How to Choose a Banking Institution?

Question

Hi all,

As I set up my LLC I'm wondering how have you gone about choosing which banking institution to bank with? I'm aware that local banks and credit unions tend to be easier with creative lending, but large banking institutions tend to have more ease of access and tend to have user-friendly software. But aside from that, what should I be looking for or questions I should be asking?

Thanks!

For context: I'm starting out with a partner, but I plan to go solo after I've built up the capital to do so (structured as a holding company in my name, with subsidiaries for each property we acquire- some in both our names as JVs, and eventually solely under my name). We live in North Jersey and will be investing mostly in Flips and STRs (with a few BRRR's in the mix as well). Thanks for your help!

Stuart Udis · Answer

Focus on the people, not the bank. Aligning yourself with the right bankers is far more important. I've worked with the same bankers for years.  Along the way I usually pick up a new banking relationship as they pivot to new banks. It's the best way to build banking relationships. Also, the good bankers are far more important than chasing the best terms. With banks, terms don't deviate a lot, but working with bankers who are there for you when issues arise is incredibly important. Investors who solely chase banking terms do not formulate the same valuable relationships.

Theresa Harris · Answer

Start by talking to the banks that you already deal with.

Alexander Medina · Answer

Hey Kevin, I usually look for a bank that balances flexibility for your business structure with ease of access to accounts and reporting. Local banks or credit unions are often better for creative lending, while bigger banks can make transactions and accounting simpler

Josh Lewer · Answer

@Kevin Forsell As others have mentioned, it’s usually best to work with banks you already have a relationship with. It honestly makes the application process quicker since they already have most of your information; you would just need to provide the new business details. Good question.

Cameron Jones · Answer

Hey @Kevin Forsell

As a flipper, I feel it's important to have access to some cash for those emergency purchases out in the field, you can't get that easily with keeping all money online. Using a local bank + bus credit card is effective.

questions to ask are, what are min balance requirements, what is the fee schedule, how good is the online banking, does it cost anything to use online bill pay, does it integrate with QuickBooks (or your accounting software), etc

Chase is great, I use them for my bookkeeping business. One thing to keep in mind are minimum balances. Lowest Chase bus checking account has a daily min balance of $2000 to avoid service fees. If you can't keep that bal, then it might be annoying eating that fee. Chase online is incredible.

american express has online business banking with no balances, no monthly fees, and have good promos for new account holders, just note they're online only.

You definitely want a business credit card with cash rewards. Chase Ink business is among the best. Use it to pay for all regular purchases, pay the statement balance by the due date, get all the rewards, pay 0 interest, build bus credit.

Make sure your LLCs each have their own accounts and do not comingle.

How to Choose a Banking Institution?

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