8 things to consider when choosing a bank for your small business

9 Aug 2022

Having a business bank account will help you to keep your business and personal transactions separate. If you run a limited company or incorporated company, you usually won’t be allowed to use a personal account in place of a business one. Finding a business bank that suits your business’ needs and plans is important, but it’s not always easy. That’s why we’ve put together a list of things for you to consider.

Woman walking in front of Bank of England

1. Is the bank suited to your business? 

Some banks specialise in specific industries, so it’s worth doing your research to look at options that fulfil the specific needs of your business. 

Consider the bank’s reputation in the market in which you operate, and find out if they provide services and advice that are bespoke to your industry. What processes do they have for dealing with business challenges, such as chargebacks? 

2. What fees does the bank charge?

Take the time to compare the fees banks charge in order to make an informed decision. After all, you don’t want to get caught out down the line. 

Fees vary from bank to bank, but can include service fees, account fees, withdrawal and deposit fees, ATM fees, credit card processing fees, overage fees. You might even have to pay an inactive account fee if your account lies dormant, so double check.

3. Does the bank offer incentives? 

As well as the features you’d expect from a business bank, such as online banking and debit cards, some banks offer additional perks such as introductory offers, low interest rates (if, for example, you keep a certain amount in your bank), and payroll services. 

Always check the terms and conditions - including when assessing incentives. 

4. Does the bank offer loans? 

Even if you don’t need business finance right now, you might need additional finance to trade and grow in the future. Does the business bank offer business loans, what type of loans do they provide, and how strict is their eligibility criteria?

If you need business finance but have been turned down by your bank, there are other options out there to choose from. Funding Options has been chosen by the British Business Bank to find finance for businesses. You can use our platform to see what you could be eligible for today (it’s free and doesn’t affect your credit score). 

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5. What level of customer service does the bank provide?

Ideally, your business bank should provide a service that is helpful and accommodating. Find out whether the bank offers 24/7 customer service and whether or not you’ll get your own business relationship manager. Reading customer reviews can be useful too.

Bear in mind that some banks don’t have physical locations these days, so if being able to go into the bank in person is important to you, be sure to shop around. 

6. Does the bank align with your cash flow needs?

Cash flow is the amount of cash that flows in and out of your company.  

Positive cash flow is when you have more cash coming into your business than you have leaving it, and vice versa. While there are banks that allow unlimited transactions, some business banks have transaction limits, so it’s important to check whether these are in line with your business’ needs so that you don’t end up incurring a fee. 

7. Can it integrate with your accounting software?

Digital integration is key when it comes to saving time and operating smoothly. See if the bank you’re considering integrates with your accounting software so that you can streamline your bookkeeping and accounting tasks. 

Integrating your business bank and accounting can automate some manual tasks and improve your cash flow visibility. It also enables you to see how your business is performing without having to switch between programmes. 

8. Does it have usable and secure online banking? 

Online banking is a must-have in today’s digital world. 

However, it’s important to conduct your online activities securely to help avoid falling victim to cybercrime. Check what security measures the bank has in place to mitigate security risks. For example, does it use two-factor authentication for enhanced protection?

How to open a business account

Opening a business bank account requires the correct documentation. 

You’ll be asked to provide proof of ID (e.g passport or driver’s licence) for all the company directors, proof of address and your business’ details, including its registered address and Companies House registration (if you run a limited company or partnership). You’ll also need details of your expected annual turnover. 

International business accounts

If you operate internationally, you may want to consider opening an international bank account. When you sign up for an account with Wise, you can benefit from cheaper and faster international payments, better foreign exchange rates, easy withdrawals and no hidden fees. It’s quick, easy and free to sign up.

Sign up for Wise

Vivek Seda
Vivek Seda

Asset Lending & Property Team Lead

Vivek Seda is the Asset Based Lending & Property Team Lead at Funding Options. Vivek has been in the commercial finance industry for over five years, helping SMEs in the UK access over £40m of funding in that time. He also supports the business on working on corporate finance and structured transactions successfully funding Acquisitions and MBOs for businesses.

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