David Meinert, owner of several Seattle businesses, including 5-Point Cafe, Big Mario's Pizza and Onto Entertainment, recently switched his business accounts from Bank of America and Chase to Seattle Bank. He says many small-business owners he knows are following his lead -- they have also been wanting to make a move but were just waiting for someone to point them to a good local alternative. So if you're fed up with the big guys and ready to transfer to a small bank or credit union, how do you find the right one? Attorney, author and small-business advocate Barbara Weltman provides these tips for a smooth transition:
Get referrals. Not all small, local, regional, community banks are created equal. Ask your circle of friends and associates for referrals. "Just as you would for finding a good doctor, lawyer or insurance agent, you have to ask around to find a good banker," Weltman says.
Beyond your immediate circle, be sure to also ask around at networking events. It helps that small banks are out there looking for you, too. "I've met a number of small-business bankers at local networking events," Weltman says. "They want new customers."
Research the fees. "Let's face it -- banks have to make money, so you're going to have to pay one way or the other," says Weltman. "Obviously, there are monthly costs you want to assess -- checking fees, check cashing fees, ATM fees, payroll deposit fees, direct deposit for employee payroll checks, business credit cards. They have a complete menu of banking services. You want to know exactly what it's going to cost you." Also, if you're planning on joining a credit union, ask whether they charge membership fees.
Ask about small-business programs. "A lot of banks want to attract small business with special features," Weltman says. Ask about low fee or no fee checking.
Communicate and negotiate. "If the reason you're moving is access to credit, it's better to have that talk upfront and to come clean for the reason you're making the change and share some financial information, to be sure it's really going to happen," says Weltman. The good news: "Because the small banks and community banks are more interpersonal, a lot of these features are more negotiable," she adds. "Ask 'what can you do for me?'"
Visit in person. Though a lot can be done online, Weltman says, "I'm old-fashioned. I think pressing the flesh makes a difference." Also, remember that one of the major benefits of banking with a small bank is the opportunity to have a personal relationship, so seeing how you click with the banker should be an important consideration.
Be patient. As tempting as it may be to stage a quick exodus from a big bank to send a message, making the switch may not be as simple as closing a Netflix account. Weltman says the actual changeover may take about three months or at least two checking statements. "Make sure outstanding checks have cleared," she says."It may take a while. It's not so much that it's complicated -- it's just a matter of making sure everything has cleared before you close up the old accounts." As a result, she warns you may have to pay duplicate fees for any period of overlap.