Is Capital One Small Business Banking a Good Option? We’ve Got Your Answers

Small businesses have a lot of choices when it comes to banking, and choosing your provider is worth thinking about. When you pick the right bank for your small business, it can be a valuable partnership that helps boost your business. Choosing the wrong bank, on the other hand, can cost you more money…but also cost you in terms of lost efficiency and extra hassle.

For the best fit, you should choose where your small business will bank based on your specific needs. Some things you’ll need to consider in making your choice include:

• What banking products are you looking for? Do you just need a checking account, or will you want a savings account as well? Do you want access to credit cards? Do you think you’ll want a small business loan in the future?
• How important is location to you? If you need to make a lot of cash deposits, for example, you’ll probably want your bank to have a location near your business. If you know you’ll be banking remotely, location will not be as important a factor.
• How important is your relationship with your banker? Some small businesses may want to develop a face-to-face relationship with an individual at their bank; for others, this may not be important.
• How will you be using your bank? Will you have a high volume of transactions? Will you be able to meet minimum deposit requirements on a consistent basis?

Is Capital One the One for You?

Capital One’s Spark Business is often cited as a good option for small businesses, but only you can decide whether Capital One is a good fit for your particular business. Here are some of the benefits and drawbacks of banking with Capital One.

What Capital One Has to Offer

Savings Account

Capital One’s Spark Business Savings account offers a stellar 1.75 percent introductory annual percentage yield (APR) for the first year. After that, the APR drops down to 0.40 percent. Capital One requires no minimum opening balance and charges no monthly service fee. You’re allowed six transactions per month, and you can deposit up to $5,000 per month for free. The monthly fee for cash deposits over the $5,000 limit is $2 per $1,000 cash.

You can also make deposits by linking your Capital One savings account to a checking account. If you have a Capital One Spark Business Checking account, you can link it to your Spark Business Savings account for overdraft protection.

Checking Account

At the moment, Capital One does not offer business checking accounts to new customers. The current message on Capital One’s website states: “We’re making some updates to our product and aren’t accepting new business checking accounts right now. Current customers won’t be impacted. Please check back later.”

Credit Cards

Capital One Spark offers two types of credit cards for small businesses: cash back rewards and travel rewards. These range from basic cards that can be obtained with average credit to premium rewards-earning cards. Some of the cards offer limited-time bonuses for spending a certain amount within a certain time period after opening the account.

• The Spark Cash card allows you to earn up to 2 percent cash back on purchases. The annual fee is waived for the first year and is $95 per year thereafter. There is no balance transfer fee. The card comes with an 18.49 percent variable APR and requires excellent credit.
• With the Spark Cash Select, there is no annual fee or balance transfer fee, but you only earn up to 1.5 percent cash back on purchases. The APR is 0 percent for the first nine months and a variable 14.49 percent to 22.49 percent after that. It takes excellent credit to qualify.
• The Spark Miles card allows you to earn up to 2 miles on each purchase, has a $95 annual fee after the first year and requires excellent credit. It offers an 18.49 percent variable APR and charges no balance transfer fee.
• The Spark Miles Select card allows you to earn up to 1.5 miles on purchases and has no annual fee or balance transfer fee. The APR is 0 percent for the first nine months and a variable 14.49 percent to 22.49 percent after that. It takes excellent credit to qualify.
• The Spark Classic allows you to earn up to 1 percent back on purchases, has no annual fee and can be obtained with an average credit rating. The variable APR is 24.49 percent.

Small Business Loans

Capital One offers a variety of small business loans and lines of credit, including working capital lines of credit, equipment and vehicle loans, real estate term loans and Small Business Administration loans. Capital One offers relationship-based rates for these products, but they’re only available in-branch.

Capital One Small Business Banking: Pros and Cons

Pros

Capital One offers a very competitive savings account. While some online business savings accounts may offer higher permanent interest rates, Capital One offers an excellent rate for the first year (1.75 percent); even its post-introductory rate of 0.40 percent is far higher than many savings accounts offer. Add in low fees, multiple locations and the ability to make cash deposits, and this savings account could be a winner for many businesses.

Capital One also offers a range of credit cards for small businesses with attractive rewards programs. As an added bonus, Capital One offers merchant services, cash-flow management and 401(k) solutions designed especially for small businesses.

Cons

Capital One does not currently offer a business checking account. This could be a major deal breaker for many businesses, since a working checking account is often one of the main things small businesses are looking for in a banking relationship.

Although Capital One offers physical locations, the bank does not have Spark Business support at its branches — aside from allowing you to deposit up to $5,000 in cash every month to your savings account. If you need help with your Spark account, you’ll need to call or go online. On the other hand, Capital One’s small-business loans and lines of credit are only available through a banker at a physical branch.

Have you used Capital One’s small-business banking products? Let us know what you think on Twitter @Revenued_com.