business account - national bank vs state bank vs credit union?

[Jason Hitchcox]

For a new REI business account (LLC), is there an advantage of setting up your business account with a large national bank, or a small state bank, or a federal credit union?
I've already read to avoid BofA. Are there others that should be avoided?
Any specific recommendations (by name) for a good financial institution to use?

[John Mireles]

When most people think of what bank to chose, they think of how friendly the people are, how convenient the branches, the cost of checking etc. But, if you're a businessperson, the thing that should be top of mind is what banks are in business to do: lend money. What you want to know is, will this bank loan you money when you need it?

Banking used to be all about relationships. It is to a small degree and the extent to which it is will vary from bank to bank. It's been my experience that the bigger the bank, the more formulaic their lending practices. With smaller banks, it's easier to form relationships not just with the branch manager but with the actual loan underwriters - the guys who will say yes or no to your deal.

I'm in the middle of refinancing a commercial property through US Bank. One of my tenants is a convenience store - which they view as high risk even though the tenant has been there for more than ten years. My previous lender was a local bank who didn't have such strict guidelines. (Unfortunately, they failed and were taken over by US megaBank).

Smaller isn't always better. I had a good relationship with California Bank & Trust - a medium sized bank. They yanked my line of credit after my divorce and then denied me when I reapplied. F#ckers. I'm looking for a new banking partner now.

Anyhow, I always recommend talking to the branch manager to make an appointment for him to come see you. If he won't leave his office for you, then look elsewhere. Bankers still do make house calls. Let him or her sell you on their bank. Talk to a few and see who is hungriest for your business.

Keep in mind that banks like to give money to people who don't need it. Apply now for a line of credit - especially if you don't need it. If you wait until you do need it, you'll probably be denied. That's just the way the system works.