Does Your Business Need a Business Savings Account?

Guaranty Bank & Trust

July 9, 2020

Does Your Business Need a Business Savings Account?

When it comes to your business, the thought of holding funds back for savings may seem like a luxury you simply cannot afford. But, establishing a business savings account is a smart strategy. This is smart for not only building a solid foundation, but also fueling your business for growth. Here we look at the benefits of saving, and what to look for in a business savings account.

Why save?

Savings for businesses provide the same benefit as personal savings – they can tide you over in the case of emergencies. A well-funded savings account provides a liquid asset you can draw from during downtimes and to insulate your business to cover unexpected costs. In addition, a business savings account can provide other benefits you might not have considered.

 For starters, it can position your business for growth. To take advantage of new opportunities, businesses must think big, with long-term plans and projects. They need to think past immediate expenses and have a vision for where they want to be 10, 20, or 30 years from now. To be ready for this type of growth, a robust savings account is needed. A lot of businesses are only able to forecast weeks or a few months into the future based on limited resources. With money in savings, you can look well ahead and be ready to act on opportunities your competitors may not be able to.

Also, when lean times hit, many businesses will falter, and that makes them an ideal target for acquisition. If you have invested in a business savings account, your business will not only thrive through financial hardships, you will also be in a position to grow your business by acquiring struggling ones. You can turn competitors into a growth platform, acquiring companies, product knowledge, and intellectual property. And, being able to withstand and continue to thrive through financial difficulties adds to your value and your business reputation.

Having funds in savings can bolster longevity, which looks good to potential funders. This means when you are ready to act on opportunities, you may be more likely to get additional financing through a commercial lender.

Another benefit is that an ample business savings account gives you the financial ability to give back to your community in the form of donations, sponsorships, and partnerships. This can position your business favorably in the eyes of staff, clients, and customers. It can also help you develop your brand of being generous, responsive, and community-minded.

What to look for in a business savings account

If you are ready to take the next step and open an account, there are several features to consider:

Incentives. Although it’s important to pick an overall banking partner you trust, there is a lot to be said for banks that want to earn your business and incent you to come on board with them. To that end, check online for local banks advertising cash bonuses or incentives.

Monthly fees. Review the terms and conditions thoroughly and make sure you have a solid understanding of the account. Avoid accounts that come with monthly fees or that charge for too many withdrawals, having too low of an account balance, or for transferring funds between accounts.

High-yield interest rate. You’ll want to look for a business savings account with a high annual percentage yield, which determines how much interest your savings will accumulate. Guaranty Bank Savings accounts offer monthly compounding interest if the account has the minimum balance available.

Minimum account opening deposit. Guaranty Bank has a couple of options, the Guaranty Prime Investment Account has a $20,000 minimum opening deposit and the Commercial Money Market has a $1,000 minimum opening deposit.

Minimum balance requirements. Based on the type of account you choose there is a minimum balance in order to avoid the monthly maintenance fee at Guaranty Bank.

Maximum withdrawals. The purpose of a savings account is to save. Based on this, depending on the type of account you have there is a limit to the number of withdrawals you can make on a monthly basis before extra fees kick in. Before you open a savings account, have a realistic idea about when and how often you may need to access it. If you plan on accessing savings from an ATM, make sure you have that option and remember, many Guaranty Bank does not charge fees for using their own bank ATMs.

Wire transfers. Another service to look for in a business savings account is the ability to send and receive wire transfers, including international transfers. Some banks may offer a certain number of free transfers every month, but then charge an additional fee. If you plan to fuel your account with regular wire transfers, this is an important feature to ask about.

Online banking. A final thing to consider is the ease and access to online banking. This is especially important if you’ll also be opening a business checking account where you’ll want to go online regularly and pay bills, transfer funds, or check your account balance. Online banking gives you visibility into your account wherever you have an Internet connection. Some banks also offer a mobile app that can make the online banking experiences even more conducive for accessing information on your phone. While this kind of ready access is not necessarily a must for a business savings account, it can be helpful if you have remote business partners who share your accounts or business locations that are far from your physical bank.

Saving is always a good thing, and that is exceptionally true for business owners. A robust business savings account and plan can be an essential tool for getting your business through lean times and positioning it for future growth. The trick is knowing what to look for, reading the fine print, and making sure you are investing in the right account for your operations.

At Guaranty Bank, we want managing your money to be as simple as possible. Please reach out to your local banker if you haven’t taken advantage of any of these services that we offer yet and would like more information.