Basic Information to Think About

Basic Information to Think About
The following will give you some basic information to think about when you are deciding which
bank to select:
1. Have you already established a personal relationship with your
banker? If you already know the key management and personnel at your
bank, you will have a head start when you need special consideration.
2. What kinds of loan programs are available through the bank? Does
this bank make business loans or does it confine itself to personal financing? Is
the bank a participating SBA guaranteed lender? Does it participate in any
other programs aimed at helping small business owners. Either now or
sometime in the future, you may need additional funds to operate or expand
your business. It is easier to go to your own banker than to have to approach
an unknown lender.
3. Does the bank have merchant credit card services? You may find
that your business will be more profitable if you can offer VISA and
MasterCard or American Express services to your customers. We are now
living in an age in which buyers of products and services do not carry cash and
expect to pay with a credit card. The merchant now has the advantage of being
able to instantly authorize the purchase and have funds deposited to the
business account within 24-48 hours. The bank generally charges the merchant
between 3 and 4 percent of the purchase amount for the service, but having the
capability may significantly increase your sales.
Instant online credit card authorization has made selling over the Internet an
important source of business income. If your bank offers online merchant
accounts, you will need to be sure that your shopping cart system will work
seamlessly with the bank's authorization and deposit system.
Warning! If you are considering credit card services, do some
careful planning before you commit your business to a program.
You will get calls from lots of third-rate companies wanting to set
you up with merchant services. Their salespeople are trained in
the "fast sell". They thrive on signing up new small business
owners. However, the costs to you can far outweigh the advantage
gained by having the service. Ask for (and review in writing) all of
the costs involved in setting up the service and the monthly
charges for maintaining the service. Also determine the cost
should you decide to discontinue services after a period of time.
One company rented their "Brand-X" machine for $10.00 per
month. However, if you quit in six months, you would owe $1750
for the machine. The irony -- the "Brand-X" machine cost only
$200 to $300 to purchase from most reputable banks. Also, most
banks will rent and update machines for a few dollars a month
with no cost to you should you discontinue your merchant account.
Watch for non-refundable application fees and other
miscellaneous charge—as well as restrictions on types of
purchases that you may accept (telephone orders, etc.)
4. What does the bank offer in the way of a business bank account?
Is there a holding period on your deposits? Can it be waived? What are the
service charges? What is the policy regarding returned checks? Do they have
overdraw protection? Is it an interest-bearing account? If so, do you have to
maintain a minimum balance? What other kinds of accounts does the bank
have that will allow you to divert temporary funds where they can earn more
and still stay liquid?
5. Is the bank a federal depository bank? If your business has employees
and you are paying any of those employees over a certain amount, you will
have to deposit funds in a separate depository account on a regular basis. It will
be more convenient if you can do all of your banking in the same place.
6. What additional services are available at the bank? Do they have
branches available in several locations? What hours are they open? Do they
have 24-hour ATM services. Do they have safe deposit boxes. Do they have
notary services? What other services does the bank have that might be required
by your business?
7. Does the bank provide electronic banking services? With the
advances in computer technology, many banks now offer remote banking
through online services. You can quickly access account information, transfer
money, pay bills and more – all with the convenience of your computer.
Note: It would be wise for you to spend some time telephoning banks to gather
information. It can also be helpful to talk to other business people and see which
banks they use and whether or not they would recommend them for your needs. You
can also check out banks on the Internet.