Business and personal banking may share some features and account types, but the offered services for business banking needs is expanded with solutions that will assist businesses with their day-to-day operations and longer-term projects.
Business Banking vs. Personal Banking Defined
Business Banking provides a wide range of services for small-medium businesses in order to assist with managing transactions and products to help set them up for success. The offered products go beyond business checking and savings accounts to include a variety of tools to help simplify life and protect their organization. These services extend to payroll services, fraud protection and cash management solutions. Customized lending options are also offered to small businesses to assist them in purchasing commercial real estate and equipment, as well as provide lines of credit to be used on working capital expenditures. At Community First Bank we are a preferred Small Business Administration (SBA) lender, allowing us to help small businesses obtain funding when they are unable to get conventional loans.
Personal Banking involves products and services that assist in managing personal expenses and financing personal assets such as vehicles, recreational vehicles (RV, Boats, and Motorcycles), and homes.
Unique Banking Needs of Small Businesses
At a minimum, small businesses should have their own business checking and savings accounts, along with being enrolled in business online banking, allowing the business to monitor financial activity anytime. Even sole proprietors should have separate bank accounts to distinguish personal and business expenses. By following this best practice, you’re not just safeguarding your personal finances; you’re also simplifying the process of tracking your business expenses for your annual tax return, something your CPA will greatly value.
As your business experiences growth and sees a rise in monthly banking activities, it signals the necessity for an expanded set of banking services. Numerous banks offer a diverse array of customized products and solutions to address your specific needs. These solutions may include Cash Management services like ACH origination, wire transfers, merchant services, positive pay, remote deposit capture, and business mobile deposit. Additionally, you have the opportunity to explore various options such as credit cards, debit cards, seamless QuickBooks integration, Health Savings Accounts (HSA’s), and a wide range of business loan offerings.
The Importance of Effective Business Banking for Financial Management and Growth
Our personal and commercial bankers are ready to review the full spectrum of business banking products with you and your business. This means they are here to work with you to customize our financial tools to best fit you and your business’s needs, allowing you to have more time and flexibility to focus on your customers and growing your business. For example, our Cash Management services allow small businesses to process employee payroll, provide ACH debit and credit origination services, and set up an automated system that is able to reconcile your account daily to help prevent fraud. All these products simplify your banking and simultaneously help establish or maintain a strong business credit history with the Dun and Bradstreet bureau.
These services will contribute to ensuring that your suppliers and vendors receive timely payments, thereby enhancing your business’s credit profile and fostering strong relationships while establishing creditworthiness. Furthermore, it’s common for many CPAs to request access to your business bank accounts, enabling them to maintain your financial records and keep them current. It’s important to note that your CPA would have view-only access and would not be able to initiate or modify any banking transactions.
Acquiring Business Loans
Usually, banks will require a small business to have at least 24 months of operation before applying for a loan. This allows the bank to analyze your business’s historical financial performance to determine if the business has been able to generate sufficient cash flow to repay the requested loan. In addition to maintaining your business accounts, keeping them current and in good standing, the status of your personal finances and credit score (score of 680 or higher) will be reviewed before a final decision is made on your loan request. The following is the basic information you should have prepared when applying for a small business loan:
- Completed Business Application
- Two to three years of business tax returns
- Two to three years of personal tax returns
- Year-to-date financial records, including both a balance sheet and profit and loss statement
- Your personal financial statement
- Collateral being offered to secure loan
There will likely be additional financial information your lender will request, but having this information on hand from the start will speed up your timeline to a decision on your loan approval. In addition to providing this information, you should be able to understand your business’s financial situation so you can answer questions regarding trends in revenue, cost of goods sold, and expenses. The more prepared you are when meeting with your banker, the better!
The following are the different loans available to small businesses:
Commercial Real Estate
- Owner Occupied
- Investment Real Estate
Lines of Credit
- Revolving or Non-Revolving Line of Credit
- Medical Professional Line of Credit
- Secured or Unsecured Line of Credit
Equipment Loans
- Commercial and Fleet Vehicles
- Furniture, Fixtures, and Equipment (FF&I)
Small Business Loans
- SBA Express
- SBA 7(a)
- SBA 504
Once a business becomes approved and obtains a loan, the borrower(s) must provide annual tax returns and, in some cases, provide monthly or quarterly in-house financial statements. These documents serve the purpose of enabling the bank to gain deeper insight into the financial well-being of the business and further nurture the banking relationship.
What sets Community First Bank apart from other financial institutions is our single-layer decision making and commitment to providing a first-class experience. Being the only locally owned and operated bank within our community means that our decision-makers are residents of the Tri-Cities area. This local presence provides us with the flexibility to offer personalized banking and lending solutions tailored to the needs of both individuals and businesses.
Our aim is to extend beyond traditional banking; our mission is to be Your Financial Partner for Life Whether it involves optimizing cash management, growing your business, securing home financing, or setting up 401(k) services for your employees, our team of seasoned experts is dedicated to partnering with you every step of the way.
Contact Community First Bank | HFG Trust to explore small business banking services tailored to support the growth and success of your business.
Jesus Melendez
Business Banker
