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Home Articles US Legal Sector: Latest Banking Requirements for SMEs

US Legal Sector: Latest Banking Requirements for SMEs

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Special to SouthFloridaReporter.com
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Oct 18, 2021
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    SMEs are a crucial component for economic growth, but banks have been slow to create products that meet their needs. Until recently, business banking has been more interested in the needs of large corporations with their higher profits and bigger loan books.

    According to a recent survey by PWC, small businesses continue to trust their banks (81% of those surveyed) but want a more proactive approach from their banks. According to the report, they cite that they want to see changes in the fees concerning late payments, overdrafts, and other bank charges. Low-interest business loans are also important to 49% of SME owners surveyed. Interestingly, 60% said they want a more open line of communication with their banks.

    Business Banks for SMEs

    Over the last few years, the way banks were regulated started changing through initiatives like Open Banking and the Revised Payment Services Directive (PSD2). These were initially proposed to promote competition within the banking industry, but they also led to a revolution in funding for small and mid-size enterprises. Data has become more important than hard capital, allowing financial institutions to design better products to serve and finance SMEs.

    Small businesses need a business bank account

    Businesses need their own bank accounts because they are the only way for their owners to have limited liability protection. SME owners know that it is imperative to not pierce the corporate veil of their business by using their personal banking account. Therefore, they use their business account to protect their business income and to build business credit, making it easier to qualify for a loan if needed.

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    Choosing a business bank

    Business owners expect their bank to become their long-term financial partners. The bank they choose must meet their business goals and offer several types of business accounts they can choose from. Besides a line of credit, SMEs also look for online bill-pay options, great mobile banking services, employee checking accounts, etc.

    The bank’s location also matters to most SMEs, especially if they need services that can only be conducted by a bank representative. Some business owners expect more personalized service, making a smaller bank a better option. However, bigger banks offer more products.

    Fees continue to be important for business owners, especially service and minimum balance fees. The more transparent the bank is, the better because the business owner knows that there will be no surprises in the fee structure. Good interest rates are also significant.

    Finally, business banking clients expect their bank to offer an excellent customer experience, customizable financial solution services, and a better omnichannel experience.

    Banks meeting unique business needs

    SME owners expect their banks to offer them more than just perks. According to TRUiC, their choice of a bank depends on several other factors, including the type of business they have, their business needs, and bank requirements.

    In the US, SMEs have a choice of several business banks and these offer several products to meet their needs. Banks like Chase Bank still offer the classic bank experience by offering conveniently located brick-and-mortar branches for clients with many cash deposits. US Bank is also a popular choice because it offers a business checking account with no fees.

    Often, smaller business owners dread the monthly service fees charged by some banks. These are a tremendous burden when they are trying to keep their running costs down. Some banks offer very low, or no service fees.

    Navy Federal Credit Union does not charge monthly service fees to business clients but also pays higher interest rates to accounts. One drawback is that only those with military affiliations can join.

    A recent development in the world of banking is online banks. These are especially popular with online businesses that operate 24/7. Some, like BlueVine, charge no transaction fees for most transactions and offer reliable and friendly customer service.

    Small business owners relying on SBA 7(a) loans often opt for a business bank account with Wells Fargo since they are considered the experts at processing them. The bank has 8,700 branches and offers lots of flexibility because it has four different types of business checking accounts.

    Final take

    SME owners selecting a bank have several requirements. Besides low fees and good rates, they also want their banks to provide customizable options and advice, making it easier for them to do their everyday banking. This all helps them to achieve their financial goals as they have more time at hand to grow their businesses.


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      Special to SouthFloridaReporter.com

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