A bank or credit union is a financial institution that provides loans, deposits, investments, and other financial services to individuals, families, businesses, governments, and nonprofit organizations.
Small business banking is the process of providing small businesses with access to the products and services offered by a commercial bank or credit union.
Banks offer many different types of accounts for small businesses, including checking, savings, money market, term deposits, and loan accounts. Credit unions may also provide these account types.
Small Business Banking Services
The following are some of the most common services provided by banks and credit unions:
Small Business Checking Accounts
A business checking account offers additional protections for the business’s finances.
It comes with many of the same features as a general-purpose checking account, including free online bill pay, mobile banking, and direct deposits.
But unlike a general-purpose checking account where the bank or credit union closes the account if the business fails to make timely payments, a business checking account stays open even if the business fails to meet its payment obligations.
Instead, the bank or credit Union sends the business a statement each month showing how much money is due.
The business owner must then contact the bank or credit union to request that they correct any errors before the next billing cycle begins.
Small Business Cash Management Accounts
Banks and credit unions also offer cash management accounts for businesses.
Like a business checking account, a cash management account provides protection against financial problems by staying open even if the business misses payments.
However, it does not include all of the benefits of a business checking account.
In addition to keeping the account open even if the business makes late payments, the bank or credit Unions will send monthly statements showing how much money is owed.
The business owner must contact the bank or credit Union to request that they correct an error before the next billing cycle starts.
Small Business Savings Accounts
Some banks and credit unions offer savings accounts specifically designed for use by small businesses.
They are similar to regular savings accounts but have some extra features.
For example, most banks and credit unions charge a fee for using their savings accounts.
And instead of earning interest on your money, you earn interest on the amount of money in your account.
This means that if you put $100 into a savings account at Bank X, you would earn $1 in interest per year.
You can also transfer funds from your savings account to another type of account, such as a business checking account, without paying fees.
Finally, some banks and credit unions allow you to borrow money directly from your savings account.
This feature is called a “business line of credit.”
Small Business Credit Cards
Banks and credit unions offer several types of business credit cards.
One common type of business credit card is a merchant cash advance card.
With this type of card, the business owner agrees to pay back a portion of the purchase price of goods or services immediately after the transaction.
Merchants often give these cards to customers who buy large amounts of merchandise or need immediate access to cash.
Another type of business credit card allows the business owner to apply for a loan against his or her personal credit card.
This type of card is sometimes referred to as a “merchant card.”
Offshore SME accounts
Opening an SME business account or an additional SME business account in another country.
Doing this not only gives your business the same specified services that a local SME account provides, but also has the benefits of a foreign jurisdiction depending on your type of business.
Offshore small business banking is becoming more accessible with the increase of Neobanks in the market.
Opening a business account abroad is both legal and helpful in cases where your business might be engaging in international payments, deal in multiple currencies, or need a more readily available account compared to local choices.
Open a Hong Kong small business account with Statrys today and you'll get access to Hong Kong banking from anywhere in the world even if you're not a large company.
Opening a Small Business Banking Account
Opening an account requires some basic information.
You must provide your social security number or local ID equivalent.
You also need a photo id and a business license or "doing business as" proof.
You can do this online, in person, or by mail.
Here's some steps you need to open a business banking account:
Step 1: Choose a bank or credit union
There are many different ways to choose a bank or credit union for your business.
Some banks specialize in serving small businesses.
Others focus on consumer loans.
Still, others may be willing to work with any kind of business. Look around to find one that works best for you.
Step 2: Get a business checking account
Your business checking account should be free-of-charge.
It should also be available when you need it.
Many banks require that you deposit checks on the same day that you receive them.
Check with your bank to learn about its policies regarding check deposits.
Step 3: Open a business savings account
A savings account is usually required for a business checking account.
Most banks and credit unions will let you open a savings account even if you don't have a checking account yet.
Step 4: Apply for a business credit card
Banks and credit unions offer various types of business credit cards for small businesses.
These include merchant cash advance cards, merchant cards, and business lines of credit.
Read the terms and conditions carefully before applying for a card.
Step 5: Set up automatic bill payments
When you get paid, make sure that you send the payment to your business address.
Then, set up automatic payments through your bank to pay other bills.
Step 6: Keep track of your business expenses
Keep a record of all transactions related to your business. Include receipts for purchases made with your business credit card.
Also, keep records of all business expenses.
Step 7: Pay your taxes.
As a business owner, you're responsible for paying federal income tax, Social Security, Medicare, and unemployment insurance (if applicable).
Talk to your accountant or bookkeeper about how much money you owe and what deductions you can take.
You would be a fool to think your local tax regime isn't working with your bank to identify you if you haven't paid taxes.
How to Choose a Bank for Small Business Banking
Choosing a bank for small business banking is not difficult.
In fact, there are several things you should consider when choosing a bank for a small business.
Here are some tips to help you choose a bank for small businesses:
- Look at their customer service. Banks that serve small businesses tend to put customers first. They understand that they need to give you good service so that you continue doing business with them.
- Look at their fees. Fees are important because they eat away at your profits. A lot of banks charge annual maintenance fees. Other banks charge transaction fees. Make sure that the bank charges no hidden fees.
- Look at their products. If you want to do online banking, look for a bank that offers this feature. Do they offer ATM access? What type of accounts does the bank offer? Does the bank offer business debit cards? How easy is it to transfer funds between accounts?
- Look at their website. The Internet is full of information about banks. Use that information to compare banks. Compare interest rates, fees, and services offered by different banks.
- Ask friends and family for recommendations. Ask people who own small businesses for their opinions.
If you're looking for a bank for small business, you've come to the right place!
Open a virtual business account in Hong Kong, completely online, with Statrys today.
Our accounts are built for international SMEs who need to make payments without the headache of dealing with multiple currencies.
Best Banks for SMEs
The following list includes the best banks for small businesses based on our research and experience.
All banks listed below have been recommended by real clients and we recommend them too.
We hope these banks will become your favorite as well.
- Statrys - Virtual Business Accounts for SMEs
Open a virtual business account that fits your needs. Boost your payment options with Mastercard® payment cards, IBAN accounts, and bank-beating FX rates.
Open a virtual Statrys account
- HSBC Commercial Banking
HSBC has over 200 years of heritage in providing financial services to businesses around the world. HSBC’s commercial banking solutions provide an extensive range of products and services designed specifically for the needs of companies across all industry sectors.
- Bank of America
Bank of America's Business Advantage Fundamentals division provides a suite of innovative products and services to support the growth and success of its small business customers.
- Citibank SMB
Citibank's Small Medium Business unit helps small and medium-sized businesses grow through a broad array of products and services including deposit accounts, credit cards, loans, merchant cash advances, and other financing tools.
- Standard Chartered Bank
Standard Chartered offers a wide range of products and services to help small and medium-sized businesses grow and prosper.
Small Business Banking is about giving you the most competitive rates available, offering you the flexibility to manage your money however you want, and helping you reach your goals.
Opening a small business bank account is easy and can be done in just minutes.
You don't even need to visit a branch if you decide to go virtual.
Open a small business account in Hong Kong from anywhere in the world with a Statrys virtual business account today.
Statrys accounts are multicurrency, FX-ready, and built for SMEs only.