Making the Most of Your Business Banking Relationship

Anyone who owns a business can appreciate the need for a bank account to handle bill paying, deposits and payroll. But banks can assist business owners in so many other ways as well. In fact, having a reliable financial partner can help a business reach its greatest potential, as well as provide support during times of financial need.

In addition to offering checking and savings accounts for companies, banks also offer a range of services such as term loans, equity funding, overdraft protection, insurance, pensions, and more.

Banks Offer Flexibility and Capital

Most importantly, banks can offer flexibility for business owners, making life a bit easier for those whose time is already in a crunch. For instance, banks feature services such as night safes which allow a business to deposit cash or checks after normal bank hours. Or, stop-check services can instruct a bank not to pay a check that has already been issued. Open credit arrangements allow businesses to withdraw money from any branch of the bank in addition to the one holding the account. ATMs also provide quick access to cash.

Loans are a large element of the business banking relationship. Generally speaking, there are two types of loans. Short-term loans include accounts receivable loans, working capital loans, and lines of credit. These have a maturity date of up to one year. Long-term loans are for major expenses, such as purchasing property, equipment, vehicles, or financing for a new product. These types of loans typically exceed a year in their maturity time and may range from up to 10 to 25 years depending on the business' need.

A bank reviewing a loan request will require a written loan proposal. Typically, this includes business and marketing plans, the purpose of the loan, as well as personal financial information. Banks also expect some type of collateral to be designated, which acts as security against the loan in case a business runs into trouble repaying the loan.

As online banking becomes increasingly popular, owners are able to access their accounts 24/7 via the Internet. Not only can a business access accounts, it can also integrate its computerized account system with the bank. Bill payment features online allow owners to pay bills with the click of the mouse or transfer funds to various accounts. Electronic funds transfers also allow money to be moved from one account to an account at a branch or bank on the same day.

Helping to ensure that a business is covered in an unforeseen event, banks also offer owners insurance protection through partnerships with insurance agencies. They can also provide owners with personal life insurance policies.

Banks Offer Guidance for New Businesses

As tried and true leaders in finance, banks are an ideal place to turn to in terms of counseling and guidance for new businesses or those facing the challenges of growth. An established financial institution can help owners identify potential difficulties and suggest products and services such as credit lines that may be useful. Many even offer free counseling to new businesses.

For the new business owner, opening a bank account is not unlike opening a personal account. However, it's important to provide the proper identification as well as the business' intended purpose and activities. This information assists a bank in determining the best type of account for the business.

While banks can bring much-needed support and assistance to a business, the business owner can do several things to establish a positive relationship with the bank. It's important to meet the requirements of a loan and demonstrate to the bank the ability to manage and repay a loan. If something changes, smart owners are quick to communicate with the bank, especially if an owner needs to renegotiate the terms of a loan.

Banks can bring so much to the life of a business – helping to achieve goals, negotiate rough terrain, and support business owners in the pursuit of their dreams. And the really good ones do it all with a smile.