The first place to look when choosing a new bank account is the basic services offered. That includes both in-branch, online, and other services.
Online banking is the core of financial operations for many businesses. With online banking, you should be able to view balances and recent activity, initiate transfers to other accounts at the same bank and other financial institutions, access online bill pay and more.
Additionally, you may consider having your business accounts at the same bank as your personal accounts. This gives you access to mortgages, lending, and related services.
Fees
Once you find banks that have the services you desire, it is time to look at fees. Business banking fees range widely from free to hundreds of dollars a month. For more complex businesses, it is reasonable to expect some fees. However, try to find a bank with the lowest fees for the services you need.
Cash and transaction limits
Some banks offer a no fee account up to certain transaction limits, so be sure to lookout for those types of limits when opening a new account. This makes sense, as depositing cash requires a teller and is cost intensive for a bank branch. The fee is typically based on the total dollars deposited per month.
Are you a freelancer or online solo entrepreneur? If that is the case, you typically shouldn’t be paying any fees for your basic banking needs.
Once your business bank account is up and running, it is essential for it to work with your accounting and budgeting software and any other services you choose. The most common of these services is QuickBooks, but there are other financial systems to think about as well, such as invoicing, payroll, etc. And whatever services you use, the ability to send and receive ACH transfers is helpful, particularly for online businesses.
Community spirit
Many business owners are active in their respective communities and appreciate banks that also give back. If this is important to you, inquire about each bank’s level of philanthropy. Do they have a charitable foundation? How much do they give annually and to what local organizations? Do their employees volunteer at local events? You can often tell a lot about the quality and commitment of a financial institution by how they give back to their communities.
Customer service
At the end of the day, most business checking accounts are similar. What sets one apart from another is often the financial institution that offers them, the services they offer, and how you plan to use your account. Your business’ success or failure is determined by its financial performance, and a business checking account is the core of your business finances. Choose a reputable, local bank that offers the services you need so that you can be free to focus on running your business instead of running your bank account. That is something every business owner can appreciate.
Commercial Lending: Should You Stay... or Should You Grow?
As we head into 2025, many business owners and executives are searching for that crystal ball, wondering whether this year will be a repeat of the last twelve months. Will interest rates start to come down? Will commercial real estate be more available or, more importantly, more affordable? Is this the year to take the leap and expand the business - or continue to wait and see what happens?
The answer is...maybe?
The fact is that while interest rates started to decline in the last quarter of 2024, they have been incredibly difficult to predict over the past 24 months, and 2025 may be more of the same. Case in point: the 10-year treasury reached a high rate of 4.706% in late April and then dropped to a low of 3.621% by mid-September, a drop of more than 100 basis points in a six-month period. As of today (1/30/25), it is at 4.526% -- almost right back to where it was at its highest in 2024.
Rate volatility has created significant uncertainty in the market and unfortunately, trying to “bet” on rate is an exercise in futility. Inflation has hung around longer than most had hoped and with the Fed signaling a slowdown in rate reductions after its December meeting there is no real expectation of significant downward rate movement in 2025 at this point. Add to that the recent robust jobs report which strengthens the notion that the economy is in good shape and the pressure on the Fed to cut rates further continues to ease.
So, what does all this mean for businesses looking to expand? The good news is that even with the current uncertainty in the economic cycle, we are seeing businesses starting to think about moving toward their business goals rather remaining ‘on pause.’
One suggestion: if purchasing a business/property at the current market rate results in positive net cash flow, buyers should move quickly. Keep in mind that market conditions can change rapidly, potentially causing prices (or rates) to rise, which would make that same investment less attractive, with more cash down or higher monthly borrowing costs.
Another option available to more sophisticated real estate buyers to ensure a lower rate is to purchase an interest rate swap. Interest rate swaps are used to manage potential exposure to changes in interest rates. The net result for the client is a fixed rate that is lower than a loan which the Bank finances on its balance sheet. While this scenario will certainly save borrowers in interest costs, it also comes with different kinds of risks and should be discussed in detail with your lender.
As always, thorough due diligence is still critical to assess the long-term viability of any investment, including market trends, potential risks, and future maintenance costs. That is why working with a strong, stable and knowledge community bank who knows the local market trends is essential. Banks, like customers, want rates to drop as well; we feel your collective pain. Working with a lender that understands the nuances of your business ensures you make the right financial decisions that fit the specific and unique needs of you and your business.