When opening your business bank account, it is a natural tendency to go to the bank you have been using or that one of your family or close friends have a relationship with. The reason for this is that you want to capitalize on the history you have with a bank. In my experience banks are just banks and their interest is to do business. At times, even a long term relationship with them may not count.
Since history and relationships are built over time as a start-up, choose the bank that will work well for the plans you have in your business. It is important to keep in mind that you are not likely to get a loan to start your business from a bank – banks rarely lend to start-up businesses. For example, if you are looking to expand into other countries it is to your advantage to seek relationships with banks that have branches in those countries. Below are some of the factors you should consider:
- The expertise of the bank.; some banks are housing corporations, others are good at agricultural funding while others with co-operatives and asset financing. The right bank can offer you expert advice in your sector as you grow.
- Whether they have a business club. Some banks have business clubs and these facilitate trade trips and talks. These cannot only save you money but also help you when sourcing for equipment and partners in other countries as they will make matches with credible trade partners.
- Duration of existence; while new banks are great if the central bank in your country is not known to be strict on policy avoid small new banks. They could easily be shut down. If the governance systems at the Central Bank in your country work, then new small banks may be good as they are flexible. This doesn’t mean they will overlook policy but that you may get better interest rates and may be able to negotiate larger loans than with established banks which may have no time to listen to your case.
- How long it will take for you to be eligible for an overdraft or loan. Types of financing available and loan amounts
- Interest rates and fees for different services.
- Ease of transaction
- Office network; you want your bank to be there wherever you go or are planning to go.
- Their understanding of local business issues: International banks that may not consider your region an important part of their portfolio are not likely to be understanding or offer you the best services. However, it is important to consider if the international bank considers your region a prime and important part of its overall portfolio. Its policies will give you an indication of their understanding.
Given all this in place overall trust other entrepreneurs experiences with the bank. When all is said and done, most banks operate as machines and their experience will soon be yours.
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