Are you applying for your first business loan? Did you just start a business and are thinking you should open a business checking or savings bank account? Do you already have a business bank account but you aren’t happy with it, and wonder if you can get a better deal? Here follows some information you should know.
If you own a business, banks want you. As long as the risks associated with your business are not noticeably high, banks will be happy to take you on as their customer because businesses usually make more profit than individuals. Before you commit yourself to one bank, research your options. Could you be getting better interest on your loan? How do the fees compare from this bank to that one? Are you getting a fair deal?
Business loans
Let’s begin with the business loan. To really grow your business you will need a chunk of money, and for most of us this means borrowing from the bank. If you have been saving up and have sufficient resources to grow a successful business, ignore this section.
Taking out a bank loan for ten or a hundred thousand can be scary. But look at the potential payoff. If you really believe in your business and have a proven track record of success that indicates future success, consider investing in a loan.
Go into the loan process well informed about what you are getting into. The bank will be using a loan origination system to decide your loan eligibility, along with an advanced software application known as the business process management tool.
Before committing to a loan your primary question should be, “what is the lowest interest rate I can get?” Don’t be afraid to bargain with your banker. Although this is not typically expected (we weren’t taught in school to question bankers), business savvy people do it all the time. Get out your negotiating skills. Let the bank know that if they don’t come down on their interest rate you will take your business to another bank. This leverage is often enough to stimulate a change, however small, in your rate. Be sure to have numbers on what competing banks offer.
Maybe your bank is already giving you the lowest interest rate on the market. Also, consider that a bank with incredibly low interest may be too good to be true. Such below market interest rates could indicate instability at the bank. Beware of small independent banks without a long history, as they could be on the brink of going out of business.
Business bank accounts
The only requirement for business bank accounts is business registration with the government. You may be a sole proprietorship, general partnership, limited liability company, corporation, association or nonprofit organization. All can qualify for a business banking account.
Setting up the bank account is relatively easy: Just bring your business license and relevant tax identification papers. The real question is which bank is best for your business account?
For a business checking account at my bank, I must keep a minimum of $1,500. 00 at all times, or else they ding me with a $7-per-month fee. What advantages do I get from the business account? Well, looking through the papers they gave me, none. Instead, I have a long list of fees, from “check processing” to “check deposit transaction” fees. Although the fees look harmless, at ten cents a pop, I shudder to think of how that could add up. Without a doubt I’ll be shopping around to see what other banks can offer me
