Do you have a CFO or other Finance/Business person handling this? Or is that you? SVB was plenty large, they just weren't well-run and were overexposed to one industry. Plenty of small banks have rock-solid balance sheets if that's all you need right now.
But the answer is it depends on your size, credit needs, and potentially on any exit plans/timeline.
Personally, I hated working with Wells Fargo. We currently have a syndicated ABL that is managed by JPM and our treasury all goes through JPM as well, so most of my experience probably wouldn't match what you would need at a tech start-up.
Factors off the top of my head (not in any order of priority):
- Safety & Security - Stress Test Results / Credit Ratings / Balance Sheet Ratios - this is just analysis to do yourself. Get familiar with their balance sheet and approach to lending. If you're comparing to a small, local bank or a private bank, just ask for the numbers and your relationship manager should be able to provide them.
- Recurring Costs - Bigger banks means bigger fees, but this is always negotiable. Just pull your analysis statement from your current account and if a bank wants the business then they will at least match it. Larger banks were also able to provide smaller margins over SOFR on our latest ABL
- Treasury Services - Many people like to say these are commoditized, but user-friendliness and reporting ease is more important the smaller you are. Also using their electronic payment systems can provide rebates at the bigger banks if you aren't already doing that.
- Credit Needs - smaller banks can't do everything and typically have a niche they support. Does that align with your needs? Your relationships sounds depository, but you need to identify what you'll need in the future.
- Other Service needs - Are you expecting to need M&A/IB services or support? You don't get this option until you get to super-regional banks or the big guys that you're going to know. Do you need local branch support for anything?
- Partnership - How is the bank going to support your growth? Do they have any contacts in certain industries that can help you to make it a mutually beneficial relationship? What capital needs will you have over the next 3, 5, 10 years? You don't want to have to switch banks again. If you plan on exiting in the next 5 years, your next bank is going to be guiding you through that exit with other advisors and they can make it a real pain in your ass or make it go really easily.
- Banks Receptiveness - Bank still has to want you as a customer and see the long-term value in the relationship. This is a tougher sell to the bank with start-ups that aren't cash-flowing. Does your lending facility have debt covenants? How likely are they to be flexible with you if you ever fail those covenants?
- Up-Front Cost - Switching banks when you have a lending relationship with your current provider is going to cost a lot, especially if you have inventory and other financial processes they need to do a field audit on. If it's just a depository relationship, it's much easier. I'm not kidding when I say that our bank change a few years ago was $350,000 and I considered it pretty cheap due to the amount of field audit and validation that had to happen across multiples sites and hundreds of millions in product. Lawyers and accountants aren't cheap.
