How To Choose A Bank For Small Businesses
Choosing a bank for your personal banking needs can be quite a task. Bear in mind that the one you settle for will have a huge impact on your business. Therefore, you have to be careful with your choice as a step in the wrong direction will negatively affect your business sooner or later.
If you are having difficulties selecting the right bank, here’s a list of factors to consider in choosing one for your small business.
Consider The Bank Size
Size matters where banking is concerned, especially when it has to do with choosing a bank for your small business. Does this mean the bigger banks are always better? No. However, the needs of your business should be considered when choosing the size.
With big banks, you have access to various branches situated at various locations. Not just that, they also come with numerous offers and resources. In addition to this, you have the luxury of choosing from a wide range of credit options.
On the other hand, smaller banks may be more inclined to the local markets and businesses’ conditions. With small banks, you might find it easier to secure loans when the need arises. You might be able to access loans at better charges and rates suitable for your business.
While at it, do not forget a personal relationship with your banker is of great importance. This relationship will be beneficial for periods when you have pressing financial issues to fix.
Bearing this factor in mind, you should set up meetings with both big and small banks. Talk to them about their various offers and see which one suits your business needs.
SMEs in Africa looking to find banks for their small businesses should consider the location factor. The proximity of the bank you’re settling for matters a lot as there might be a need for you to make frequent visits to your bank.
The nature of your business will determine how important proximity is to you. For example, if your business demands that you visit the bank physically often, then you might need to consider opting for one close by.
Also, if you tend to travel frequently, you need a bank with branches across different locations. Having this will provide you with ease of access wherever you find yourself nationally.
Experience In Your Business Niche
Some banks are experienced in certain business niches. The more familiar a bank is with your industry, the better it is for you. It means that such an institution fully understands your business’s needs and will be better positioned to offer you the services you require.
A great way to go about this is by finding other businesses similar to yours. Find out where they bank and also ask about their experiences so far. This information will be useful in carrying out your research in each of these banks.
Pay a visit to any branch of the banks and ask questions. Do not shy away from asking whatever question will be beneficial to your business needs. With these responses, you can tell a lot about their level of expertise and how relevant it is to your business niche.
Here’s another factor to consider when choosing a bank for small businesses. Will you require a business loan in the future? If you answer yes to this, it’s better to go for a bank that offers loan services.
SMEs in Africa require funding to grow, and easy access to loans can help make this happen. In your search for a bank, you want to limit your options to banks that have a history of providing small businesses with loans.
Ask for information about the banks’ loan services on your list, then opt for the bank with the best loan option for your business. Remember, you don’t want to get stuck with a bank to discover they can’t meet your financial needs when the situation calls for it.
Compare Bank Fees
After carrying out your research on several banks, it’s time to carefully compare the different banks’ rates. Bear it in mind that some banks come with hidden charges; you might not know about this from inception except you take out your time to find out.
These supposedly harmless little charges can add up to quite an amount over time, so make no mistakes thinking they don’t matter. Some of the common bank charges include:
- ATM charges
- Service fees
- Withdrawal and deposit fees
- Management fees
- Account fees etc.
Ensure you find out about other additional fees before settling for any bank. Besides, banks have different minimum balances. You want to find out if you meet up with all the requirements.
Choosing the right bank for SMEs in Africa is very vital. Although the process can be quite daunting, getting the right bank is worth every bit of effort you put into it. The sooner you can choose a bank, the sooner you can set up your business for growth.