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hen you open a business bank account for your California company, you'll find it easier to track your financial transactions. All your revenue and outgoing expenses will be in one place—saving you time when preparing your financial statements or tax returns. Plus, keeping your personal and company transactions separate may be necessary to maintain liability protections provided under certain California business entity structures, such as an LLC.
However, deciding on the right bank for your company can be tricky. To help you in your search, we've compiled a guide to the best banks in California, along with factors to consider when opening your account.
What to know about small business banking
You likely have a consumer bank account you use for your daily financial transactions. Your bank account comes with helpful tools, such as a debit card and checks you can use for purchases. You can deposit money, withdraw cash, and make purchases with the available cash in your personal bank account.
A small business bank account provides the same benefits for an organization. It caters to small and medium-sized companies. The banking institution may offer additional products suitable for business owners, such as credit cards, loans, and payroll services.
Some financial institutions may have divisions just for small business banking, while others don't distinguish between their larger corporate clients and small and mid-size companies. It all depends on the bank or credit union's policies.
Aspects to consider when deciding on a business bank account
When it comes to business banking, it pays (literally) to do your research. All banks and credit unions take different approaches to their banking services, and some may be costlier or offer fewer features than others. Here are a few elements to consider.
Fees
A bank may charge various fees for its various account services. Some common fees include monthly maintenance costs, wire transfer fees, overdraft fees, and ATM withdrawal charges.
Minimum balance
Some banks may require a minimum balance to open a business account. You may need to maintain the minimum balance to avoid a separate monthly charge.
Interest rates
Most personal checking accounts don't allow you to earn interest on your balance—but a business bank account might. If you prefer an interest-bearing account, compare the rates available from various financial institutions. Keep in mind that your interest rate may rise or fall depending on the current rates set by the Federal Reserve.
Access to mobile banking
Some banks offer robust mobile banking options, including integrations with accounting software, payroll services, and point-of-sale (POS) applications. Integrations can streamline other business processes, such as financial statements and tax preparation, saving you lots of time. If mobile banking and integrations are important to you, inquire about them.
Advantages of using a bank tailored to California small businesses
There are a few benefits to banking with a local California bank rather than choosing a major nationwide or international financial institution.
A California-based bank or credit union may have a community presence. You may find your employees, clients, or vendors also bank with them, which may lower your fees for payroll, wire transfers, or customer sales. Some California banks may host gatherings with other professionals and potential clients, which can help you establish business connections.
Banking at a local California bank may also open the door to unique lending opportunities. The FDIC notes that nearly 40% of small businesses receive financing from community banks rather than major financial institutions.
You may find that a California community bank charges fewer fees than national banks—something any business owner will appreciate.
4 best banks for your California small business
So, what is the best bank to open an account with in California? The answer will depend greatly on the specific needs of your business. Banking needs will vary between different types of companies. However, here are our top choices for the best and safest banks in California for your small business.
1. California Bank & Trust
California Bank & Trust has been serving customers and businesses since 1952. It has 85 branches and offices sprinkled throughout the state, including in San Diego, Fresno, and San Francisco. It's received several awards, including "Best Bank" and "Best Commercial Bank," from various local newspapers.
With California Bank & Trust, you'll find a comprehensive business banking division that offers business checking and savings accounts, as well as funding options. Business owners can choose between five different checking account options with varying features, such as interest, mobile banking, and treasury management services.
If you prefer a truly local California bank for your business needs, California Bank & Trust is a superior option.
2. Los Angeles Federal Credit Union
Los Angeles Federal Credit Union exclusively serves the Southern California region, including Los Angeles, Van Nuys, and Culver City. It caters specifically to small and mid-sized businesses that don't have a large volume of business activity, making it perfect for solopreneurs, freelancers, or mom-and-pop organizations.
While Los Angeles Federal Credit Union is small, it offers competitive financing options for business loans of up to $5,000,000. There are no fees to apply, and you can use the money for any business-related purpose, including working capital, business expansion, and inventory. Los Angeles Federal Credit Union also offers business credit cards with limits of up to $50,000.
3. HomeStreet Bank
HomeStreet Bank serves consumers and businesses throughout the West Coast and Hawaii. It was founded in 1921 and has 58 branches and four lending centers. Aside from banking services, it also offers SBA loans and its own commercial loan products. Real estate developers and builders can access competitive building financing opportunities.
HomeStreet Bank emphasizes its commitment to customer relationships and in-person branch services, although it also has a comprehensive online bank portal. Their fee schedule is easily accessible online, and you may qualify for free business banking services with an interest-bearing account if you meet a low minimum balance requirement.
4. First Northern Bank
First Northern Bank opened its doors in 1910 in the small town of Dixon, California, in the farmlands between Sacramento and San Francisco. Today, it has 14 branches in Northern California, and it is known for being the region's top small business lender and offering superior customer service.
First Northern Bank offers a comprehensive suite of business services, but it specializes in specific market sectors, including agribusiness, clean energy, healthcare, IT, and business professional services, such as law and accounting firms. It offers four business checking accounts, including its Simply Business Checking solution, with no monthly maintenance fees or minimum balance requirements.
Small and mid-size business owners can access an interest-bearing checking account if they meet specific requirements. The interest-checking account includes some features that may be attractive to business owners, including invoice generation and digital payment acceptance.
Explore fee-free business checking with Novo
Small business owners in California aren't limited to local banks and credit unions—you can also consider an online banking platform like Novo, which offers free business checking accounts with no monthly maintenance fees or required minimum balances. Novo's business checking accounts are FDIC-insured up to $250,000, and you'll get access to some pretty cool features, like financial spending insights, mobile checks and deposits, and no transaction limits. Novo seamlessly integrates with several popular business apps, including Stripe, Shopify, PayPal, and Square — helping to streamline your business processes. To learn more, check out Novo's business banking solution services!
Novo is a fintech, and not a bank. Novo acts as a service provider to Middlesex Federal Savings, F.A., and the deposit and banking products obtained through the Novo platform are provided by Middlesex Federal Savings, F.A.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
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