March 7, 2011 Objective: Students will evaluate business banking through comparing and contrasting.

Checking Accounts How many of you have established a personal checking account? This is after all the first step to getting ready for a business banking relationship in the future. But be prepared that business banking is greatly different from personal banking. In fact, not all banks offer a robust amount of business services (also called “commercial services”) to include: loan products, merchant processing, credit cards, deposit accounts, cash management services, online banking, electronic sweeps, payroll services, etc…

6.1 Assignment Locate 2 potential banks that you are interested in using for your business banking needs where: – Bank “A” is a small, locally owned bank – Bank “B” is a large, nationwide bank Answer the listed questions below for EACH of your chosen banks: – Q1: Have you already established a working relationship with the bank? If not – why did you select this bank as part of your assignment selection? – Q2: What kinds of business bank accounts are available? – Q3: Does this bank offer merchant credit card services? – Q4: Does the bank participate in business loan programs? – Q5: Is the bank a federal depository bank? (or what regulatory body does govern it?) – Q6: How many (local) branches does the bank have? – Q7: What are the bank’s hours of operation? Are they open on Saturdays/Sundays? – Q8: What will it cost you to have a business checking account? – Q9: What is your overall feeling about the bank? Note: You do not need to necessarily visit the banks in person; although it is encouraged. Your answers can simply be written in essay format or you’re welcome to create a table if you prefer. You should be able to answer the questions by locating the information on the chosen bank’s websites.

Local vs. National Small, locally-owned bank Omaha Bank Mid City Bank Centennial Bank First American National Bank Security National Bank American National Bank Peoples National Bank Credit Unions Large, nationwide bank US Bank Wells Fargo First National Bank Bank of the West Union Bank & Trust Bank of America

Business Banking DO NOT try to use the same account for personal and business. This IRS does not like this!!! One problem is your bank will not allow you to deposit checks made payable to your business name into your personal account, the checks will need to be payable to you personally. Business accounts are also necessary for credibility with your customers and other businesses… why?

Business Account Fees Before opening a business account it’s important to research the account fees. Business accounts have a lot more fees than personal accounts. Other questions to ask? – Is there a holding period on deposits? (Can it be waived?) – What are the service charges? – What is the policy regarding returned checks? – Do they have overdraft protection? – Does it pay interest? – Do you have to maintain a minimum balance?

FDIC The FDIC insures you in case your bank closes due to financial difficulty. Started after the great depression to ease concerns about the safety of banks. Each depositor is currently insured to at least $250,000 per insured bank. Credit Unions CAN NOT be members of the FDIC – NCUA: National Credit Union Association – Each depositor is insured to a least $250,000 per insured bank.

Merchant Card Services Do you want to allow your customers the ability to pay for your product with VISA or Mastercard? Many customers do not carry cash and will expect to pay with a credit card. The bank generally charges the merchant (you) 3-4% of the purchase amount for this service.

Lending It’s best to avoid borrowing for your business, but with some businesses this just isn’t possible. – Who thinks their business will NEED to borrow money? Can you get a business loan from the bank you’ve chosen? What about a credit card? Not all banks offer these services. – Would you want to have money with different banks or it all together in one place?