4 Banking Tips For New Small Business

This is the guest post by banksifsccodes.com. Here you can get the 4 banking tips for new small business.

As an entrepreneur, you’re always hustling to get to keep your business successful, so it can be easy to overlook some of the most important elements of your operations.

Every small business owner will need to work closely with a bank or credit union, whether just to handle daily deposits, to secure a loan, or for help with other financial services. Here are 4 banking tips for new small business owners to keep in mind as he or she works to accomplish their dream.

Mobile banking

  1. “Free” business checking can still lead to fees

Like a personal checking account, business accounts often carry monthly fees. These fees can sometimes be waived with a minimum balance or a mix of other requirements, but why not look for a free business checking account instead?

It’s certainly an improvement, and can save you $150 or more each year, especially for upstart businesses that might struggle just to maintain a positive balance each month.

But wait…the decision doesn’t end there. Even free business checking accounts often carry a few restrictions. Do you make tons of transactions each month? Maybe handle a lot of cash deposits? Then you might be facing fees up to $0.75 per transaction or per $100 cash deposited over the set limit.

So, before you jump on the first free account you come across, make sure to understand the business checking fees and how they’ll impact your day-to-day operations.

Compare business checking accounts closely to determine which will have the lowest total monthly cost.

Banking tips

  1. Don’t assume your current bank is best for your business accounts

It’s a natural inclination when making a decision to go with what’s most

Comfortable – it applies to choosing a bank for your business just as much as picking a restaurant for a night out.

It’s ok if your first stop when shopping for your new account is where you do your personal banking, but don’t be automatically lured by the familiarity. There’s a good chance that another bank or credit union will be best for your business by offering lower fees, more personalized service, or better access to credit.

  1. Relationships are important

None of us are experts in everything, and in when running a business, your time is better spent doing just that, rather than trying to learn the complete ins-and-outs of the legal system, the tax code, or a loan product. These advisors (and others like them) can help give you critical information about your business in a concise and comprehensible manner. So, as you build your business, make sure to find people with good references and whom you trust, and form a relationship now.

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  1. Focus on the “5 Cs”

The 5 Cs of Credit are basic guidelines that a bank or credit union might use to evaluate a potential borrower.  As a business owner, excelling in and/or understanding each of these categories could drastically improve your chances of receiving a loan. So what is this magical set of criteria?

  • Character – A lender’s overall sense of a borrower’s trustworthiness, credibility and overall character. Make sure you have high-quality credentials/references and are sincere in all your interactions with the bank.
  • Capacity/Cash Flow – At its core, a borrower’s ability to repay the loan. Get your financials in order and know exactly how you plan to use the funds and how you plan to repay.
  • Capital – The amount of money invested personally by the owner/management team. Banks are more willing to lend to someone who has invested some of their own money in to growing the company.
  • Conditions – Economic, industry, and environmental conditions that may affect the company (may also refer to how the loan proceeds will be used). Know your market and be prepared to explain exactly how your business will succeed.

These are the 4 most important tips small-scale businesses must keep in mind while undertaking banking techniques.

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