A Tale of Two Banks – Or Why You Need a Business Bank

One piece of advice I regularly give business owners is to find a business bank to bank their businesses and to get to know someone at that bank. The responses I get typically include “Well, I use one of those big banks for my personal banking so it’s more convenient” or “I don’t need a lot of banking services so a I don’t need a business bank.” Like most things in life decisions have consequences and, in my opinion, using big consumer-oriented banks to bank your business, such as Chase, can have consequences and some of those consequences cause problems. So, let me give you a few examples.

One of my clients banks with American Business Bank. Recently we needed to add a check signer to the account. To do so we called our account manager. He had one of the staff at the bank send us a form called a CIP Information Sheet. We completed the form and emailed the form along with a copy of the new check signer’s ID to the bank and the new check signer was added.

Another client of mine, who banks with Chase, also needed to add a check signer. The president of the company was required to go into a branch and speak with a clerk to add the new check signer. However, before the new check signer became active on the account the new check signer also had to go into a branch and meet with a bank clerk. And that had to be done within 30 days. As it happened, the new check signer was busy and then traveling and ended up coming into the bank on day 32. Sorry, that person could not be added to the account until the president of the company went back into the bank and met with another bank clerk. Apparently, Chase thinks that company presidents have nothing better to do.

Another client of mine ($30 million company), who also banks with Chase had an instance where the owner of the company used the company bank account to pay $1,000 to his cousin using one of those apps like Venmo. The bank thought it was fraud and put a hold on the company’s business account. Chase insisted that the president come into a Chase bank and show his ID to get the account back up and running. The problem was the owner was on vacation visiting relatives in the rural Midwest. No amount of pleading with the Chase “account manager” would get the account open. The owner, in the middle of his vacation, had to find a Chase bank (many, many miles away) and drive to the bank to get the account back open so we could use it. We came within minutes of not being able to issue paychecks to some 80 employees. If this were a movie you would have called it a “nail biter.”

That same client wanted to change its address as the business was moving. Our Chase account manager said the only way to change the mailing address was to go into a Chase branch, so the president had to make another trip to the bank. Meanwhile that same company has a backup bank account at a business bank. An email to the account manager at the business bank got the mailing address changed.

Perhaps the most devastating situation was a client of mine that had several business bank accounts and credit cards with Chase, and one day received a letter stating that Chase no longer wished to do business with that company but provided no explanation as to why (the company was in the real estate business). I found this situation so extraordinary that I started to do some research on Chase closing accounts and was amazed at what I found. Apparently, Chase has been closing accounts of conservative activists, companies engaged in bitcoin services, adult entertainers, and many other companies. There is even a whole Facebook page devoted to people discussing their business accounts being shut down by Chase. The worst is that Chase gives no reason for shutting down the accounts, and most of the time calls and letters to the bank trying to figure out why get no response.

To me it is a little creepy that a bank can decide to close your bank account because someone in a glass tower somewhere in New York or Chicago (or more likely a weirdo in a basement bunker) is combing through publicly available information on the bank’s customers and based on some arbitrary list of what the bank considers to be “undesirable” can make the decision to close an account, and then provide the customer with no explanation. Meanwhile Chase has been charged with five felonies by the US Justice Department and Chase is also the only American bank to ever be fined for using depositors’ money to gamble in derivatives in London and lose $6.2 billion of that money. As my grandmother used to say, that’s like the pot calling the kettle black. Maybe Chase should give its customers the ability to arbitrarily fire Chase executives.

I have used Chase as an example in this post because the negative experiences I have had were with Chase. I have heard similar stories over the years from colleagues and associates about other big consumer banks. Why don’t these big consumer-oriented banks provide better service to small businesses? Well, in my opinion, they just find it easier to make money charging 20% to 30% interest on credit cards than by helping small businesses with the individual attention those businesses really need. The point is that if you own a business take the time to seek out a business bank, such as American Business Bank or one of many other business banks. As a business owner, even a small business, having a business bank, in the long run, will save you a world of headaches and time.