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Five Important Considerations for Small Business Banking

For a small business owner, time, money and resources are of the essence. Daily, mundane requirements--like managing banking needs--are often swept under the rug or overlooked, while other less important tasks--say, stocking the supply closet--tended to on a more regular basis.

Owners of small businesses should select a bank specific to their needs; not any bank will do. But with a wide range of banks on the market, the paradox of choice sets in; while options are aplenty, the selections can be confusing and induce major anxiety. Instead of looking at the bank itself first, the proprietor should evaluate his or her most pressing needs and look for a bank that closely matches those requirements.

A small business should consider the following before selecting a bank:

  • Regional vs. national. Smaller, local banks offer certain advantages to large mega-bank operations. Regional banks tend to have a better grasp of the local market and can often offer more personalized, one-on-one customer service, which is important when dealing with sensitive financial matters. Local Chicago-area banks, such as First Midwest Bank and Libertyville Bank and Trust specialize in small business needs from investing to checking to lending.

  • SBA loans. For many small business owners, it’s important to find a bank that is well versed in working with the U.S. Small Business Administration. These federally subsidized loans are designed for businesses with credit histories, cash flow or collateral that makes them less-than-ideal for traditional loans. Additionally, these loans often offer proprietors lower down payments and longer amortization schedules. Larger banks often offer these loans, but select small banks, like Hinsdale Bank and First Bank of Highland Park, offer SBA loans as part of their small business suite. The Private Bank also offers SBA loans, and as a SBA National Preferred Lender, they can process and turnaround loan applications, which is essential for busy small business owners.

  • Lending needs. The right banks matters when it comes to lending needs. According to recent research, small banks are more likely to lend to local businesses. Small and mid-size banks account for 54 percent of small business lending, though they only possess 22 percent of bank assets. Regional banks, like Lakeside Bank in Chicago, offer a range of lending services, including short term working capital, long term fixed loans, adjustable rate loans and more.

  • Fees. Consider fees, or the lack thereof, as various fees can add up. MB Financial Bank, for example, waives any fees for depositing up to $10,000 in cash each business cycle and business owners can get up to 40 free online bill payments each cycle, as well.

  • The basics. Sometimes banking needs are simple for a small business. Perhaps checking, a credit card and a savings account are the main objective for small business banking. When it comes to these basic services, considerations such as nearby ATMs and online banking can tip the scale. BMO Harris Bank, for example, offers over 1,300 ATM locations nationwide.

  • Perks and extras. The perks shouldn’t be the driving force when selecting a bank but rather icing on the cake. For example, Marquette Bank Chicago offers a FunRewards program through personal and business accounts which allows customers to earn points that are redeemable for MasterCard gift cards or charity donations.

Banking is a long-term relationship, so it’s important spend ample time finding a bank that meets your small business’s specific needs. And to yield maximum benefit from your banking service, small business owners should meet with their dedicated banker at least annually to discuss their needs and progress.

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