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Better bank deals are out there; here’s how to find them

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If you've been frustrated with your bank's service, 2004 is the year to shop around for a replacement, or, at the very least, to press your current institution for more services, especially if you do business with a large bank or community bank.

What's new? Regional and state institutions are offering some of the best deals as they battle to maintain sliding market share.

Examples: KeyBank offers a 1 percent rebate on the principal balance of loans from $10,000 to $250,000 after six months. The origination fee is waived with a business checking account.

Sovereign Bancorp and Banknorth recently launched free business checking. The catch: Each bank limits monthly transactions to 100. After that, Sovereign charges two dollars per transaction. Banknorth charges 50 cents. Other banks are expected to follow. Only one-fourth of major banks currently offer free business checking accounts, according to a study by Greenwich Associates.

Background: Since 2002, state and regional banks have lost 6 percent of their small business market share, according to Informa Research Services. At the same time, community banks recorded a 7 percent increase. Main reason: service.

Meanwhile, megabanks scored a 6 percent rise in small business market share since 2002. Main reasons: product variety and ubiquitous branches. If you feel most comfortable with a nationwide megabank, weigh these stats in making your choice:

• The five institutions with the largest small business market share are, in order, Bank of America, Wells Fargo, Wachovia, U.S. Bank and Bank One, according to a new study by NFO WorldGroup.

• The five institutions with the most loyal small business customers are Sun-Trust, Wachovia, Washington Mutual, Bank of America and Bank One.

Note: When comparing banks, especially small and community institutions, ask about their loan-to-deposit ratio. The higher the ratio, the more willing a bank is to make a loan. A ratio of 50 percent or more is desirable. Also, inquire about the ratio of commercial loans to other loans. The higher the ratio, the less the institution focuses on lending.

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