After a decade of stagnant returns, bank profitability hit a 14-year peak in 2022. As a result of the pandemic, rising interest rates, inflation, and other factors, demand for business banking products have skyrocketed.
Business banking products are financial services and products provided by banks and are specifically designed to help businesses manage their financial affairs and grow. While business banking products include a plethora of financial tools, the most widely used of these products include checking and savings accounts, credit and debit cards, and loans.
Similar to personal checking accounts, business checking accounts are used for everyday transactions like purchases and payments. However, as business checking accounts are designed for businesses rather than individuals, they may have higher transaction limits, multiple signers, and other features that are useful for managing business finances.
Savings accounts, on the other hand, allow businesses to save money and earn interest on their deposits. Savings accounts are an important tool for businesses as they generate passive income and act as a financial safety net for unexpected expenses. Some business savings accounts may offer higher interest rates or other perks, such as the ability to manage multiple savings sub-accounts for different purposes.
Business credit cards
Business credit cards are another common type of business banking product and are used to pay for business expenses. A business owner can use their credit cards, repay the balance, and use it again. Credit cards often offer rewards, such as cash back or points, for business-related purchases, and users are able to generate more rewards the more they purchase. Some business credit cards may also offer additional perks, such as extended warranty protection or access to airport lounges.
Loans can include traditional term loans, which provide a lump sum of money that is repaid over a fixed period of time, as well as lines of credit, which allow businesses to borrow money up to a certain limit as needed. Business loans are commonly used to finance larger business investments, such as purchasing equipment, expanding operations, or financing short-term working capital needs.
There are many different types of business banking products available, and the right product for each business depends on its specific needs and financial circumstances. By understanding the various options and working with a trusted business bank, businesses can successfully leverage the financial tools and services they need to thrive.
Boundless helps business owners learn about traditional and alternative financial products that can support business operations.