How do you go about picking the best bank in Canada to open a small business account with?
Banks pull out all the classic marketing tricks. They offer some services for free. But you could end up paying more because of higher rates for another product.
All this financial jargon can be confusing when trying to pick a small business bank account. The devil is indeed in the details!
So, what do you do?
To find the best bank for a small business in Canada, ask yourself what service is the most important to your small business. Then do some math to figure out which is cheapest in the end.
Also keep in mind that there are intangibles, like good customer service, that cannot be captured by the math.
Over the course of this article, we will help you evaluate the options to discover what is best for you.
Product Comparison
| RBC | Meridian | TD | Scotiabank | BMO | FirstOntario | |
| Customer Service | Good | Good | Good | Bad | Bad | Good |
| Credit Policies | Good | Good but smaller than a big bank | Good | Good | Good | Good but smaller than a big bank |
| Fees | Excellent | Excellent | Fine | Fine | Bad | Excellent |
| Physical Locations | 1209 | 92 | 1091 | 900 | 900 | 32 |
5 Best Banks for Small Businesses in Canada
1. Our Top Choice – RBC Digital Choice Bank Account Package
· Experienced financial advisors and good customer service.
· Monthly fee of 5$ with no minimum balance requirement.
· Unlimited electronic debit and credit transactions, and unlimited electronic cheque deposits.
· If you do incur charges, they will be at a similar rate to RBC’s competitors.
· RBC is a big bank and so you might be able to get a larger loan than with a credit union.
RBC Digital Choice Bank Account Package
RBC was founded in 1864 and is the largest bank in Canada by market capitalization.
Features and Benefits
RBC is one of the biggest banks in Canada and is the top choice for many consumers. They have solid customer service, experienced financial advisors, and some of the best credit policies on the market. Their Digital Choice Bank Account Package offers one of the more well-rounded accounts for a small business.
The monthly fee is a competitive rate at $5. They do not require you to have a minimum balance. You get unlimited electronic debit and credit transactions, and unlimited electronic cheque deposits.
When they do charge, it is the same price that their competitors charge. They charge $2.50 for every paper debit or credit transaction, $5 for every $1,000 deposited at a branch, and $2.25 per $100 in ATM deposits.
However, it is important to keep in mind that your transactions with this account have to be kept online. If you do go into a branch for a transaction you will incur a fee.
Why should you bank with them?
This product is for small business owners who are willing to pay a little bit more than they would at a credit union. All for the security that comes with banking with one of Canada’s largest banks.
They have fees that do not exceed their competition in traditional banking, and that often undercut the competition.
RBC offers the best of both worlds with its Digital Choice Bank Account Package.
One of their most al=ppealing features is their business loans. Cash is like lifeblood for a small business. And when you open your business account with RBC, you can receive larger business loans than smaller banks could offer. Alternatively, there are other reliable business loans providers.
If you expect most of your business to be done online, then the Digital Choice Bank Account Package makes the most sense. With that, you do not pay fees on electronic transactions.
RBC’s customer service is top-notch and is another reason that this bank is a fantastic option for you. Your small business is your livelihood, and you want the best customer service, should any problems occur.
In our opinion, RBC is the best bank for small business in Canada if customer service is your top priority.
2. Meridian eProsper Chequing Account for Small Business
Meridian is a credit union that was formed in 2005 through the merger of two credit unions. They offer competitive rates for their small business accounts.
Features and Benefits
Meridian is a credit union that offers free access to all Meridian ABMs, as well as 3,600 EXCHANGE® Network ABMs across Canada. This makes it the most widespread credit union in Canada.
Although credit unions are not as big as a traditional bank, they are generally able to give you better deals. Credit unions are not beholden to shareholders and are very much a part of the community that they operate in. This means that they can offer competitive rates and a better customer experience.
If you choose to get Meridian’s ePropser Chequing Account for Small Business (this is the account we use for our small business) you get unlimited online transactions. That means unlimited deposits, unlimited transfers, five free personal service transactions, and no monthly fees.
To receive these perks for free, you just need to maintain a balance of $5000. If the balance goes less than $5000, the monthly charge is $9. They also charge $1.50 for email transfers (as of this writing).
These rates make Meridian a competitive alternative when choosing which bank to open your business bank account with. Meridian’s rates are competitive with other financial institutions and represent a viable option to anyone looking to open a small business.
Why should you bank with them?
If you are looking for the lowest cost option and are open to online banking, Meridian e-prosper account is the way to go.
Although the size of the loans that they can offer is usually smaller than traditional banks, it may be easier to get a loan from a credit union. Credit unions are also able to offer lower rates on loans.
Another great thing about the Meridian eProsper account is that you can open a savings account along with your checking account.
If you expect your business to have excess float, you can move those funds to your savings account and generate passive interest income.
3. TD Basic Business Plan
TD Bank was created in 1955. It is the largest bank in Canada by assets and the second-largest by market capitalization.
Features and Benefits
The TD Basic Business Plan is also a good way to conduct your banking if you are a small business owner. With the TD Basic Business Plan, you pay $5 a month on transactions, which is a competitive rate. A bonus to conducting business with TD is that you get five free transactions and deposits a month.
Any further transactions will be charged at $1.25 per transaction. Each deposit item will be $0.22. The cash deposit fee will be $2.50 per $1,000. Another bonus if you choose TD is that they have a lot of branches around Canada.
If something goes wrong with your account, you are likely to have a TD close by. There will be a customer service representative to help you resolve the problem.
Why should you bank with them?
If you are a small business owner or are planning to launch a small business, the TD Basic Business Plan might be best for you.
For starters, because they are such a large bank you are going to be able to get a large, flexible business loan. If you are someone who values good customer service and being able to go to a physical location, the sheer amount of TD branches in Canada makes it a good fit.
They are the largest bank in Canada by assets and have many branches around the country. You will not have a problem trying to find a location if needed. They also offer 5 free transactions and deposits, which is always a big plus.
4. Scotiabank’s Right Size Account for Business
Scotiabank was founded in 1832. They are the third-largest bank in Canada.
Features and Benefits
When you choose to bank with Scotiabank you are also choosing to bank with Canada’s third-largest bank and with that comes benefits.
First, Scotiabank is known for having good rewards programs, something that many banks do not offer.
However, they are outclassed by other banks when it comes to the fees associated with their Right Size Account for Business.
The $6 monthly fee is just a tad more than the $5 fee offered by RBC and TD, but a dollar can add up over time. They also only offer four free transactions a month, which is one short of Scotiabank’s five.
After the first free four transactions, you will pay $1-1.25 per transaction depending on the number of transactions you are making. $1 is the lowest fee we have covered in that category so far.
Why should you bank with them?
Scotiabank is the third largest bank in Canada and so one of the benefits of banking with them is that you will be able to find a branch no matter where you are.
If you are someone that values being able to solve your problems with customer service in person then that is a reason to shop with Scotiabank.
Another reason to do business banking with Scotia is their low per transaction fee. If you expect to be making a lot of transactions a month this tiny difference of 25 or 50 cents (depending on the number of transactions you make) adds up. Moreover, this saving goes directly to your bottom line!
5. BMO Business Start Bank Account
BMO was founded in 1817. It is the fourth largest bank in Canada.
Features and Benefits
The BMO Business Start Bank Account is a solid option if you are starting a small business, but it is not as good as some of the other products we have covered.
The $6 monthly fee makes it a pricier option than TD or RBC. There being no minimum balance requirement is enticing for those who do not know how big their business will be.
BMO also offers seven free transactions a month, which is better than Scotiabank’s four and TD’s five.
BMO charges you for electronic transactions once you have exhausted the seven free ones. This may not be ideal for some business owners. For electronic transactions, once you are past the limit you will be paying $0.60.
You will also be paying $1.25 per cheque and $2.25 per $1,000 deposited.
Why should you bank with them?
If you are a small business anticipating that you are going to be making a lot of transactions, then the price of Scotiabank makes more sense than BMO.
If you are someone who values being able to go to a physical location and a traditional customer service experience, then TD or RBC is probably a better pick.
If you think that your business is going to see a lot of electronic transactions then it makes a lot more sense to go with RBC who does not charge.
The only possible reason to go with BMO is if you have an existing relationship with them. BMO does offer a very good business credit card but like we did, you can as well get that without their business bank account.
Honourable Mention: FirstOntario Credit Union
FirstOntario is a credit union that began in 1939. Due to being a credit union, they can offer competitive rates when compared to the bigger banks in Canada.
Features and Benefits
FirstOntario offers some enticing options for those looking to open a small business bank account. Their $0 fee eBanking account will save you a lot of money and is one of the stand out features.
FirstOntario offers their business bank account for no monthly fees, no minimum balance requirement, and unlimited electronic transactions with five free in-branch transactions a month.
After you have exhausted the five in-branch transactions, each transaction becomes $5.
For businesses with a lot of transactions, they also have a $25 a month plan where you pay a flat fee and get unlimited transactions. They also offer no restrictions on those transactions, and there is no minimum balance requirement.
Why should you bank with them?
$25 a month is by far the most that any of these institutions are charging. However, once you factor in that you are getting transactions for free, it works out to be cheaper depending on how busy you think your small business will be.
FirstOntario Credit Union is a great option for small businesses doing a lot of transactions.
Client’s Guide to Choosing the Best Bank for Small Business in Canada
Not all small businesses are created equal. They all have different needs of their financial institution. As a small business owner, some of the things that you should consider when opening a business account are discussed below.
Customer Service
Customer service is an especially important aspect to consider when choosing what financial institution you are going to open an account with for your small business.
If there is a situation where something goes wrong financially, you would want to get that resolved quickly. And good customer service is a vital part of this process.
Before choosing which small business bank to go for you should check the bank’s hold times and general availability to financial advisors and other staff.
If your business is central to your livelihood, you are going to want to bank with experts who are available.
Credit Policies
If you have a small business or are thinking of launching a small business, you are most likely hoping that your business is going to grow in the next few years. This is exactly why the credit policies of the institution you choose to bank with are so important.
Business comes with expenses and those expenses might exceed what you can pay now if your business takes off. This is where credit policies come into play.
Taking out a line of credit with your financial institution allows you to keep up with the demands of your product and grow the business.
Paying extra attention to whether you meet the criteria to get a line of credit with the institution you are looking at is extremely important.
Banking Fees
One of the most important questions you should ask yourself when picking a bank to launch your small business with is “How much is this going to cost me?”
You are likely to want to have an idea of how much you are paying. This allows you to factor the costs into your business expenses and financial planning.
Credit Unions generally have lower rates than their traditional banking counterparts.
For example, FirstOntario Credit Union has an account where you pay $25 monthly and you get unlimited transactions. The $25 monthly fee is by far the highest monthly fee we have seen, but how much are you going to save due to there being no cost associated with the other transactions?
A bank might have a higher monthly fee but free electronic transactions.
So, if you are a small business that anticipates you will be doing a lot of business using electronic transactions a higher monthly fee may come with more benefits.
Physical Locations
How important this category is depends on your preferences. Some people prefer the convenience of being able to bank from home. While others feel more comfortable going to a physical location in order to talk to a customer service representative.
If you are one of the latter, then one of the big five banks in Canada would probably fit you better than a digital bank or a credit union. This is because the big five have the most branches across the country.
Frequently Asked Questions: Best Bank for Small Business Canada
Why should you open a bank account for your business?
There are a lot of advantages that come with opening a bank account for your business. First, for tax purposes having a separate bank account for your business is important.
If you conflate your personal and business expenses together you are going to be flagged by the CRA.
It would be best to avoid the stress that comes with that. Consider having a separate account dedicated to your business. This will help you maintain a clear financial record of your financial activity. It might come in handy in the future, especially if the CRA comes knocking.
You might be looking at the rates between a business account and a personal account and thinking, “why would I even open a business account if they cost so much more?” There are perks that come with opening a business account.
For example, many people can have signing authority for a business account, which is important if you plan to grow your business.
You cannot be everywhere to sign for everything, and so multiple signing authorities quickly become a must-have, as your business scales up in size. This is one of the biggest advantages that come with opening a business account.
Do any banks offer free business bank accounts?
Unfortunately, there are currently no banks that offer free business bank accounts to their customers. There are banks that offer cheaper alternatives compared to their competition.
But every financial institution charges a fee for services. Even credit unions charge fees or require you to maintain a minimum balance.
The Bottom Line
RBC and their Digital Choice Bank Account package is the best for small businesses if you are looking for a full services bank.
This account combines cheap rates with the institutional benefits that come with a traditional bank like good credit policies and customer service. RBC also has some of the best financial advisors in Canada.
With the Digital Choice Bank Account, you get the monthly fee at a competitive rate of $5. RBC does not require you to have a minimum balance. You get unlimited electronic debit and credit transactions, and unlimited electronic cheque deposits.
This is a well-rounded, cheap package for small businesses when compared to the other big banks in Canada.
But if fee is your only criteria and you can maintain a minimum balance of $5,000 and do only electronic transactions, Meridian Credit Union’s eProsper account is a great option.
We use it personally and the only banking-related charge that we pay is $1.50 for every email transfer (we have not found a way to circumvent this).
