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Should I use a local or national bank for my business?

There are many differences between a national bank and a local. Which you choose depends on your businesses needs and what is important to you. Here are the five differences and some information about each to help you in your decision.

The first is customer support. Large national banks have a less personal approach to customer support but may also have more branches for your banking transactions. Local banks have a more personal feel to them you could even get on a first name basis with the manager of a local bank much more quickly than with a large national bank. Local banks change their policies more readily to meet the needs of the local customers. One draw back for local banks is there are fewer locations to do your banking. As the old saying goes it's not what you know but who can also apply to banking. Usually the local bank is prominent people in your community who would be good networking contacts for your business.

The second is services. Most national banks have gone to website banking and 24 hour account balance and transfers. Many local banks are open to these services as well if they are informed it is important to their customers. Changing services or policies is very hard to do in a national bank chain, there are too many people in charge and getting to all of them is unlikely. Increasing their services is unlikely unless there is a general customer need expressed across the nation. But with a small local bank it is very likely you could talk to the president of the bank and really make changes based on your needs if it is in the best interest of the majority of the banks customers.

The third is interest rates. Most local banks to be competitive have lower interest rates than national banks. It could save you money to go through a local bank for loans. Local banks usually have their loan officers in house and have answers more quickly because there is less transfer of information. They are also anxious to have your business because they have a smaller customer base from which to generate their loans.

The forth is community advertising and activities. Local banks with local boards and managers have access to local community activities and needs. Supporting them is a great way to stay involved with your community and gain customers from the prominent members of the community. The networking that you can do with a local bank is not possible with a national bank. National banks don't have the access to the community that local banks do.

The fifth is investment opportunities. Usually you can invest more readily in your local banks and be part of the operating and decision making body for a local bank giving you more control of the things happening. If a local bank is bought out you would either be offered the same shares of the bank purchasing it or have your shares purchased at the time of the buy out. Either way your investment is usually safe.

The sixth is name recognition. Large national banks have the name recognition and trust factor. This could be a benefit you are looking for name recognition or could just cost you more.

You need to measure which things are the most important to you. Figuring the discounts if any that a bank will give you for getting all your services from them. If there is no discount than maybe you should have several banks each meeting different needs for your business. You don't have to be loyal to only one bank unless it is good for your business

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