Small Business Banking Services

Workshop Goals In this workshop, you will... Identify common financial products and services used by small businesses. Consider the important factors when choosing a financial institution. Explore the value of building a relationship with a financial institution.

Post Your Business Needs Why do businesses need banking services? Come up with as many answers to the question as you can. Write each answer on a sticky note. Post each note on the wall.

Choosing a Financial Institution What are your business’s unique needs? Does the financial institution have a good track record, if any, of providing services to small businesses? How important are nonfinancial considerations? What fees may be associated with the financial institution’s accounts, products, and services? Is the financial institution insured?

Common Types of Accounts Small Business Checking Accounts Commercial Checking Accounts Savings Accounts Money Market Accounts Certificates of Deposit Payroll Accounts

Online Banking Services Online banking: Anytime you access your banking services via the internet, you are taking advantage of online banking. You can keep tabs on your account activity, generate payments, and even deposit physical checks over the internet. Mobile banking: Mobile banking is when you access banking services via your mobile phone. Remote banking: Financial institutions use an array of remote banking services that allow you to manage your account and get help from bank employees wherever you are.

Using Business Debit Cards Pros Only spend money that you have. Access cash through ATMs. Protect your card and account with a PIN. Lower fees than credit cards. Avoid interest on payments. Cons Could deplete or jeopardize your account balance. Limited fraud protection, especially if money is withdrawn directly from ATM. Your financial institution may not have enough ATMs that are convenient to you. There may be fees for withdrawing money from ATMs that are not affiliated with your financial institution. Using a credit card allows you to track your small expenses in one place. Other authorized users may require access to PIN to use card. Does not build credit history. 

Using Business Credit Cards Pros Can add key personnel as “authorized users” and track their expenses. Can assign credit limits for authorized users. Keeps personal expenses separate from business expenses. Robust rewards program. Can qualify for higher credit limits than personal credit cards. Cons Authorized users are not responsible for paying the bills. Mishandling a business credit card account may negatively affect your business and personal credit. Fees and interest rates may be high. 

Scenarios Scenario 1: You own a neighborhood self-service laundry. A few minutes ago, one of your customers informed you that you were out of creamer for your coffee machine. Do you use your business debit card or business credit card to purchase more creamer at a local supermarket? Scenario 2: You own a small framing shop. You’ve had a great month in sales, but money is a little slow coming in to your account. You’ve paid most of your bills and are almost at your minimum required balance on your account. An employee alerts you to a great deal on packing boxes that you’ve meant to buy. Do you use your business debit card or business credit card?

Building a Good Relationship Educate Yourself Learn the basic services a bank offers. Be prepared to answer questions about your business and its ongoing financial needs. Build a Good Relationship with Your Financial Institution Network Speak with a bank representative. Network at events where financial institution representatives will likely be present.

Remember... Summary Do your research before selecting a financial institution for your business. There are many types of financial products and services available for your small businesses. It is beneficial for you to build a positive relationship with your financial institution.