Owning your own company means making lots of decisions. We made deciding on a bank easier by picking the five best banks for small businesses. This was originally published on The Penny Hoarder, which helps millions of readers worldwide...
If you’ve started your own company — or you’re considering the move — you’ve likely marveled at the logistics required to pull it off.
Popular first-time small business owner (SMB) questions include:
How do taxes work now? What do I need to know about buying health insurance? What exactly qualifies as a business expense?There are many changes when you run your own show. And when you become a business owner, your banking needs to change, too.
That’s right, you need a business account.
Since vetting banks and business checking accounts probably isn’t how you want to spend your time when you’re self-employed, we did the leg work for you. But first, let’s cover some basics.
What is a Business Bank Account, and Why Do You Need One?
A business bank account is where you keep your money for the company. It’s an account used specifically for the business — so, separate from your personal checking or savings accounts — where you hold your earnings, pay for related expenses (supplies, vendor services, utilities, etc.) and more.
Keeping these transactions separate is helpful come tax time. If you choose to apply for a business loan (some banks require you to have an account for a designated time period) or relief funds down the road, you’ll also need an account to share your financials and house the money.
No matter how big or small your operation is, it’s strongly recommended that you open a business bank account. At a minimum, a business checking account; it’s a good way to stay organized, period. You want a place to keep track of all the money coming in and out of your business and have a clear-cut record of your finances.
Banks for Small Business Owners
Most major banks offer business accounts, as well as many credit unions. You can opt to open an account with an online-only bank or solely brick-and-mortar institution, or choose one that offers a hybrid model.
If your personal bank offers business bank accounts, that might incentivize you to open an account with your current organization — but run the numbers first. While you may have access to the merchant services you’re accustomed to and be able to link accounts (and seamlessly transfer money from your business bank accounts to your personal checking account, for example), there may be higher transaction fees or hidden costs.
You have lots of options when it comes to banks for small business, so do some research.
Common Types of Business Checking and Savings Accounts
Like with personal accounts, you have many options when it comes to choosing a business bank account. Here are the basics when it comes to business banking:
Business Checking Account
Some banks, specifically larger ones, may offer a variety of business checking accounts. Depending on factors such as your daily minimum balance, the number of transactions performed in a month and the amount of services you need, you can choose a checking account to fit your needs and budget.
Business Savings Account
You can select this type of account to build cash reserves and earn interest on your money. And similarly, some banks offer more than one type of account (ranging in monthly maintenance fees) based on how much money you plan on saving and the number of transactions you make in a month.
Business High-Yield Business Savings Account
With this type of account, you have an opportunity to earn higher interest rates on your money. Typically, there is a higher minimum deposit required and tighter restrictions around the number of monthly transactions allowed for this account.
Many banks offer business loans and business credit cards (more on those next) and certificate of deposit (CDs). You also want to keep an eye out for new-business-account bonuses (usually in the form of a couple hundred dollars) for owners just opening their account.
There’s no one “best bank for small business,” so it’s important to take inventory of what you want and need when it comes to business banking. With that said, keep reading for our picks for the best banks for small business owners.
How We Picked the 5 Best Banks for Small Businesses
There are several angles you could take to determine the best bank offers, depending on the business needs of your company. To help you choose the best banks for small business, we focused on three banking services:
Small Business Checking and Savings Account Options
We looked at balance requirements, (monthly) fees and transaction and deposit limits.
In general, it’s a good idea to look for business bank accounts that offer the following:
A low minimum balance requirement A low monthly maintenance fee (or one that can be easily waived) Minimum monthly service fees (bonus for no monthly fees!) Free business checking A business debit card Free cash deposits (at least up to a point) Online banking Mobile banking (an app) Online bill pay Payroll servicesUnlimited and free transactions (or banks that offer a reasonable limit for your needs) are also good to look for. Related, if your small business is verging into medium-sized-business territory, you might be eligible for free XYZ until you reach a certain limit. In that case, it may be worthwhile to move up to the next business checking account level to match your needs.
Small Business Lending
There are three main ways you can borrow money for your business. We compared what banks offered across these three categories:
If you’re a qualified small business owner, you can take out SBA loans, which are backed by the Small Business Administration and, as a result, come with lower interest rates. You can also secure a business term loan, which operates in the same way as a personal loan. You can secure a business line of credit, which can provide you with flexibility if you’re not sure how much money you need.Business Credit Cards
While we don’t advocate spending just to get credit rewards, there’s no reason to leave perks for your existing expenses on the table. We looked at the annual fees, interest rates and perks each bank offers with their small business credit cards.
Your needs may be more complicated, but they likely include these basic merchant services. So here’s how the best small business banks stack up.
The 5 Best Banks for Small Business Owners
Because we’re talking to SMBs about business savings and business checking accounts, we leaned into information specific to that audience. Meaning, we focused more on banking services that cater to those just starting out and whose cash flow might not be cracking six figures yet.
To be clear, none of these companies paid The Penny Hoarder to make the list. And a reminder: We don’t know your business finances or your cash flow like you do. The best bank for your small business is going to depend on your specific situation.
Now, here are our five favorites.
1. Wells Fargo: Best Overall Bank Account for Small Business Owners
If your business can keep a reliable daily balance, Wells Fargo’s business accounts come cheap.
With over 4,900 brick-and-mortar locations and 13,000 ATMs across the country, the other appeal is convenience. Customer service is around the clock, and you can handle all your business banking needs in one location.
Business Checking and Savings Accounts
It will only cost you $25 to open an Initiate Business Checking account at Wells Fargo. The account comes with:
A $10 monthly service fee that’s waived if you maintain an average balance of $500 over the month 100 free transactions before you incur a transaction fee $5,000 in free cash deposits per monthThe Business Market Rate Savings Account also includes a $25 minimum opening deposit. The account comes with:
A $5 monthly fee that’s waived if your average balance is at least $300 20 free deposited items each month $5,000 worth of free cash deposits each monthSmall Business Lending
Wells Fargo also offers unsecured business loans for various business purposes. At a glance:
Loan amounts range from $5,000 to $100,000 Terms range from one year to five years, with no scheduled annual review Fixed interest rates start at 1.75%If you need financing for a business vehicle or equipment, you can apply for Business Equipment Financing as well. Details vary depending on the industry, equipment and services.
Business Credit Cards
Wells Fargo’s small business credit cards offer:
1.5% cash back on every $1 spent A sign-up cash back bonus between $300 and $500, depending on the card you apply for The Wells Fargo Business Platinum card offers 0% interest for the first nine months — after that, APRs range from Wells Fargo Prime (3.25%) plus 7.99% to 17.99%2. Capital One: Best for Low Fees
You can likely guess that the “credit cards” category landed Capital One on the list, but the checking and savings account options are worth a nod as well. If your main priority is credit cards, Chase may beat Capital One out, but if you’re looking for comprehensive service (read: better savings and checking options), read on.
Business Checking and Savings Accounts
With Capital One Spark Business Basic Checking, you get the following:
Unlimited business transactions Free cash deposits up to $5,000 each month with no fee Online and mobile pay, mobile deposits and online bill payThere is a $15 a month fee to maintain the account, but you can waive that by having a $2,000 minimum balance for 30 or 90 days.
With Capital One Business Advantage Savings, you:
Only need an opening deposit of $250 Get a promotional interest rate guarantee for the first year (0.20% APY for 12 months) Can have six free withdrawals a month Free Capital One ATM usageThere is a $3 monthly fee, but it’s waived with a $300 balance.
Small Business Lending
Capital One offers equipment loans, business installment loans and lines of credit that start at $10,000. Loan term lengths and repayment terms vary.
Business Credit Cards
Capital One offers three business credit cards and includes information upfront about the credit score you need to possess to qualify for each one. Here they are at a glance:
The Spark 1% Classic card requires a Fair credit score and offers:
1% cash back on all purchases No annual fee Free employee cards with spending limitsThe Spark 1.5% Cash Select card requires an Excellent credit score and offers:
1.5% cash back on all purchases A $200 cash bonus if you spend $3,000 in your first three months 0% APR for the first nine months; 13.99% to 23.99% APR after that No annual fee Free employee cards with spending limitsThe Spark 2% Cash card requires an Excellent credit score and comes with:
2% cash back $95 annual fee Free employee cards with spending limits
3. Chase: Best Credit Card Offerings
As another “big four” bank, Chase Bank offers familiar perks: a reliable brand and enough resources to keep things convenient. Chase Bank has 4,700 branches and 16,000 ATMs across the country, and its customer service runs around the clock as well. But Chase’s credit card offerings are particularly worth noting.
Business Checking and Savings Accounts
The small business checking account, Chase Business Complete Banking, comes with:
A $15 monthly fee that’s waived with a minimum daily balance of $2,000 100 free transactions each month Same-day deposits into your Chase Business Complete Banking account for no additional feeChase’s Business Total Savings charges $10 per month, which is waived if you maintain an average balance of $1,000.
Small Business Lending
Chase offers a variety of small business loans. Here are the details:
Loan amounts start at $10,000, with varying interest rates Terms range from 12 to 24 months Lines of credit up to $350,000 are also available through Chase’s SBA ExpressBusiness Credit Cards
You probably hear the name Chase and think of credit cards, so it’s no surprise that its offerings in this category are robust — in fact, they’re why Chase made the cut.
The Ink Business Unlimited and Ink Business Cash cards come with:
No annual fee A $750 cash back bonus if you spend $7,500 in your first three months A 12-month introductory period of 0% APR APRs ranging from 13.24% to 19.24% after the first 12 months (the average business credit card APR is 15.37% as of June 2019, according to ValuePenguin)While the Ink Business Unlimited will give you 1.5% cash back on all purchases, the Ink Business Cash earns you 5% cash back on select categories.
If you’re willing to pay an annual fee of $95 for the Ink Business Preferred card, the perks go up from there.
4. Axos: Best High-Yield Savings Account
The checking and savings offerings fall short of Capital One’s and Wells Fargo’s, and there are no credit cards. But if you’ve been in business for a few years, are looking for more substantial lending and don’t have a considerable sum of transactions each month, it’s worth a look.
Your money will earn a high APY, but you’ll have to earn your fee waiver.
Business Checking and Savings Accounts
The Axos Basic Business Checking account requires a $1,000 minimum opening deposit and comes with:
No monthly maintenance fees Visa debit card 200 free payments and cash deposits each month — after that, you’ll pay 30 cents per transactionIf that minimum opening deposit is a deterrent, you may consider the Business Interest Checking account instead. The account only requires a $100 minimum deposit and comes with:
0.81% APY — considerably higher than most accounts A $10 monthly maintenance fee that’s waived if you maintain an average daily balance of $5,000 50 free payments and deposits each month; after that, you’ll pay 50 cents per transactionAxos Business Savings requires a $1,000 initial deposit. The account comes with:
0.20% APY $5 monthly fee if your average daily balance is below $2,500Small Business Lending
Axos also offers lines of credit and commercial loans. Both require your business to have been in operation for at least two years.
Lines of credit and commercial loans start at $250,000 Line of credit terms are generally one-year terms Commercial loans offer three-, five- or seven-year termsBusiness Credit Cards
Axos does not offer credit cards.
5. Navy Federal Credit Union: Best Credit Union
You’re a small business owner now. Maybe you don’t want to do business with a multibillion-dollar corporation.
If that’s your speed, a credit union like Navy Federal might be right for you. These member-owned nonprofits can provide a comfort and familiarity that the big four can’t offer.
Full disclosure: The perks are not going to match the big four. Membership is also not available to everyone. Only veterans, active-duty military, employees of qualified government agencies and immediate family of Navy Federal members can apply to this credit union.
Business Checking and Savings Accounts
Navy Federal’s Business Checking account comes with:
Free starter checks No monthly service fee Navy Federal GO BIZ™ debit card 30 free non-electronic transactions — after that, you’ll be charged 25 cents per transactionNavy Federal also offers money market accounts that begin paying dividends at $2,500.
Small Business Lending
Navy Federal offers the following small business lending options:
Secured and unsecured business loans starting at $35,000 Term length can match borrower needs Annual fee of $325 for equity up to $100,000Business Credit Cards
Navy Federal offers credit cards from Visa and Mastercard. The details:
No annual fee or foreign transaction fees You’ll earn one rewards point for every dollar you spend Interest rates start 5.99% (but will fluctuate)Honorable Mention: BlueVine
To be clear, BlueVine is a fintech company, not an online bank (The Bancorp Bank provides banking services). While it doesn’t offer credit cards, you can get a business debit card. And BlueVine offers something you can’t find with most banks: 1.0% interest on your business checking balance up to $100,000.
BlueVine’s free business checking account has no monthly fees, no monthly transaction limits and no minimum balance requirements. You can pay vendors and bills by ACH, wire or check and set up recurring payments. You can also apply for credit lines up to $250,000 with rates as low as 4.8%.
BlueVine is FDIC insured and its online-only structure could mean convenient mobile banking for you. If a brick-and-mortar location isn’t a top priority, add this one to your list.
Check out our current list of bank promotions for a chance to gain a monetary bonus when signing up for a new bank account.
How to Choose the Best Small Business Bank Accounts
You have many options when it comes to small business bank accounts. And your mileage with different banks and business checking accounts will vary depending on your wants and needs.
Ultimately, only you can determine the best business bank account for you and your business.
Do you want to use the same bank for your personal account, for example? Are you willing to step outside of the free checking options to earn more perks? Are you holding out for a debit card you can put your dog’s face on?
No matter what’s on your checklist, the options listed here should give you an idea of where to look next. If Wells Fargo and Chase were catching your eye, for instance, it might be worth comparing offerings from other big banks like Bank of America and Citibank as well.
And if you like the idea of Navy Federal, search for credit unions in your area to compare. If your small business is location-based and caters to a local client, working with a neighborhood credit union might benefit you in other ways a bigger bank cannot.
The right bank for your business and personal finances is out there. You’ve just got to hunt it down.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.