Choosing the Best Business Banking Partner

Establishing a business banking account is one of the first things company owners need to do. These accounts are vital for obtaining accurate accounting data and keeping track of allowed tax deductions.

When business owners mix business banking along with individual accounts they will likely end up undergoing an IRS audit. The time spent clarifying expenses and providing adequate documentation can be grueling and may lead to late fees and penalties, so it’s best to start things off on the right foot.

There are quite a few ways to setup a business bank account. Owners can apply online or visit banks in-person. They can select a basic checking account or apply for accounts that include merchant services, direct deposit payroll, or an open line of credit.

Many banks offer accounts that can be connected to accounting software programs such as Peachtree or QuickBooks. Interconnecting accounting software with business accounts help managers conserve time while providing adequate documentation for tax records. Additionally, this method lets business owners access their account from various locations such as work, home, and even while traveling.

Fees associated with corporate checking accounts are usually quite a bit more expensive than personal bank accounts. The majority of banks charge companies a monthly service fee. Some charge fees for every transaction, while others charge if transactions exceed a set number. Fees are also assessed for overdrafts and electronic transfers.

Although it’s never a good idea to bounce a check, companies can avoid expensive fees by setting up overdraft protection. This involves connecting business checking accounts to a savings account or credit card. If overdraft occurs, banks automatically transfer a preset amount of money into the checking account.

It can be very helpful to comparison shop banks to find ones that offer the most benefits and assess the lowest fees. A trusted source for comparing banks is BankRate.com, which offers information about national and local banks.

Small business owners may find it advantageous to open accounts with local banks or credit unions. Local banks tend to be more flexible and willing to work with owners that don’t have pristine credit. This can be very helpful to owners that require working capital or want to apply for business credit cards.

On the other hand, national banks usually offer a broader range of services than local banks. National banks engage in lending practices for small business to Fortune 500 companies, along with providing a variety of credit card options. Additionally, national banks offer integrated accounting services such as invoicing systems and direct deposit payroll.

The best approach for locating the right bank is to create a list of anticipated financial needs for the short and long term. While it can be challenging to determine what services will be required in the next 5 years, most owners can figure out if they will need business loans or credit cards. Spending time assessing overall needs can help owners avoid having to switch banks at a later time.

When comparing banks it’s important to read the fine print and calculate the true costs of conducting business. Make certain to fully understand the fee structure and checking account requirements.

Some banks charge service fees if balances fall below a certain limit. Others set limits on the number of transactions that can be conducted each month and charge hefty fees if limits are exceeded. Over the course of a year, banking fees can cost owners hundreds of dollars.

Researching available options lets owners find cost-effective business banking and can help determine which bank would be the best partnership. One consideration is that local banks frequently participate in community events where local companies are promoted. Acquiring bank endorsement can be very beneficial, so when talking to banks be certain to inquire about the types of promotional activities they participate in.

Landing A Small Business Loan In This Environment

Banks are not currently and probably will not be lending to small, growing businesses anytime soon. They view these small firms as too risky and banks are just not taking on any risk (any risk at all).

But, that does not mean that your business cannot get the money its needs to start or grow. You just might have to go about it in a different manner which, in the long-run, may be a benefit to you and your business.

For most small business, banks are not lending as they don’t want any loans with any risk on their books. While they do want your deposits and other account business, they are just unwilling to let money walk out the door.

They blame these small businesses for items like poor credit, inadequate cash flow or undervalued collateral but in truth, many of these banks are just not in a position to lend to what is deemed risky businesses. And, if your business does not really need a loan, then it is deemed risky.

What Can Your Small Business Do?

For established small businesses, if your banker is refusing to take your call (and most are) then you should be looking at some of the alternatives methods of financing that have been around for decades or that have recently cropped up to fill the lending gaps left behind by the banks.

Know that banks are not nor have always been the only and best options for small businesses. Banks tend to look at your overall business’s profits before making a business loan decision. Alternative financing options tend to look more at the need of the business and its ability to covert financial assets to cash.

1) Look to factoring. If you have customers in the wings but lack the working capital to get these jobs started, factor those job orders for 100% of the cash you need to complete those jobs. Or, if you are sitting on a bunch of unpaid invoices, look to use them to get the working capital your business needs to meet immediate expenses or start that next order.

2) Look to SBA loans. While these types of government guaranteed loans still have to go through banks – the SBA’s 504 program is leading the way in helping many local small businesses acquire and finance property and equipment. With the SBA’s 504 program, your local community development corporation will work with the SBA and your bank to finance hard assets. As they all spread and share the risk, your chances of getting funded increase dramatically.

3) Let your business finance its own growing needs. There are a lot of growing businesses that tend to have a lot of sales but are still losing money (more cash out then in). This is not a reflection of the economy or any market but that of how the business is managed.

Look for ways to reduce costs while maintaining your current level of sales or if that is not possible then look for ways to increase prices. You should always be looking for ways to reduce costs – even if your business is highly profitable.

Keep shopping around for lower cost suppliers and vendors. Look to technology to improve processes or for ways to reduce staff expenses. And, constantly review your service providers – no sense in over paying for services like phone, internet, etc. If you can get your costs down and bring your profits up, you might not need outside financing at all. The best business loan is not having to get one in the first place.

Business is not easy and is getting harder the longer our economy remains stagnate. However, people and businesses still need products and services to get through their days. They look for products that either make their life easier or save them time and money. And, while many are being more selective in what they spend their money on, they are still spending – good news for your business.

Getting and keeping customers (letting them know who you are and what your business offers as well as keeping your business on the top of their minds) is always a challenge. But, successful businesses get out there and find creative ways to meet and overcome those challenges. The same is true in financing your small business.

If you need capital to either get your business off the ground or to finance your current growth, you might as well just forget about the banks and get creative. Banks are just not ready to take chances.

If you can’t demonstrate (sell) your business’s potential to the many different financing options out there (some that really want to work with your business) then you might start thinking about another career.

Finding new ways to capitalize your business is just one of the many challenges that all businesses face in their development. But, the good news is that it is not the most daunting challenge you will face. If you need a business loan to start or grow your company, then get out there and get one!

Consider Your Small Business Mortgage Alternatives

At the present time, America is feeling financial pressure throughout, and the situation influences advertising costs, business lending, and other facets of business directly related to any small company. Conventional lenders are not as willing to aid small businesses as much as times in the past; this is also true regarding investment houses and insurance companies. Even top-rated firms with great experience are getting turned down for commercial funding and refinances.

Despite the tight-wallet disposition of traditional lenders, commercial funding is still available. The demand for a small business mortgage continues to skyrocket, so those seeking small business lending services are searching for alternatives to the traditional methods.

Privately-funded commercial mortgages are quickly gaining momentum. Private lenders, funded by a plethora of sources, lend money to those searching for a direct commercial lender. The criterion is often not as stringent in comparison to bank restrictions.

In addition, alternative routes for finding a new business loan may facilitate the process of recruiting money faster. Often, some alternative methods can take under a week to finalize, yet it can take beyond three months or more to finalize commercial mortgages through banks. You won’t have to deal with loan committees or tons of paperwork; small business lending can be a simple matter of quickly demonstrating you can pay your lender back – regardless of America’s economy or what the financial gurus situated within Wall Street are talking about.

Private lenders focus on equity; loans decisions are not made or broken strictly based on the credit of the potential borrower. Private business lending companies differ, yet most will not lend more than seventy percent of the purchase price or the value of the commercial property in regards to matters of commercial refinance. This may mean you must be prepared to commit to a large down payment or a second mortgage.

With traditional forms of small business lending waning, alternative forms of finding commercial funding is becoming invaluable to any small business. Alternative entities are presently available so hopeful business lending seekers do not have to close the doors on their small-business dreams.