Small business banking

Small business owners have a multitude of job functions, often ranging from mapping the company’s strategy to mopping the bathroom floors. Small business owners also take on a high level of financial responsibility. Banks focused on helping small businesses can take some of the burden off of business owners by helping them sort through and manage their finances.

“Banks, in essence, can become financial partners by creating relationships that grow through the life of small businesses,” says Jose Valle, president of the Miami-Dade region of BankAtlantic.

Smart Business spoke with Valle about how small businesses should choose a bank and how they can get the most out of the relationship.

Why is it important for small business owners to partner with their banks?
Small businesses need advice and assistance in the areas of operation, growth and credit. Small business bankers and cash management professionals can provide the needed advice and guidance on how to best use banks’ products and services. These individuals can help small business owners manage costs and cash flows and assist with credit needs, which is essential to the growth and success of small businesses.

Banks also are instrumental in helping small businesses create and maintain strong credit histories. These can be used as a tool to provide credit and trade references that help companies meet potential credit needs.

How should a small business owner choose a bank?
Small business owners should choose banks that accommodate their needs. Conveniences like flexible hours of operations, such as late hours and weekends, and access to bank personnel during these extended hours reduce stress for business owners. Also, finding a bank that is close to the business owner’s home or office allows for easy visits.

Personal service is another critical factor small business owners should look for in a bank. Banks that are relationship driven, where a customer is treated as an individual and not a number, provide high-quality services. Professionals at these banks work with small business owners to assess their needs and tailor products and services to meet those needs.

Another factor to consider is the availability of competitively priced financial products and services that are flexible enough to meet the needs of small businesses. Additionally, the availability of credit to facilitate the growth and viability of the small business is another key element in the banking relationship.

What opportunities do banks offer to people who want to start a business?
Traditionally, most small businesses start with personal and family financial resources. Banks typically do not offer credit to start-up small businesses. One significant exception, however, is when a new business owner has a track record in the type of business being conducted coupled with collateral provided from personal, family or investor sources.

A new business can, however, establish a deposit relationship with a bank through the availability of reasonably priced or no-cost financial products, such as free business checking and savings. These products also help the new small business develop a credit history, which is essential in facilitating the availability of credit in the future.

What deposit services do banks offer to help business owners manage and grow their business?
Small business deposit services include checking, savings, certificate of deposits, and money market products. These products provide flexibility and can match the cash flow and operating needs of small businesses.

Small business owners can work with bank professionals to choose the products that best meet their needs, based on the nature and growth patterns of their companies. Most banks provide these products at minimal or no cost and some provide interest income to the business.

How can banks help small businesses with credit and financing?
Banks have a number of products with different terms and maturities based upon the specific needs of the business. The most common are lines of credit (usually renewable on an annual basis, with interest typically tied to an index), term loans (mostly fixed-rate loans with maturities usually ranging from three to seven years) and long-term financing (often related to real estate assets, with maturities in the 15 to 25 year range).

What other types of banking services are available to small businesses?
Banks offer very useful services to help small businesses track their accounts and move funds. These products include daily notification of cash disbursements, wire services and bill pay options.

As small business grow into mid-size businesses, they also can use their banks to help with more advanced services, such as account analysis and investment alternatives.

Jose Valle is president of the Miami-Dade region of BankAtlantic. Contact him at (305) 383-4517 or [email protected].

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