An Introduction to Business Banking

Written by Wellington Ayugi

Business banking is a company’s financial dealings with an institution that provides business loans, credit, savings and current accounts specifically for companies and not for individuals. Business banking is also known as commercial banking. It occurs when bank creates tailor-made products and services to suit businesses.

The Advantages of Opening a Business Bank Account

Business banking presents a great way for one to manage their business revenue and expenses separately from their personal finances.

Difference Between Business Banking and Personal Banking

Business banking aims to satisfy the financial needs of businesses operating in various sectors such as agriculture, trade, manufacturing and service across the country.

Personal banking on the other hand offers products and services that are specific to individual customers.

What Products Are Offered In Business Banking

There are a wide range of products available within business banking, they include:

  • Business current accounts
  • Business savings accounts
  • Business credit cards
  • Business loans

What Services Are Offered In Business Banking?

Business banking divisions offer a wide range of services to businesses such as:

  • Bank financing services: Bank financing is a primary source of capital for business expansion, acquisitions and equipment purchases. Depending on a business’ needs, banks can offer loans (short and long term), asset finance loans and credit cards.
  • Cash management services: Cash management services help businesses achieve greater efficiency in managing the cash coming into and out of the business. With online and mobile banking, businesses can set up specific processes and notifications that help them be more aware of their everyday transactions.
  • Real estate services: These are commercial services provided by banks in the areas of debt and equity structuring, analysis of real assets and evaluation of portfolios.
  • Merchant banking services: This includes services such as issuing letters of credit, factoring and bill collection.
  • Employer services: Some banks offer to help businesses to deal with managing payroll and employee benefit schemes.
  • Securities trading: Banks usually offer businesses an opportunity to trade on the securities exchange and thus increase their investments.

Through bank affiliates, business banking services can include tax planning. In some cases, banks can also be appointed as trustees and executors of their client’s assets.

Reasons Why You Need A Business Bank Account

A business bank account is beneficial because it offers one:

  • Legal liability Protection: A business bank account protects one from any legal liability in the event you are sued.
  • Better management of tax returns: It is easier to record your income and expenses through your bank activities and transactions for the purpose of filing tax returns.
  • A professional profile: Your customers will take you seriously if your transactions are through a business account instead of a personal account.

Learn more:

5 reasons to open a business checking account


About the author

Wellington Ayugi

Wellington Ayugi handles Business Development at Covered and has a passion for personal finance, microfinance, and developments in financial technology