June 24, 2019

3 Effective Ways Financial Institutions Can Support Small Businesses

Relationships | Technology | Loans

Small businesses depend on financial institutions in a number of ways, especially in the early stages of operating. One of the most common ways these businesses need help is in the form of checking accounts or other simple tools that help keep finances organized. However, fees and other restrictions can become a deterrent or inconvenience for business owners. To attract and keep small business customers, it can be important to optimize the way you handle customers and the types of services you offer them.

Small Business Needs

Most businesses need access to basic services such as a checking account, credit cards, payroll services, and loans. It’s helpful for a financial institution to have a streamlined and convenient process to offer these core banking services to prospective business customers. Your bank can increase profits from business accounts by improving your processes in services such as loans, and by offering small businesses all the banking services they need. You’ll also save time for the customer if they don’t have to go elsewhere. This will make the relationship more attractive for both parties.

Many of the most frequently asked questions by small business customers are related to the processes for obtaining credit and loans. High interest rates or an intensive process for vetting customers for loans and credit can turn small businesses away. They may not want to deal with these administrative headaches, in addition to the responsibilities they have with running their daily operations.

Why Are Some Banks More Attractive than Others?

Some banks just make it easier for small businesses to work with them through various perks such as low fees and better rates. Things like minimum balance fees or limits on transactions will frustrate many business owners if they feel like they are wasting money to maintain an account or complete normal transactions. Some larger banks such as Wells Fargo and SunTrust are consistently ranked as the best for small businesses due to minimal fees, an easy process for SBA loans, and diversity in the kinds of services offered to customers.

However, the size of a bank can also be important. Some people are willing to sacrifice the small conveniences and better technology associated with a larger national bank to develop a stronger relationship with a small group of people at a local institution. Improved customer service can lead to better retention and more long-lasting relationships. Research has found that even minor improvements in customer service can greatly affect a bank's bottom line.

Encourage Them to Do Business with Your Bank

Many banks now offer incentives like cash bonuses for opening an account or partnerships with local companies to offer discounts on things that may help a business, such as insurance. Customers now also expect technology to be used in ways that simplify many of the most common types of banking transactions. Credit or debit cards that offer cash back or other rewards have also become popular recently.


At the end of the day, your financial institution should provide incentives that make small businesses want to work with you. These incentives can include a combination of avoiding restrictions that cost business owners valuable time and offering bonuses that legitimately help these customers. Whatever you decide to do, be sure that it makes sense for both your bank and the customer.

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