Small business owners in the U.S. continue to face challenges in obtaining financing from traditional lenders, one year after the regional turmoil caused by higher interest rates and bank failures. According to a survey conducted by Goldman Sachs, about 77% of small business owners are concerned about their ability to access capital, and 28% of loan applicants reported taking out loans or lines of credit with predatory payment terms. The difficulty in accessing traditional forms of credit highlights the lingering impact of sharp interest rate hikes by the U.S. Federal Reserve and the failures of Silicon Valley Bank and Signature Bank in March of the previous year. Several small business owners have reported finding it harder to secure loans from big, mid-size, and small regional banks. Despite the availability of alternative lenders such as fintech firms, some business owners remain wary of turning to non-traditional sources of financing. The survey also revealed that Black-owned businesses face even greater challenges in accessing capital, with a lower approval rate for loans compared to their white counterparts. Additionally, 86% of Black-owned businesses expressed concerns about their access to capital. The tightening of lending standards by banks has contributed to a decline in small business sentiment, as labor costs and slowing sales continue to impact bottom lines. Smaller and regional banks, in particular, have struggled with deposit growth, leading to a cautious approach to lending. As a result, small businesses have had to explore alternative financing options to support their growth.
When it comes to choosing a banking partner, mid-size businesses are encouraged to consider the benefits of working with a local bank. Partnering with a locally owned bank can provide several advantages. Local banks often take a unique interest in the people and businesses they serve, offering highly personalized and customized service. They may also provide lower fees and higher deposit rates compared to larger institutions. Additionally, investing in a community bank directly impacts the local community, supporting local organizations and businesses. Signature Bank, for example, is a local bank in Chicago that focuses exclusively on serving the needs of privately owned businesses and their owners. Having a banking partner that is trustworthy and easy to communicate with is critical for mid-size businesses [b3942983].
In 2024, choosing the right bank account is crucial for startups. Founderbounty.com recently published an article that provides a list of recommended startup business bank accounts. These accounts offer various features such as low foreign exchange fees, payroll and expense management for employees, and versatility in handling different currencies. While some of the recommended accounts are mainly UK-based, they have high trust fund ratings and are well-regarded by customers. Startups can benefit from these accounts to streamline their financial operations and manage their funds effectively [27abeabb].
Small businesses in the United States are also facing challenges in navigating the changing landscape of payments. Main Street businesses, in particular, have been operating with the threat of closure since early 2020. To stay competitive, small businesses need to offer convenient payment options to their customers. Providing diverse payment methods such as mobile payments, buy now pay later (BNPL), and digital wallets can attract customers and retain younger generations. Accepting digital and electronic payments not only reduces the risks associated with handling cash but also minimizes the chances of fraud. Payment processors are encouraged to offer additional services such as banking, credit, marketing, and data analytics to attract small businesses. The payment preferences among small businesses are rapidly evolving, driven by technological advancements and changing consumer behaviors [6635a4fe].
Consumer Reports (CR) researched the apps of five large traditional banks and five online-only digital banking providers to determine the best banking apps. Three out of four Americans use one or more banking apps. Digital banks offer free checking and savings accounts with higher interest rates, while traditional banks offer more features and tools for budgeting and saving. All banking apps have flaws in data protection, with some sharing more data than necessary. CR recommends using FaceID or a six-digit PIN to unlock your phone, enabling two-factor or multifactor authentication on the app, alerting your bank if you lose your phone, and allowing the app to send notifications for every withdrawal or deposit to quickly spot potential fraud [1906bf2c].
Opening a bank account in the United States as a non-resident is now more accessible than ever. Wise and Littio are two companies that offer this service. Wise is a neobank that allows individuals to open a bank account in the US completely online, while Littio is a fintech company that specializes in digital financial solutions. Both companies make it possible for non-residents to open a bank account in the US quickly and easily. All that is required is to identify oneself with an official document like a passport. Opening a bank account in the US as a non-resident provides benefits such as access to credits and tax advantages. It is recommended to explore different options to find the best fit for one's financial needs [1f83233e].