A startup company needs funds to build their business, and there are plenty of ways for a founder to collect the needed funds. For some founders, friends and family make great sources of investment capital. Others will turn to crowdfunding sites such as the Best business start up bank account. However, if you’re looking for a more substantial financial commitment from an institution, then it’s in your best interest to look into a bank account that is tailored specifically for startups.
The difference between the various accounts
There are many factors that should be taken into consideration when opening up an account with a bank or credit union that caters to startups. For one, you should be aware that some of these institutions have requirements in place for a startup to be eligible for their account. For example, Compass Bank has criteria that includes the company’s potential revenue, how long it has been in business, and its profitability. Another major factor is choosing the right type of account. For instance, Chase provides three different startup accounts:
Chase Business Select Checking
This bank helps businesses with under $1 million in operating revenues grow by offering a premier business checking account and an easy-to-use interface on their online banking platform.
Launchpad Venture Checking
This account is tailored to first-time and young companies looking for a checking option that starts the financial journey right.
Chase Business Checking Plus
This account caters to companies that have significant revenues.
Although these accounts are tailored towards startups, they aren’t necessary to open a checking account. Many popular private banks and credit unions offer startup accounts that include direct deposit and online bill pay options. These can be beneficial as you don’t have to constantly visit a branch for these important services. With the right account type in place, you can focus on other aspects of your company without having to worry about keeping track of banking deadlines and account balances.
The challenges associated with opening an account for startups
There are a number of challenges associated with opening an account for startups, including the amount of initial investment that is required. This can be a concern for founders that are just starting out, as they might not have the funds to open an account with one of the top banks or credit unions. Luckily, there are lesser-known institutions that offer startup accounts that don’t have minimum balance requirements.
Another challenge is the process associated with opening an account at some institutions. For example, you might need a reference from a business associate in order to open an account at Wells Fargo or Bank of America. Fortunately, there are other institutions that do not require references to open an account for startups. However, this could be due to their lesser status compared to these two banking giants.