loan documentsGetting or keeping a business up and running can be rewarding, but it also can be risky and time-consuming. Here are some simple strategies that may help entrepreneurs and other small business owners get the most from their banking relationships and avoid frauds or scams.

The Basics

Prepare or revisit your business plan. A business plan provides a small business owner with a roadmap to help his or her venture succeed. A lender will generally ask to review your business plan when you apply for a loan. The U.S. Small Business Administration (SBA) has a free tool to help you develop a basic business plan.

Consider sources of assistance for launching or expanding a small business. You may want to start with resources available through the SBA, such as your local SBA District Office and SBA partners that can provide services such as training and coaching. Many of these organizations use the FDIC–SBA Money Smart for Small Business financial education curriculum for entrepreneurs (see FDIC/SBA Financial Education Curriculum for Small Businesses is Updated and Expanded).

Connect with small business specialists at your bank. Meet LCSB’s Lending Team.

Deposit Accounts

Consider a separate account for your business transactions. The Internal Revenue Service recommends that you have a business checking account that is separate from your personal account(s) because doing so can make recordkeeping for tax time easier. It may even be essential depending on your corporate structure. The need for separate accounts generally increases as a business grows or becomes incorporated.

Comparison shop for a business checking account. Compare LCSB’s Business Checking options.

Know if all your deposits are protected by FDIC insurance. Under FDIC rules, all deposits owned by a corporation, partnership or unincorporated entity (including a for-profit or a not-for-profit organization) at the same bank are added together and insured up to $250,000, separately from the personal accounts of the owners or members. The deposits of a sole proprietorship — an unincorporated business owned by one individual using a business name — are insured together with any personal funds the owner may have at the same bank in the single-ownership insurance category, up to $250,000 in total. If you need assistance with determining your insurance coverage, you can speak to an FDIC Deposit Insurance Specialist at 1-877-ASK FDIC (1-877-275-3342) or use our Electronic Deposit Insurance Estimator(EDIE), an interactive calculator.


Review how you allow customers to pay for goods. Businesses can consider ways to make it easier for customers to pay for purchases. For example, while many small businesses do not accept credit cards, perhaps because of the costs (including processing fees), many others do. “Allowing customers to pay with smartphones may be another option,” said Luke W. Reynolds, chief of the FDIC’s Outreach and Program Development Section.

Shop around for debit and credit card processing services because the costs vary. For tips, visit the Federal Trade Commission website’s “Play Your Cards Right” page.

Be familiar with the rules from the card networks that govern different aspects of your credit or debit card acceptance. For example, the card networks (including Visa, MasterCard, Discover and American Express) have decided that, as of October 1, 2015, merchants that do not use chip-card readers (for added security with in-store purchases) may bear the cost of losses due to stolen or counterfeit cards. Learn more from the SBA about the transition to cards with computer chips.


Establish a good payment record for your business. Just as credit bureaus maintain a record on your personal credit history, several companies track how businesses handle their finances. Making on-time payments to suppliers is one good way to show reliability. Also ensure that your personal credit report is accurate because a lender will likely review it when your business applies for financing.

Review the options for borrowing money to help your business operate or grow. Possibilities include:

  • Business lines of credit or business credit cards. “Lines of credit may be well-suited to help make up for gaps in cash flow, but they often are better suited to short-term financing and may not be the best choice to finance long-term investments,” Reynolds explained. “Business credit cards are an option for smaller, more routine purchases.”
  • Business term loans. With these loans, your business agrees to repay a set sum of money, plus interest, in predictable installments over multiple years. Consider using them for major purchases, such as machinery or equipment that can benefit your business for several years.

Avoiding Losses

Don’t assume that the same rules apply to business cards and personal cards. Your liability for unauthorized transactions on your personal credit and debit card accounts is generally capped by federal regulations — $50 for credit cards and $50 or more for debit cards (depending on when you notify the bank). While federal law doesn’t protect business debit cards from liability for unauthorized transactions, your bank account agreement and state laws could limit your liability. And, if a credit card issuer provides 10 or more credit cards to a company for employee use, it may require the business to assume unlimited liability for unauthorized transactions. If fewer than 10 credit cards are issued to the company, the $50 limit will only apply to unauthorized use by someone other than an employee of the corporation. The bottom line: Notify your bank immediately of any problems because state laws, industry standards and your deposit agreements may provide certain protections.

Guard against fraud and scams. Examples include unauthorized withdrawals from a bank account as well as fraudulent offers and counterfeit bills. An auditor may be able to help you identify and minimize risks. To learn more, including how to create customized cybersecurity plans, go to

Article courtesy of FDIC.

Last Updated: April 18, 2018