Matthew Sexton

The best banks for small business should be able to support your company with outstanding business checking products and other business services to help you grow and prosper. The banks on this list have either full-service business banking or a specific product that's good enough to merit inclusion in this buyer’s guide. While these providers offer outstanding business banking services, each has slightly different strengths and weaknesses. Decide what services you need from your business bank and choose the option that best aligns with your business needs. Here are the 10 best banks for small business, with links directly to the provider: : Best overall bank for full-service small businesses banking tools and premium checking : Best for low cash deposit fees and ongoing rewards *: Best high-yield checking account †: Best traditional bank for extensive business lending products †: Best for unlimited everyday transactions †: Best for businesses looking for smaller Small Business Administration (SBA) 7(a) loans *: Best digital bank for incorporated startups and tech companies *: Best digital-only bank for rapid access to funds and faster payments : Best for full-service digital banking : Best for startup business resources *Providers are financial technology (fintech) platforms backed by and Federal Deposit Insurance Corp. (FDIC)-insured through a supporting bank partnership. (Partnerships: Coastal Community Bank for Bluevine, Evolve Bank & Trust for Mercury, and Middlesex Federal Savings for Novo) †Providers are geographically limited. See the U.S. Bank geographic limitations, Capital One geographic limitations, and Huntington Bank geographic limitations to see if your business is located in an area served by these providers. Best Banks for Small Business Basic Checking Accounts At a Glance See fullscreen table × Chase: Best Overall Bank for Full-service Small Business Banking Tools & Premium Checking Chase Business Complete BankingSM Checking Overview Bank of America: Best for Low Cash Deposit Fees & Ongoing Rewards Bank of America FundamentalsTM Business Checking Overview Bluevine: Best High-yield Checking Account Bluevine Business Checking Overview U.S. Bank: Best Traditional Bank for Extensive Business Lending Products U.S. Bank Silver Business Checking Overview Capital One: Best for Unlimited Everyday Transactions Capital One Business Basic Checking Overview Huntington Bank: Best for Businesses Looking for Smaller SBA 7(a) Loans Huntington Bank Business Checking 100 Overview Mercury: Best Digital Bank for Incorporated Startups & Tech Companies Mercury Business Checking Overview Novo: Best Digital-only Bank for Rapid Access to Funds & Faster Payments Novo Business Checking Overview First Internet Bank: Best for Full-service Digital Banking First Internet Bank Business Checking Overview Silicon Valley Bank: Best for Startup Resources SVB Edge Business Checking Overview How We Evaluated the Best Banks for Small Business When we evaluated the best banks for small business, we considered Monthly fees, if any, and how easily they're waived Required opening deposit and balance minimums Transaction limits before fees ACH and wire transfer fees ATM fees and availability Cash deposit fees and availability Interest yield, if applicable Other checking account perks Software integrations Other business services provided Lending products provided Customer service Customer reviews What You Need To Open a Business Bank Account Each provider on this list may require different documents to open a business bank account. Generally, you'll need: Employer identification number (EIN) or Social Security number if you’re a sole proprietor Fictitious business name certificate or doing-business-as (DBA) certificate Business formation documents Organization documents, including your ownership agreements Business licenses Government-issued photo ID, such as a passport or driver’s license Frequently Asked Questions What bank is best suited for small businesses? If you want to use a brick-and-mortar bank for your small business, Chase is the best option, thanks to multiple checking options and great business support products. If you want a digital-only bank, Bluevine, with its interest-bearing checking and line of credit product, is the best choice. Which bank is good for a startup business account? If you’re looking for the best banks for a startup business, our top choices are Chase, Bank of America, and Axos Bank. Each provides full-service banking with specific tools to help new businesses. Who has the best small business checking account? Bank of America has the best small business checking account, thanks to waivable monthly fees and plenty of free transactions available each month. It also provides you access to your Dun & Bradstreet business credit score as part of your business checking account. Bottom Line While the 10 banks listed in this guide provide multiple business banking support products to help your growing company, choosing which is best for your business will be determined by your company's exact needs. Each provider offers slightly different products and services. Consider what you need from your business bank and go with the bank that best aligns with your needs.

The best small business checking accounts should provide your business with a low-fee deposit account for your daily financial transactions. Banks with the best business checking accounts should also have outstanding business support products, including merchant services, interest-earning accounts, and lending products. Both traditional brick-and-mortar banks and online financial technology (fintech) companies offer outstanding business checking products. However, determining which is right for your company will depend on what features and services you need from your business checking provider. Here are the 10 best small business checking accounts, with links directly to the provider: : Best overall for ongoing rewards and low cash deposit fees : Best for full-service small business banking tools and premium checking *: Best for earning interest on deposits †: Best for unlimited everyday transactions †: Best for businesses with low transaction volumes *: Best digital-only bank for rapid access to funds and faster payments : Best digital-only bank for integrated free payment software *: Best digital-only bank for tech companies and startups : Best for full-service online banking *: Best digital-only provider for cash back on debit card purchases *Providers are fintech platforms backed by and Federal Deposit Insurance Corp. (FDIC)-insured through a supporting bank partnership. (Partnerships: Coastal Community Bank for Bluevine, Middlesex Federal Savings for Novo, Evolve Bank & Trust for Mercury, and The Bancorp Bank for Oxygen) †Providers are geographically limited. See the Capital One geographic limitations and U.S. Bank geographic limitations to see if your business is located in an area served by these providers. Best Small Business Checking Accounts At a Glance See fullscreen table × Bank of America: Best Overall for Ongoing Rewards & Other Business Support Services Bank of America FundamentalsTM Business Checking Overview Chase: Best for Full-service Small Business Banking Tools & Premium Checking Chase Business Complete BankingSM Checking Overview Bluevine: Best for Earning Interest on Deposits Bluevine Business Checking Overview Capital One: Best for Unlimited Everyday Transactions Capital One geographic limitations: Capital One currently requires that you visit a branch to complete an application to open a business checking account. There are branch locations in Virginia, Texas, New York, New Jersey, Maryland, Louisiana, and Washington, D.C. Capital One Business Basic Checking Overview U.S. Bank: Best for Businesses With Low Transaction Volumes U.S. Bank geographic limitations: Applicant must reside in Arizona, Arkansas, California, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Utah, Washington, Wisconsin, or Wyoming to be eligible for checking account. U.S. Bank Silver Business Checking Overview Novo: Best Digital-only Bank for Rapid Access to Funds & Faster Payments Novo Business Checking Overview Grasshopper: Best Digital-only Bank for Integrated Free Payment Software Grasshopper Innovator Business Checking Overview Mercury: Best Digital-only Bank for Tech Companies & Startups Mercury Business Checking Overview First Internet Bank: Best for Full-service Online Banking First Internet Bank Business Checking Overview Oxygen: Best Digital-only Provider for Cash Back on Debit Card Purchases Oxygen Business Checking Overview How We Evaluated the Best Small Business Checking Accounts To find the 10 best small business checking accounts for you, we considered dozens of providers. We looked at fees charged, interest earned, potential rewards, minimum deposit and balance requirements, ATM fees and network size, online and mobile banking features, and other financial products offered by each provider. Reasons To Consider a Business Checking Account Keeps your business and personal finances separated: To maintain the accuracy of your business’s financial records, it’s essential to keep your business and personal finances separate. Helps you build your business’s credit: When you open a business bank account, credit bureaus begin tracking your business's credit history. Lets you assess your business’s performance more easily: With your income and expenses running through a dedicated account, it becomes easier to analyze your business’s performance. Lends credibility to your business: Customers will see your business as more trustworthy when payments come from a business account. Simplifies tax season: Using a business checking account helps maintain a record of income and expenses, simplifying your tax preparation at the end of the year. Helps you build a banking relationship: It can be beneficial if you need business financing in the future. What You Need To Open a Small Business Checking Account Though each provider above may require different documents to open a business bank account, here is a general list of what you will need: Employer identification number (EIN) or Social Security number if you’re a sole proprietor Fictitious business name certificate or doing-business-as (DBA) certificate Business formation documents Organization documents, including your ownership agreements Business licenses Government-issued photo ID, such as a passport or driver’s license Best Small Business Checking Accounts Frequently Asked Questions (FAQs) Who has the best business checking account? Thanks to waivable monthly fees, Bank of America has the best entry-level business checking account. You get up to 200 free monthly transactions and can deposit up to $5,000 for free each month. Bank of America also allows you to access your Dun & Bradstreet business credit score within the app. What banks offer free business checking accounts? The best free business checking accounts should have either no or easily waivable monthly fees. Banks that don’t charge monthly fees include Bluevine, U.S. Bank, First Internet Bank, Novo, Mercury, Grasshopper, and Oxygen. Banks with easily waivable monthly fees are Bank of America, Chase, and Capital One. Does my business need a checking account? If you own and operate a business, you need to have a business checking account. Here are the benefits of having a business checking account: It keeps your business and personal finances separated It helps you build your business credit It lets you assess your business performance more easily It lends credibility to your business It simplifies tax season It helps you build a banking relationship It allows you to accept credit card payments How do I open a business checking account? To open a business checking account, follow these six steps: Step 1: Gather the required documents. Step 2: Select the right bank account. Step 3: Find the best bank. Step 4: Learn the account’s possible costs. Step 5: Open the account online or in person. Step 6: Deposit funds. Bottom Line All of the banks and financial technology companies listed here offer outstanding business checking products. Some providers even have full-service banking, while others specialize in certain aspects of business banking. Understand what you need from a business bank, compare the offerings and fees of each provider in this guide, and choose the bank that best meets your business's current and future needs.

ChexSystems is a reporting agency that monitors business and consumer deposit account activity. It operates in a similar manner to credit reporting agencies when producing a credit score. If you have negative bank activity, such as bounced checks, overdrawn balances, and fraudulent or suspicious activities, these will appear on a ChexSystems report. Negative items on a report can keep you from opening a new business bank account. You’ll have to either clear the items on the report or choose a financial provider that doesn’t use ChexSystems to open an account. is one online-only bank that doesn’t use ChexSystems. You can open a business checking account and earn 1.5% APY on balances of $100,000 or less. Visit Bluevine’s website for more information or to apply. How ChexSystems Works ChexSystems operates under the Fair Credit Reporting Act (FCRA) to provide a report of all negative banking activity associated with a social security number or an employer tax identification number (EIN). It pulls information from banks, credit unions, and retail stores to compile a report that those entities can check. The following sections explain the information on a ChexSystems Report, what a ChexSystems Consumer Score is, and how to request your score. Business Impact of a Negative ChexSystems Report Having a negative ChexSystems report, whether under your personal Social Security number or your business tax ID, can make it difficult for you to open a business bank account. You need a business bank account to separate personal and business finances, build business credit, and simplify your tax preparation among other reasons. Some banks allow you to open an account without going through ChexSystems. Some will instead perform a soft pull of your credit to ensure there isn’t a risk in opening an account. What To Do If You’re Denied a Business Bank Account If you’re denied a business bank account because of a poor ChexSystems score, you can choose a provider that doesn’t use ChexSystems. However, you should attempt to resolve any items on your report so that it doesn’t become an issue for your business or you personally later. The following section will show you how to read your report and the steps to take to clear any negative items off of your report. How To Read Your ChexSystems Report & Resolve Issues Tips To Improve Your ChexSystems Report Check your reports regularly: Even if you haven’t had any issues with a checking account, you should request your report annually. This allows you to stay on top of any errors and get them fixed quickly. Dispute errors: ChexSystems reports could contain inaccurate information. Erroneous negative information can lower your ChexSystems score. Make sure to dispute errors with ChexSystems and the bank that reported the error immediately. Pay off outstanding debts: Pay off any unpaid balances on your previous accounts. or make payment arrangements with the bank. Request that your bank updates the payment status in ChexSystems when the debt is settled to help improve your score. Manage your bank accounts responsibly: Avoid making negative banking activities and manage your bank accounts responsibly. Monitor your account regularly to ensure it has sufficient funds to cover your checks and avoid overdrawn balances and unpaid fees. Ask your bank for overdraft protection: Some banks offer an overdraft protection service to help prevent checks, ATM transactions, and wire or electronic transfers from causing the account’s balance to fall below zero. This prevents overdrawn balances and insufficient funds. Set up banking alerts: You may opt to receive alerts every time a transaction is made with your account so that you can monitor potential fraudulent transactions easily. Other Bank Account Reporting Agencies Even if your business bank doesn’t use ChexSystems, it may be using a similar system to detect fraud and report negative transactions. Two other commonly-used systems are Early Warning Services (EWS) and TeleCheck. EWS assists banks, retail stores, and payment processors with detecting fraud associated with bank accounts and payment transactions. It’s co-owned by Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo. TeleCheck is an entity owned by Fiserv Inc. TeleCheck assists retailers, banks, and other businesses with fraud reduction and other risks involved with payment acceptance and account opening. Frequently Asked Questions (FAQs) Can you open a business account if you are in ChexSystems? You can still open a business account if you’re in ChexSystems, but it may be difficult. Some banks may deny you any account until the items on your report are resolved, whereas others allow you to open a business account without going through ChexSystems, such as Bluevine. Why would a bank deny a business account? While having issues with ChexSystems could cause a bank to deny a business account, there could be other reasons. Poor personal or business credit scores could also cause a bank to decline a business. In addition, businesses without all the proper paperwork for their organization type could be denied an account. Follow our guide on how to open a business bank account to ensure you have everything you need before opening an account. Can I open a business account if I owe another bank money? You can open a business bank account if you owe another bank money, but if the new bank uses ChexSystems, EWS, or TeleCheck, there’s a good chance you’ll be denied. The best plan is to pay any outstanding debts before opening a new account or choose a bank that doesn’t use ChexSystems. Bottom Line While ChexSystems is primarily a consumer tool, having a negative ChexSystems report can affect your personal finances and your business. You may be denied opening a small business checking account, which will significantly hamper the ability of your business to grow and expand. It’ll also make it nearly impossible to get business credit. Keep a close eye on your ChexSystems report and resolve any issues quickly to avoid any potential problems.

The annual percentage yield, or APY, is a measure of the amount of money you will earn on a business checking or savings account over one year. The APY will always be slightly higher than the stated interest rate because it compounds on itself. In other words, you can earn interest on previously-earned interest with APY. If you’re looking for a business checking account that can earn you interest, Bluevine is an excellent choice. You can earn 1.5% APY on qualifying balances of $100,000 or less. Visit for more information or to open an account. APY Formula & How APY Is Calculated APY is calculated by dividing the stated interest rate in decimal form by the number of compounding periods per year. Then, add one, and take that value to the power of the number of compounding periods. Then, subtract one to get the decimal value of APY, which can then be converted into a percentage. The APY formula is: APY = [(1+r/n)n]-1 r = Stated interest rate n = Number of compounding periods in one year How APY Works in Business Banking When you’re ready to open a business bank account, regardless of whether it’s a checking or savings account, you should consider finding an account that offers a high APY. This will allow you to earn income on your financial reserves. Before finding a business account, it’s important to understand exactly how APY in business banking works, what you should consider when choosing an account, and just how much money you will earn from APY in your business bank account. What a Good APY Is for Your Business Bank Account What constitutes a good APY will depend on the type of account you’re looking to open. Business checking accounts typically have lower APY than savings accounts. Here are general guidelines for a good APY for specific account types: Business checking account: Many business checking accounts don’t offer APY. Any APY higher than 0.5% in a business checking account is a good APY. Business savings account: In a savings account, any APY higher than 1% is a good APY. There may be more restrictions on the balances that earn interest, so know that information before opening an account. Business money market account: Typically the highest-earning account, an APY of 1.5% or better is a good APY. Fixed APY vs Variable APY Before choosing an account, find out whether the account has a fixed or variable APY. Fixed APY means the rate you earn won’t change with market conditions, whereas variable APY means rates can increase or decrease as the market changes. Checking accounts typically have more fixed APY, while savings and money market accounts typically have variable APY rates. Using an APY Calculator To Determine Your Earnings Regardless of which type of account you choose, you can calculate how much you’ll earn in a compounding period using our money market calculator below. To use it, you’ll need to know your daily average balance at the end of the billing (or compounding cycle), your end-of-cycle balance, the APY on the account, and the number of compounding periods in a year. Input those values into our calculator to figure out how much money you have after the interest earnings are added to your end-of-cycle balance. Banks Offering APY on Business Accounts The best banks for small business offer APY on both business checking and savings accounts. Listed below are examples of providers offering good APY rates on both types of accounts. Business Checking Accounts With APY See fullscreen table × Note: APY rates were accurate at the time of publication. Rates will fluctuate as the Fed raises or lowers interest rates. Visit the provider’s page for the most current APY rates before opening a checking account. Business Savings Accounts With APY See fullscreen table × Note: APY rates were accurate at the time of publication. Rates will fluctuate as the Fed raises or lowers interest rates. Visit the provider’s page for the most current APY rates before opening a savings account. Frequently Asked Questions (FAQs) What is APY for a business account? APY on a business account works the same way it does on a personal account. It calculates the interest earned by a deposit account over an entire year. It’s higher than the stated interest rate because you can earn interest on previously earned interest. What is a good APY on a business bank account? For a business checking account, 0.5% APY or higher would be considered a good APY. On a business savings account, an APY of 1% or higher would be good. For a business money market account, you would want to earn at least 1.5% APY to consider it a good return. Can a business bank account earn interest? Your business bank account can earn interest. Interest-earning checking accounts are less common, although providers such as Bluevine and Grasshopper offer solid interest returns on business checking accounts. Higher rates of return will be found on business savings and money market accounts. Live Oak Bank and Prime Alliance Bank have solid returns on business savings, while First Internet Bank has a strong return on its money market account. Bottom Line The APY reflects the interest your business bank account will earn over a year. The higher the rate, the more interest you’ll make. It’s essential to know how often the interest is compounded, as accounts compounded daily will earn more interest than accounts compounded monthly or quarterly. Look for an account that offers a strong return on investment to allow your reserves to earn your company money.

The best free business checking accounts should have no monthly fees, or fees that are easily waivable, and limited and transparent routine fees. Some providers have next to no fees for typical banking services while others offer a limited number of free transactions before fees are charged. The banks on this list have the best free business checking accounts while also providing you with the other business services needed for your company's growth. These include interest-bearing accounts, lending products, personal accounts for you and your employees, and merchant services. Here are the 10 best free business checking accounts: : Best overall for free business checking with a high interest yield : Best free business checking with a traditional bank : Best premium business checking account with a traditional bank : Best for unlimited transactions with a traditional bank : Best for businesses with minimal monthly transactions : Best for full-service online banking : Best digital-only bank for tech companies and startups : Best digital-only bank for rapid access to funds and express payment processing : Best digital-only bank for integrated free payment software : Best digital-only provider for cash back on debit card purchases Best Free Business Checking Accounts At a Glance See fullscreen table × *Providers are financial technology (fintech) platforms backed by and Federal Deposit Insurance Corp. (FDIC)-insured through a supporting bank partnership. Partnerships: Coastal Community Bank for Bluevine, Evolve Bank & Trust for Mercury, Middlesex Federal Savings for Novo, and The Bancorp Bank for Oxygen Bluevine: Best Overall for Free Business Checking With a High-interest Yield Bluevine Business Checking Overview Bank of America: Best Free Business Checking With a Traditional Bank Bank of America FundamentalsTM Business Checking Overview Chase: Best Premium Business Checking Account With a Traditional Bank Chase Business Complete BankingSM Checking Overview Capital One: Best For Unlimited Transactions With a Traditional Bank Capital One Basic Business Checking Overview U.S. Bank: Best for Businesses With Minimal Monthly Transactions U.S. Bank Silver Business Checking Overview First Internet Bank: Best for Full-service Online Banking First Internet Bank Business Checking Overview Mercury: Best Digital-only Bank for Tech Companies & Startups Mercury Business Checking Overview Novo: Best Digital-only Bank for Rapid Access to Funds & Express Payment Processing Novo Business Checking Overview Grasshopper: Best Digital-only Bank for Integrated Free Payment Software Grasshopper Innovator Business Checking Overview Oxygen: Best Digital-Only Provider for Cash Back on Debit Card Purchases Oxygen Business Checking Overview How We Evaluated the Best Free Business Checking Accounts When we evaluated the best free business checking accounts, we considered Which accounts had no monthly fees or easily waivable monthly fees Required opening deposit and balance minimums Transaction limits before fees ACH and wire transfer fees ATM fees and availability Cash deposit fees and availability Interest yield, if applicable Other checking account perks Software integrations Other business services provided Lending products provided Customer service Customer reviews What You Need to Open a Small Business Checking Account Though each provider on this list may require different documents to open a business bank account, here is a general list of what you will need: Employer identification number (EIN) or Social Security number if you’re a sole proprietor Fictitious business name certificate or doing-business-as (DBA) certificate Business formation documents Organization documents, including your ownership agreements Business licenses Government-issued photo ID, such as a passport or driver’s license Frequently Asked Questions (FAQs) What bank doesn’t charge monthly fees for a business account? Many online-only banks and some traditional banks, such as U.S. Bank, provide business checking accounts with no monthly fees. Others, such as Bank of America and Chase, offer easy ways to waive monthly fees. What banks have free checking with no minimum balance? Several online-only banks offer free checking with no minimum balance, including Bluevine, Novo and First Internet Bank. Some traditional banks, such as Capital One, have waivable monthly fees with unlimited free transactions. Even if a bank has waivable monthly fees, check the free transaction limit and ensure your business won’t exceed that each month. Bottom Line If you are looking for a business checking account with no or easily waivable monthly fees, the providers on this list are all outstanding choices. When deciding which provider to choose, first figure out what you need from your business bank. Decide whether online-only banks or traditional banks provide the services you need, then select the bank and checking account that best meet your business needs.

With interest rates steadily rising throughout 2022, more borrowers are turning to Small Business Administration (SBA) loans to obtain affordable financing. While SBA rates have also risen over the last year, these remain among the most affordable loan options. Regardless of what type of SBA loan you need, you’ll likely find lower rates than other financing options. Listed in the table below are the six types of SBA loans and the current loan rate ranges for each type. If you’re looking for an SBA loan, is a great choice. You can get funding of up to $25 million with little to no collateral and a credit score as low as 650. Even if you’re a sole proprietor or a startup, you can get funding through this lender. SBA 7(a) Loan Interest Rates & Explanation The SBA sets the maximum interest rates banks can charge for SBA 7(a) loans, and rates vary depending on the size of the loan and the length of the repayment term. These loans are based on market interest rates, so as the prime rate changes, so will the SBA 7(a) loan rates. To estimate your monthly payment on an SBA 7(a) loan, check out our free SBA loan calculator. This will allow you to estimate payments based on the current rates and the loan size needed. How SBA 7(a) Loan Rates are Determined The maximum interest rate on SBA 7(a) loans is based on three factors: A base rate (one of the following publicly available interest rate measures): Prime rate, London Interbank Offered Rate (LIBOR) (one month) plus 3.0%, or the SBA’s price/earnings to growth (PEG) ratio. The loan term: Loans of greater than seven years will be priced higher than those under seven years. The loan size: Loan sizes are categorized as less than $25,000, from $25,000 to $50,000, and over $50,000. Fixed vs Variable SBA Loan Interest Rates SBA 7(a) loans can have either a fixed or variable interest rate. Fixed-rate loans have the same interest rate throughout the life of the loan, whereas variable-rate loans can have changes in rates at quarterly or monthly intervals. Interest rates must be at or below the maximum interest rate set by the SBA. Banks tend to offer only variable rate loans to smaller SBA loans under $500,000. Rates on those loans are typically set near or at the maximum allowed by the SBA. Base Rate & Interest Rate Resets Banks can choose one of three market interest rates as their base rate. The prime rate, which is most often used, and LIBOR rates tend to be very close. The SBA PEG rate is released quarterly, so it can differ slightly, especially in a volatile rate market. SBA Express Loan Rates SBA Express loans, a subset of the SBA 7(a) loan program, offer a faster approval process than a standard SBA 7(a) loan. However, the price for faster approval is a higher interest rate. Express loans have a maximum of $350,000. The maximum interest rates for SBA Express loans are: SBA Express loans carry a higher interest rate for similar size amounts and terms than the standard SBA 7(a) loan. If you’re interested in an SBA Express loan, is an excellent option—you can get funding in as little as 30 days. SBA Loan Rates on CDC/504 Loans The SBA sets the maximum interest rates banks can charge on Community Development Company (CDC)/504 loans. The maximum interest rates on CDC/504 loans are tied to market interest rates based on the amount borrowed. A CDC/504 loan is composed of two loans: Bank loan: A loan from a financial institution for typically 50% of the price of the property, equipment, and building upgrades. CDC loan: A loan from a nonprofit organization, a certified development company (CDC), for 40% of the price. The remaining 10% is a down payment from the borrower. While the SBA doesn’t set the interest rate on the bank portion of the loan, the interest rate on these loans tends to be very low. Since the loan is backed by real estate, there’s a lower risk to the bank of not getting back the money it lends. This lower risk is reflected in a lower interest rate. Loan rates for the CDC portion of an SBA 504 loan are fixed for the life of the loan. The loan portion provided by the bank, credit union, or non-bank lender doesn’t have to be fixed—it may have a variable rate or balloon payment. SBA Loan Interest Rates on SBA Microloans Loan amounts for SBA microloans cannot exceed $50,000, and repayment periods cannot extend beyond six years. Interest rates for microloans generally range from 6% to 9%. However, the exact rates and terms available for SBA microloans vary by lender. SBA microloans are offered by intermediaries, referred to as SBA microlenders. They’re often nonprofit organizations with expertise in small business lending and technical assistance. The SBA maintains a list of all current SBA microlenders, organized by state. Economic Injury Disaster Loans (EIDLs) Businesses that have suffered economic loss through a national or economic disaster could be eligible for EIDLs. These SBA disaster loans require a disaster declaration from the federal government for a business to apply. If your business meets these eligibility requirements, you can apply for an EIDL directly through the SBA’s Disaster Loan Portal. However, the portal has been closed for EIDL loans for businesses affected by COVID-19. Frequently Asked Questions What is the interest rate on an SBA 7a loan? The maximum interest rate on an SBA 7(a) loan is determined by the size of the loan and the length of the repayment term. Those rates can be calculated using the following list below: Less than $25,000 loan, less than seven-year term: Prime rate + 4.25% Less than $25,000 loan, more than seven-year term: Prime rate + 4.75% $25,000 to $50,000 loan, less than seven-year term: Prime rate + 3.25% $25,000 to $50,000 loan, more than seven-year term: Prime rate + 3.75% More than $50,000 loan, less than seven-year term: Prime rate + 2.25% More than $50,000 loan, more than seven-year term: Prime rate + 2.75% What disqualifies you from getting an SBA loan? You can be disqualified from getting an SBA loan for either personal or business reasons. For instance, you can be denied if one or more of the following is true: Your credit score is too low There’s an issue of character, such as a criminal record You don’t have the revenue to repay the loan You don’t have enough collateral Meanwhile, your business can be disqualified if you’re in an ineligible business, including those engaged in illegal activities, loan packaging, speculation, multisales distribution, gambling, investment, or lending, or where the owner is on parole. How long can you finance an SBA loan? The maximum length of an SBA loan depends on the loan type. Real estate loans can be financed for up to 25 years, while equipment loans, working capital loans, and inventory loans max out at 10 years. Bottom Line While all interest rates have increased over the last year, SBA loans still provide the lowest rates available; however, these tend to take the longest to get funded. If you need a small business loan quickly, then you might consider a fast business loan or a same-day business loan. These can be funded within 24 hours but come with higher fees and interest rates than an SBA loan. If you can wait on funding and can qualify, SBA loans are the best financing option available for your business.

A business money market account (MMA) is an interest-bearing business bank account that typically earns interest at a higher rate than business savings accounts. However, money market accounts earn less interest than investment accounts because they are considered low risk. While the Federal Reserve Board officially lifted the six-transaction limit on money market accounts in 2020, some banks have kept the limit in place. Other banks have either increased the limit or eliminated it. Like other deposit accounts, money market accounts are Federal Deposit Insurance Corporation (FDIC)-insured up to $250,000 per account holder. If you’re looking to open a business money market account, is an excellent choice. You can earn an annual percentage yield (APY) of 1.51% with a daily balance of $5 million or less and 2.27% with a daily balance above $5 million. The account has an easily waivable monthly fee, and sole proprietors can get an ATM card. Visit First Internet Bank’s website for more information. How Business Money Market Accounts Work A business money market account can be funded via automated clearing house (ACH) transfer, check or cash deposit, or incoming wire transfer. Once the money is in your account, you can leave it to draw interest, withdraw it, or transfer it to another account. In general, most financial institutions still limit the number of withdrawals or outgoing transfers to just six per month. You’ll be charged an excess transaction fee if you exceed six transactions. In extreme cases, the bank may reclassify your account, which could cause you to lose the interest-bearing nature of the account. To calculate how much money you’ll make monthly, you’ll need to know what period the bank uses to compound the interest, the APY earned by the account, and your daily average balance: Compounding time period: The amount of time the bank uses to determine how often interest is compounded. In most cases, interest is compounded monthly. APY earned: This is the annual percentage yield earned by the account. It’s slightly higher than the stated interest rate because you can earn interest from the account's already accrued interest. Daily average balance: Generally, this is calculated by taking the sum of the daily balance of your account in a billing cycle and dividing it by the number of days in that billing cycle. Business Money Market Interest Formula, Calculator & Examples To calculate the money market interest and the final balance of your account after the interest is added for one month, use the formula below: Final Balance = D [(r/100)/n] + E D = Daily average balance at the end of the billing cycle E = End-of-cycle balance at the end of the billing cycle r = APY n = number of compounding periods in a year (in this case, 12) Calculator Use this business money market interest calculator to determine the balance of your account at the end of the billing cycle after interest earnings are added. Business Money Market Account Costs There are limited costs involved with money market accounts, and some of them can be waived if you meet certain requirements. Here are some more common fees you may see with your money market account for business: Monthly account fees: Account fees range from $5 to $15 per month. Most can be waived if monthly balance minimums are met. Transaction fees: If your bank still has a monthly transaction limit, you could pay $15 per excessive transaction or more. Your account could also be reclassified into a noninterest earning account. Wire transfers: Some accounts will charge wire fees ranging from $15 to $50 per transaction. Cashier’s checks: This can be up to $15 a piece for cashier’s checks. Dormant account fee: If your account becomes inactive or dormant, you could be charged fees. Be sure to conduct transactions into your account at least once a year to avoid these fees. If you aren’t going to use an account, be sure to close your account to avoid fees and potential unclaimed funds issues. Pros & Cons of a Business Money Market Account Business Money Market Accounts vs Other Accounts There are other types of business bank accounts that allow you to earn interest on reserve business funds. In addition to business money market accounts, you could choose to open a high-yield business savings account or a business certificate of deposit (CD). The table below compares some of the differences among the three account types: How To Open a Business Money Market Account The steps to opening a business money market account are similar to opening any business bank account. If you already have a small business checking account with a provider, check with it first to see if it offers a money market account. Since it already has your business information, the opening process should be much easier. Otherwise, here’s a general list of what documents you’ll need: Employer identification number (EIN) or Social Security number if you’re a sole proprietor Fictitious business name certificate or doing-business-as (DBA) certificate Business formation documents Organization documents, including your ownership agreements Business licenses Government-issued photo ID, such as a passport or driver’s license Frequently Asked Questions (FAQs) How does a business money market account work? A business can transfer financial reserves into a business money market account. That money will earn interest, typically at a higher rate than a business savings account but lower than a business CD or investment account. It carries far less risk than investment accounts as the FDIC insures them for up to $250,000. What are the disadvantages of a money market account? Three main disadvantages to a business money market account are: Some business money market accounts have a high minimum deposit or balance requirements. Failure to meet the minimum balance requirements could result in monthly fees or limited interest earnings. There can be significant penalties for exceeding the maximum monthly withdrawals or transfers out of the MMA—they can be hefty fees or even the reclassification of the account into a noninterest-earning account. Banks often offer inflated introductory rates, which then drop significantly once the intro period expires. Once the rate changes, this could leave you looking for a new business MMA provider. Can a business use a money market account? Any business can use a money market account to earn interest on the company’s financial reserves. Not all banks with business banking products offer business money market accounts. Visit your bank’s website to check. Bottom Line A business money market account is an excellent way for your company to earn interest on its financial reserves. A money market account typically earns more than a business savings account but less than a business certificate of deposit or investment account. However, CDs lack the liquidity of money market accounts, and investment accounts carry a higher risk. Business money market accounts are a solid choice for a good interest yield in a low-risk account.

Commercial banking is a group of bank products and services designed to meet the financial needs of corporations, medium and large businesses, and government clients. These can include deposit accounts, commercial lending offerings, merchant services, and investment products. This contrasts with retail banking, which offers similar financial services to individual clients and the general public and, in most cases, the same banking provider offers commercial and retail banking services. Banks will provide products and services to small businesses out of one or both of those banking categories. If you need commercial banking products and services,  is an excellent option. You can earn cash back bonuses for opening a new business checking account, and it offers a wide range of small business resources and products. Visit Bank of America’s website for more information. Functions of Commercial Banking Commercial banks have several essential functions that allow them to serve business and corporate customers with all their potential banking needs. The functions of commercial banking are accepting deposits, lending funds, acting as an agent, and offering other financial and utility services. 1. Accepting Deposits The most common function of a commercial bank is accepting deposits. Often, these accounts pay interest to depositors but come with monthly fees, which can be waived by meeting certain balance or transaction requirements. Commercial banks will accept deposits in three types of accounts: Current accounts: The most common bank account, these allow customers to withdraw money at any time without notice and often don’t earn interest. Saving deposits: These are smaller accounts that typically earn interest. There may be limits on when and how much can be withdrawn. Term or fixed deposits: Money in these accounts is held for a set period and cannot be withdrawn without a severe financial penalty until the term expires. 2. Lending Funds Commercial banks will provide funding to companies, allowing them to expand, purchase equipment, meet day-to-day financial needs, and acquire additional property, among others. Companies will repay the bank's funding with interest until the loan is satisfied. There are several types of loans provided by commercial banks: Commercial term loan: A short-term lending product used by companies to purchase equipment, inventory, or use for cash flow purposes. Loans are for a set period, usually less than 10 years, with full amortization at the end of the term. Commercial line of credit: A revolving line of funding provided to a company. The company can take draws against the line of credit, with interest paid only on the amount used. Draw periods can range from a few months to a few years. Companies will often have to present financials annually to renew the line of credit for future use. Commercial real estate (CRE) loan: A mortgage loan used for the purchase, rehabilitation, or expansion of real estate. These types of loans include fix-and-flip loans, Small Business Administration (SBA)-backed loans, hard money loans, and conventional mortgage loans. These can be short-term loans that lead to permanent financing or a property sale or can be permanent financing of up to 30 years. Cash credits: Rather than loaning a company money, the commercial bank allows a company to draw against a deposit account created by the commercial bank. The company borrows money without having a credit balance, and interest is only paid on the used amount. It’s often secured with property, fixed assets, or stocks as collateral. 3. Acting as an Agent Commercial banks can perform functions for their customers to assist with their business needs. Some of these functions include: Collecting bills Offering insurance Offering investment products Purchasing or redeeming securities Acting as executor, administrator, or trustee of a client’s estate Helping prepare income tax returns and claiming tax refunds 4. Offering Other Financial and Utility Services Businesses often need other services from their commercial banks besides deposit, lending, and agent. Commercial banks can facilitate these business services, as well as: Overdraft fee protection Traveler’s checks Locker facilities Debit and credit cards Foreign currency exchange Funds transfers including wire services Discounting bills of exchange Commercial Banking Products & Services Commercial banks provide various services that can benefit a business beyond just deposit accounts. They are structured the same way for companies as they would for individual customers. In addition to deposit accounts, here are some of the other services offered by commercial banks: Industrial loans and other lending services: Loans are the primary source of profits for commercial banks. By providing loans to corporations, commercial banks earn income in the form of interest paid to them by their borrowers. Merchant services: Most commercial banks offer merchant services that include credit card processing, mobile payment solutions, gift cards, and electronic check services. Global trade services: These services may include foreign exchange, foreign trade financing, letters of credit, global payments, export financing, and bank guarantees, among others. Leasing: Many companies use leasing as a financing method for acquiring real estate, automobiles, factory equipment, and other major fixed assets. Treasury management services: Commercial banks offer funds collection, disbursement, and fraud prevention. Corporate-oriented products and services: These include retirement products, employee stock ownership plans, payroll services, advisory services, and insurance products designed for corporations and institutions. Pros & Cons of Commercial Banking Types of Commercial Banks There are three types of commercial banks, classified by how they’re owned or where they’re located. Any kind of bank can work for your bank as long as you’re eligible to get an account. Click the tabs below to learn more about each type of bank. Retail Banking vs Commercial Banking Retail banking and commercial banking are often handled by the same financial institutions. Retail banking provides financial services to the general public, while commercial banking offers those services to medium to large-sized businesses and corporations. Almost all banking services in a retail bank would also be available in a commercial bank, including deposit accounts and lending products. Commercial banks would additionally offer business merchant services, investment products, and retirement planning services. Small startups might find their initial banking products housed in a bank's retail banking department when they first open a business bank account. As the business grows, adds employees, and potentially incorporates, those accounts may be moved to the commercial banking department. While the general steps for opening a business bank account at a retail or commercial bank will be similar, the specific documentation may differ. The commercial bank may require your business to be established longer, have higher revenues, and be structured as a limited liability company (LLC), S corporation (S-corp), or C corporation (C-corp). When choosing a bank for your small business, you should consider whether the bank has both retail and commercial banking services. This would allow the same institution to continue serving your business as it grows. Commercial Banking vs Investment Banking If retail banking caters to the smallest businesses and commercial banking to the mid-sized and larger businesses, the largest corporations are served by investment banks. They provide services to large, publicly traded corporations. They help these corporations by advising on investment strategies, stock issuance, and potential acquisitions and mergers. They also handle large amounts of money, typically deal with longer-term investments, as opposed to day-to-day financial transactions, and can assist with raising capital. Here’s a table with some of the differences between the two types of banks. Frequently Asked Questions (FAQs) What is an example of commercial banking? While commercial banking can include services that would also fall under retail banking, such as deposit accounts and lending products, other services would be exclusive to it, including offering investment products, payment processing, merchant services, and global trade services. What are the primary functions of a commercial bank? A commercial bank has four primary functions. Accepting deposits: These deposits can be accepted into current accounts, saving deposit accounts, and term or fixed deposit accounts. Lending funds: Commercial banks should offer a variety of lending products, including term loans, lines of credit, real estate loans, and cash credits. Acting as an agent: A commercial bank will act on behalf of the business for many transactions, including collecting bills, offering insurance, offering investment products, and helping with tax preparation. Offering other financial and utility services: Commercial banks offer services outside of deposit and lending services, including overdraft fee protection, traveler’s checks, locker facilities, debit and credit cards, and foreign currency exchange. What are the advantages of a commercial bank? There are three major advantages of a commercial bank. They provide products specifically designed for the financial needs of a business, assign a customer service representative that works directly with the business to ensure their needs are met, and enable you to set up deposit accounts for your employees. Bottom Line Commercial banks can provide your business with a wide range of services. Many offer commercial and retail banking services, allowing your business to grow into the services that a commercial bank offers. Before you start a business relationship with a bank by opening a small business checking account, consider a bank that will allow your business to grow and expand.