The first step in choosing a bank for small business starts with determining your company’s needs. Hundreds of business bank account providers offer a wide range of banking products and services. Banking providers range from online-only financial technology (fintech) companies to credit unions and traditional brick-and-mortar banks. Some offer one or two highly specialized banking products, while others offer full-service business banking that can scale as your business grows.
Deciding which bank to choose depends on what products and services your business needs. If you need an online-only bank, consider Bluevine. It offers an interest-earning business checking and an outstanding business line of credit. Visit its website for more information.
Visit Bluevine Bluevine is a financial technology company, not a bank. Bluevine deposits are FDIC-insured through Coastal Community Bank, Member FDIC,
Step 1: Evaluate Your Business Needs
Identifying your business banking needs and goals can help you narrow down the features you’re most looking for in a business bank. Here are a few examples:
- Cash-reliant businesses typically need access to in-person banking and support for cash deposits.
- Sole proprietorships and contractors could benefit from account integrations and tech tools that reduce manual workload; read our guide on how to open a sole proprietorship bank account if you need assistance.
- Businesses with international clients may benefit from low fees on international wire transfers; consider one of our best international business banks when choosing a provider.
Step 2: Identify Important Factors
When considering what to look for in a bank for small business, identify which business banking features are critical to your current and future business plans. Factors that affect your business banking experience include banking products and services offered, network size and availability, fees, interest rates, account scalability, reliability of digital banking platforms, industry experience, and account integrations.
Financial Products & Services
Find out the types of bank accounts and loan options being offered by the bank. While traditional banks typically have multiple account options and a wide range of products and services for businesses, online-only banks don’t always offer full-service banking. If you’d rather keep all your banking transactions in one bank, you need to ensure that the bank offers all the products and services that you may need, including:
- Business checking accounts
- Business savings accounts, including money market accounts and certificates of deposit (CDs)
- Business loan options
- Business insurance
- Commercial real estate (CRE) financing
Network Size & Availability
When selecting a bank, consider the number of available branches and ATM networks. If you travel frequently but still need in-person branch banking, choose a bank with several branches and a large ATM network across the country. See our reviews of the following banks that are great examples of nationwide banks:
However, if you don’t intend on banking outside your area of operation, a community-focused regional bank or credit union may cater to your needs better. If you are okay with doing your banking transactions online, it might be better to choose an online bank vs a traditional bank.
Fees
Most business banks charge account fees and service fees. Typical business banking fees are generally triggered by account activity or fees to maintain the account by the bank. An example of these types of fees are:
- Monthly account maintenance
- Excess transaction
- Cash deposit
- Wire transfer
- Out-of-network ATM transaction
A business that makes regular wire transfers should select a provider with low wire transfer fees, such as Relay. See our review of Relay’s business checking for more information.
Interest-bearing Accounts
If you want to get the most out of your deposits, it’s best to go with a bank that offers high interest rates. Most business savings accounts earn interest, but some online business banking providers also offer interest-earning checking accounts. Bluevine and Grasshopper are two examples of banking providers that earn interest on qualifying business checking deposits. Check out our review of those banking providers for more information:
Online & Mobile Banking Experience
If you want the freedom to conduct your banking transactions from anywhere, look for a bank with a good digital banking platform. Most of today’s providers offer digital banking for browsers and mobile devices. Reliable digital banking platforms should let you easily view your business activity, complete financial transactions online, and reach customer service—all in a secure environment.
Common digital banking features include:
- Mobile check deposit
- Fund transfers
- Bill pay management
- Card management
- Two-factor authentication (2FA)
- Online customer support
- Online wires
- ACH file transfer
- Payroll
- Report generation
Scalability & Support for Future Needs
Many banks provide tiered business checking and business savings account options that scale to accommodate higher transaction volumes. Though higher-tier accounts tend to charge higher monthly service fees, they provide higher limits for fee-free transactions and cash deposits.
If you plan on expanding your business, it’s best to go with a bank that offers tiered checking or savings accounts. Additionally, if you need funding for the future, you’ll want to look for a bank that provides various business loan options.
Industry Experience
Many banks have specific experience in different industries. If a bank specializes in your industry, that means it offers products and services that can directly meet your needs. For example, if you are in a real estate business, you may want to work with one of the best banks for real estate investors because they offer account options and investment property loans that make managing real estate finances easier.
Account Integrations
If software and payment services integration is a priority, you should ensure that you can integrate your software seamlessly with the bank’s platform. Having account integrations makes it easier to consolidate your business operations with your banking activity.
The best business banks offer app integration with a variety of accounting software, payment software, and other business tools. Integrations with accounting software, for example, let you sync banking data with bookkeeping ledgers, which removes the load of manual data entry.
Step 3: Understand the Different Types of Banks
Once you’ve narrowed down the features you most need in a business bank, identify which type of bank offers these features. Types of banks include traditional banks, online-only banks, and credit unions.
Traditional Banks
Traditional banks usually have several branch locations available and offer a full array of business banking products, including business checking accounts, credit cards, business loans, and mobile banking. Some operate nationally, while others limit their service area to specific communities or regions.
National banks tend to charge higher fees but offer wider branch access. Examples of national banks include Chase, Bank of America, and Wells Fargo.
Regional banks charge lower fees but have fewer branches. However, because they are limited to specific service areas, they know local market conditions intimately and offer banking services designed for local needs.
Community banks also tend to charge lower fees. They are similar to regional banks, but their service area is much smaller. Generally, a community bank focuses on the needs of businesses and families where branches are present. Most often, you will know your bankers since they are part of our local community.
Traditional Banking Is a Good Fit if You | Traditional Banks Are Not a Good Fit if You |
|---|---|
Work with cash regularly and need support for cash deposits | Prioritize banking with minimal fees |
Prefer banking in person | Prefer the convenience of online banking |
Require a full range of banking services, including business checking, business savings, lending products, and cards |
Online-only Banks
Online-only banks and banking solutions are a great fit for business owners who want to save on fees and don’t mind conducting all banking transactions online. With no brick-and-mortar banking locations, you won’t be able to visit a location if you have a problem with your account.
Some online banks have started allowing cash deposits. Some providers allow you to make those deposits through in-network ATMs, while others require you to visit a third-party retail location, such as Green Dot, to make those deposits. Fees can vary widely, so understand the cash deposit fee structure of a potential online-only bank before signing up for an account.
There are advantages to choosing an online-only bank over a traditional bank. Because online-only providers get to save on expenses like rent and utilities for physical branches, they can offer their customers lower fees, higher interest rates, and cost-saving features like discounts and cash back.
Most digital banks let customers open accounts online for free with no opening deposit. However, unlike traditional banks, many online banking solutions lack banking services beyond business checking and savings.
Online-only Banking Is a Good Fit if You | Online-only Banks Are Not a Good Fit if You |
|---|---|
Want to bank with minimal fees | Work with cash regularly |
Are looking for cost-saving features, such as high-yield Annual Percentage Yield (APY), cash back, and discounts | Prefer in-person banking |
Want to streamline banking with tech solutions and integrations | Need a full selection of banking services |
Credit Unions
Credit unions are nonprofit organizations that have members instead of customers. Often, credit unions are smaller than traditional banks, and they cater to members that meet specific membership criteria, like location requirements or company affiliations. Before you make any online donation that appears to give you membership to a credit union, verify you qualify for an account based on employment affiliation and the geographic location of your business.
Like regional banks, credit unions tend to have a better understanding of local market conditions and thus have products specifically tailored to the needs of businesses in their service area. One of the main reasons to choose a credit union over a bank is better interest rates, lower fees, and easier access to business lending compared to traditional banks.
Credit Union Banking Is a Good Fit if You | Credit Unions Are Not a Good Fit if You |
|---|---|
Want lower fees | Want nationwide branch access |
Prefer banking solutions that are designed for people in your community | May not be a member of a specific employer, or may not live in a specific geographic location |
Prioritize easier access to financing options |
When choosing a bank, keep the limits in mind for the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA). This is a very important and proactive step in protecting your business in the event of a bank failure. While both these organizations insure funds up to $250,000, some businesses need additional coverage. This is where a fintech bank can be useful since many have partner banks allowing you to deposit larger amounts and still receive coverage.
For a complete list please refer to our best online business banks article.
Step 4: Open an Account With Your New Bank
Choosing a bank for a small business requires evaluating your options to find a provider that best suits your business needs. Typically, banks will ask you to prepare your personal and business documents, including identification, business license, and articles of organization. If you are opening a joint business bank account, your bank will also request these documents from your partners. Some banks allow you to open an account online, while others require you to visit a branch.
Refer to our guide on how to open a business bank account for the steps you need to take and a checklist of required documents per business type.
If you are changing business banks and are closing your old account, be sure to let any outstanding transactions clear your old bank before closing that account.
Best Banks to Choose for Your Small Business
The best banks for small businesses offer a variety of accounts and loan options for businesses, along with other perks and services that focus on business banking. Working with one bank that can meet all your business needs provides more convenience than opening several accounts with multiple banks.
We’ve evaluated more than 100 traditional banks, online banks, and credit unions to help you choose the best institution for your needs. Check out one of our buyer’s guides below for more specific provider information before choosing a business bank.
- Best Banks for Startups
- Best Banks for Nonprofits
- Best Bank Accounts for Self-employed Professionals
- Best Banks for Real Estate Investors
- Best Online Business Banks
- Best Credit Unions for Small Business
- Best Free Business Checking Accounts
- Best Business Checking Accounts for Limited Liability Companies (LLCs)
- Best Online Business Checking Accounts
- Best Small Business Checking Accounts
- Best Business Savings Accounts
Frequently Asked Questions (FAQs)
It’s not recommended to use a personal bank account for business banking because it can create accounting conflicts and cause issues with the IRS. Opening a business bank account allows you to keep business and personal finances separate, which is essential if you want to build business credit, keep your business accounting seamless, and avoid tax issues.
Our best traditional bank for startups is Chase because it offers full-service banking that can scale as your business grows. It also allows you to have your personal and business accounts in the same bank. Our best online-only financial technology company is Novo, thanks to product offerings that allow you to send and receive money faster than with other providers.
While you can have multiple bank accounts, many banking providers allow you to have multiple accounts within the same bank. This allows you to separate funds for specific purposes, such as future tax payments and long-term capital improvements.
Verify your bank’s FDIC insurance limit to confirm your balance stays under the $250,000 insurable amount. If you need to deposit funds over this threshold, building a banking relationship with multiple financial institutions would be wise to ensure your deposits are fully covered.
Using a local bank can be very helpful for businesses needing in-person banking services. A business needing to deposit cash regularly will want to consider a local bank for convenience. A business operating primarily online can choose between a local bank or an online-only bank. Deciding between a local bank and an online-only bank will largely depend on the structure of your business.
Bottom Line
Before choosing a bank for your business, do extensive research and consider several important factors, including account features and loan options. It would also be good to review the online banking platform to confirm you would have access to any treasury management features needed to manage your finances.
In addition, consider how accessible customer service is as well as interest rates and monthly maintenance fees. The best bank is the one that can meet your business banking needs, saving you the most time and money.
