Tips for choosing a small business bank

Finding the right bank to serve your small business needs can be a daunting task.

With so many competing financial institutions to choose from, business owners simply don’t have the time for the in-depth research required to carefully weigh all the options.

This guide to choosing a small business bank will help you narrow down your choices so you find the best fit for you.

Tips for choosing a small business bank

Small, medium, or large?

You can eliminate a high percentage of contenders by deciding up front whether you want to use one of the traditional large high street banks or one of the newer UK ‘challenger banks’ such as TideStarling Bank, Revolut or many others.

First things first, what are your top banking priorities?

  • Cost: Larger institutions can usually offer lower day-to-day banking fees
  • Convenience: Look to a bank for accessible business hours and the advanced tech for more user-friendly online banking. Challenger banks have the edge here as they are generally built on a mobile-friendly platform already,
  • Comprehensive services: If you deal with international clients, a large bank will have advisers and banking options to suit your needs, yet many of the newer banks have great ForEx (Foreign Exchange) built in.
  • Business financing: Regional and local banks tend to be more customer-friendly when it comes to lending – and may charge lower interest rates on business loans and lines of credit.  However, with the rise of lending providers such as CapitaliseIWOCA and Market Invoice, access to finance and capital needn’t be just via the big banks.
  • Customer service: Due to their smaller size and community focus, mobile banks strive for more personalized attention than their larger competitor.

When you’re ready to talk to a bank about their small business banking services, ask whether you’ll be assigned a small business adviser or their small business support teams, and how they can help your business succeed.
Pro tip: When looking for a business bank account, make it easier for you to grab the information from your bank directly into your accounting system by choosing a bank that will provide a direct bank feed.  This makes it easier for you and your accountant to record the transaction correctly.

​The cost of doing business

Now that you’re focused on the kind of bank you want to deal with, you’ll want to compare fees for service.As you start to research banks you’ll be offered sign up perks – and you may even be offered a free business account.

With some of the mobile-friendly banks, you can set an account up in minutes via your smartphone.

Take a close look at the fine print. Banks are in business to make money, and you may be charged a fee per transaction or if you choose to bank in person versus online.

Some other fees you might incur include:

  • Not meeting the required minimum balance
  • Exceeding the monthly limit for withdrawals and deposits
  • Maintaining an inactive account

When you need funds to grow

As you’re considering the options, it’s wise to think ahead to the day you’ll apply for a business loan or line of credit to invest in greater growth and expansion.

Now is the time to look into interest rates for small business financing, the application process, qualification criteria, and terms for a loan or line of credit.

Lending providers such as Capitalise, make the application process easy and you often will get a decision in minutes as opposed to days.

Knowing in advance what a lender is looking for when they approve applicants for business financing may be what makes or breaks your decision to sign on as a member.

​Final thoughts

Ask around your business network for “insider info” that will help you decide on a small business bank that can meet your day-to-day needs, support your growth, save you money, and ensure you’re a happy customer.

A final thought: the financial service industry is a crowded market, and the banks are trying their best to compete for your business. Although the sign-up perks might be tempting, don’t let your decision be influenced by a bank’s advertised incentives – choose the right bank for your needs.

It’s much more important to choose a small business bank that is the right match for your business goals both now and in the future.