month
  • Online banking (no paper statements)
  • Transfers

Initial Deposit

All banks require a minimum deposit of at least $100 to get started. This is a common practice and should be expected.

Daily and Monthly Balances

Each bank require a certain amount of money is in the account on a daily and monthly basis. If not there are fees that will be accessed. These fees vary from bank to bank and account type to account type. They normally range between $10 to $25 but can be waived by maintaining a certain amount in the account at all times.

Monthly Transaction Volume

Each time you deposit a check or write a check, this counts as a transaction. Review your past three bank statements and determine how many transactions on average you normally have.

Online Banking

With the convenience of online banking, I am not sure why anyone would not choose it. All banks normally have this option available and it comes standard with most accounts.

ACH Transfers
I don’t know about you, but I do not like paper checks. To avoid the hassle, I enjoy the option to send money directly to my vendors and receive money directly from my clients. This helps eliminate those pesky trips to the brick-and-mortar buildings. You must be careful here, because some banks actually charge you a fee to conduct these types of transfers. Also be aware that ACH is different than Wire Transfers; which carry a more hefty price tag.

I’ve compiled a matrix below to help you clearly see the options of each bank. After conducting this initial research, I found that PNC is head and shoulders above the rest. Bank of America comes in at a close second. Be advised, however,  that in order to keep the maintenance fees away, you MUST conduct at least one transaction a month with your debit card, or keep at least $3,000 in your account at all times.  If you do not, it will cost you $15 for the month where you did not meet one of these two requirements.

I do realize that this is not a global coverage of banking options. For those of you who are in other countries, if you have suggestions and/or recommendations, I’d like to know by commenting below.

For those of you who might be members of Federal Credit Unions, I’ve found that they can be competitive as well.

Bank Initial Deposit Balances Transactions Online Banking Transfers
PNC $100 None Up to 200 Yes No Fee
Bank of America $100 None Up to 150 Yes Incoming $3 each
TD Bank $25 $500* Up to 500 Yes No Fee
Suntrust $100 $1000 Up to 150 Yes $50 mth
BB&T $100 $1500 Up to 150 Yes No Fee

Banks

  1. PNC Free Business Checking
  2. TD Bank Business Convenience Checking *First 12-months maintenance fee is waived.
  3. Bank of America Business Economy Checking
  4. Suntrust Primary Business Checking
  5. BB&T Business Value 150 Checking

PNC Bank: offers consumer and corporate services in over 2,500 branches in Delaware, the District of Columbia, Florida, Kentucky, Indiana, Illinois, Maryland, Michigan, Missouri, New Jersey, New York, Ohio, Pennsylvania, Virginia, West Virginia, & Wisconsin, with the RBC Bank deal adding Alabama, Georgia, North Carolina, and South Carolina to the mix.

TD Bank: Canada: All provinces, Northwest Territories, Yukon. United States: Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, Washington, DC

Bank of America: According to its 2010 annual report, Bank of America operates “in all 50 states, the District of Columbia and more than 40 non-U.S. countries.” It has a “retail banking footprint” that “covers approximately 80 percent of the U.S. population and in the U.S.” it serves “approximately 57 million consumer and small business relationships” at “5,900 banking centers” and “18,000 ATMs.”

SunTrust: operates approximately 1,700 bank branches across Southern states, including Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia, and Washington, D.C.

BB&T: operates more than 1,850 financial centers in the United States of North Carolina, South Carolina, Virginia, Maryland, West Virginia, Kentucky, Tennessee, Georgia, Florida, Alabama, Indiana, Texas, and in Washington, D.C..

 

Created By:

Paul McNeal is a Business Coach and Mentor with Teen Business Forum. To learn more check out about.me/paulmcneal.

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