How to choose a bank for your small business

bank got my first credit card when I was 15 years old. “You’ll want to build up some good credit history for yourself,” my mom told me.


Immediately after I made a charge, I used the earnings from my part-time job at the mall to pay it off completely. So when I started to get real about my business and formed an LLC, I knew it’d be a good idea to start to build credit.

But I was overwhelmed. I had no idea where to start, which bank would be best, what services I’d need, or how to tell if rates are fair. If only I had this guide.

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Know your business goals and banking needs

There are two key pieces of information you need before you begin your search for a bank:

  1. Your short- and long-term business goals
  2. Your banking needs based on those goals

Let’s talk about goals. What are your plans for your business? How will you expand and grow, both in the near and distant future? We’re talking about not only financial goals, but overall business goals as well.

“One mistake some businesses make is choosing a bank account that’s not scalable,” says Michael Kern, CPA and founder of Talent Financial, a personal finance and business consulting firm. “A certain account may seem right at the time but if your business increases in size you may outgrow it — without the ability to upgrade to a higher account.”

Here’s an example: Right now, you sell handmade goods on Etsy and at local markets. You’re not ready for a full-on storefront yet, but you hope to grow into one within the next five years. Opening a brick-and-mortar requires a lot of capital, and one way to fund this is through a business loan. In this case, you might want to find a bank that also offers business loans.

Finding banks

If not your personal bank, then where should you start looking? Cairns recommends going local. “Building relationships with your local bank or credit union pays dividends over time,” he says. “If they have a history of working with you, you’re seen as less of a risk.” This comes into play with small business lending.

Another place is good ol’ Google. You can start broad, and then narrow down to your specific needs. “Try a search on ‘name of city + business bank + name of industry,’” says Janet Gershen-Siegel, content manager at Credit Suite. “Experiment and see what comes up. But no matter what, it should be a bank familiar with the SMB’s industry. That way, the bank will understand seasonal variances and other quirks of the business immediately.”

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Small banks vs. big banks

Many banks and credit unions offer similar products and services, so it’s worth taking the time to look at the big picture. When you’re ready to meet with an institution, check in on the sincerity and reputation of the company you may invest in, and see what their general approach is to dealing with entrepreneurs and growing businesses. It’s crucial to ask, ‘is the big box bank the fit for me?’ If it isn’t, there are several other options you could choose from.

Look for experience in your industry

We noted this before, but it’s worth reiterating: Some banks specialize, or have specific experience in different industries. This familiarity with your industry means they’ll better understand your needs and will be more proactive in advising you on an ongoing basis.

“Ask other business owners in a similar type of business where they bank and what their experiences have been,” says Diana Cox, principal relationship manager at Addition Financial. “Once you’ve done your research, walk into a branch and see how they respond.” You can ask them questions specific to your industry to gauge their expertise and better understand how they think.