When you are just starting out with a new business venture, there are rarely any chances of you already being equipped with all the funds required to run the organisation. In the majority of the cases, you need funds in order to finance the initial needs of your firm.
This is primarily because you don’t have a steady business income before you start with your venture. You need money for initial expenses such as investment, your first purchase of raw materials, initial office bills, prepaid expenses and several other costs.
For you to take care of all these expenses, you need an institution to fund you for your needs, and what better institution can you get than a good commercial bank?
Banks have been supporting small business for years. From providing short-term and long-term business loans to advising them in the matters of investment, banks have always been supportive to new businesses.
If you are starting out with a new business venture, commercial banks would help you at every stage. They would serve all your needs- be it as simple as opening a separate bank account as complex as opening a steady line of credit with the bank.
Therefore, it is very important for a start-up or a small business to choose the right bank to take care of their needs. Once you make a wrong call, your finances can go into the wrong hands and your business may have to suffer.
Banks have indulged into several unethical acts of manipulation in the past. People of the UK have still not been able to recover from the damage PPI scandal caused. Even after making a PPI check and complaining against the lenders, majority of the banks have still not paid them their compensation.
All these issues make it more important for a small business to choose the correct bank to fund them and look after their needs. Here are the few most important guidelines for such enterprises in order to choose the most appropriate bank for their company:
Look First For The Features You May Require
A commercial bank has hundreds of services to provide to their customers. They would provide specialised locker facilities. They would appoint a professional financial advisor for your business. They would help you open a separate de-mat account in case you want to invest in another firm’s shares. Many banks also take up the charge of helping young enterprises in making their shares public.
As a business enterprise, you should choose the bank depending on your needs and preferences. If your priority is to gather funds to gain fixed assets, go for a bank that would provide your business with long-term finance at best rates.
If your business would need more funds to finance your working capital, look for a bank offering the best rates for overdraft and short-term loan facilities. This would help you in targeting only the banks that would serve your purpose and you can therefore make the most out of them!
Don’t Forget To Re-evaluate Your Business Needs
Once you have chosen a bank for your business, it is not necessary to stick around with the same bank for the rest of your business’ life. It is always advisable to re-evaluate your business and its needs after every few years and if you feel that your current bank is no longer serving your purpose, you can change the bank as well.
For example, you might need more funds to acquire fixed assets such as machinery and land when you started the business. You chose a bank that gave you the best rate for long-term finance and paid back the loan in a few years. Now, on re-evaluating your business, you may find out that you now need more working capital.
In such a situation, it is advisable to switch your bank if there is another bank helping you with short-term loans at a good interest rate.
Compare Banks Before You Zero In
Never settle with the first bank you deal with. Every bank will have smart and encouraging executives who would lure you into signing up with them. However, it is always a wise decision to approach multiple banks before choosing the one that suits you the most.