What if your bank accounts were frozen?
Small business banking just got a little tougher. Recently, Citibank announced it reserves the right to freeze assets of its depositors in Texas. Small business owners who are customers of that bank would not be able to complete transactions like making transfers between accounts or to pay bills if Citibank make good on the threat.
How could the bank do this? Citibank invoked a law that is still on the books from the early 20th century. This law was designed to prevent a run on the banks during the Great Depression. Citibank’s move to communicate to its customers the power to freeze assets sets the tone for other money-center banks to follow suit.
These actions could be like an earthquake for small business. What would happen if your business assets were frozen and you couldn’t pay your bills for seven days? What about all those bounced check charges, late fees and your credit rating decay? Who would pay for those? Your business would in money and reputation.
Is it fair? Nope. Is it for real? Yep.
The trend appears to be the biggest bank brands seem to have the biggest financial problems. Diversify your savings and transactions. Keep no more than you need in the transaction account of one financial institution. You should have one main bank and one “back up” bank just in case. This requires a bit more management, but it will reduce your overall risk. Your small business survival depends on your ability to manage that risk.
Change your thinking. Global reach or convenience doesn’t mean a hill of beans if you can’t get access to your own money, right?
Small business banking requires a strong financial partner that won’t evaporate or change the music in the middle of the dance. It’s early enough in the year to do your due diligence. Don’t put your small business at risk by waiting.
Your small business banking relationship needs to be a priority. You don’t want your bank to determine the fate of your company. You’ve worked too hard for that. Make sure you have the right banking partner .Check into the financial health of the small business banking institution that handles your transactions. 
The stodgy, low risk, local bank begins to look like the sexiest girl at the dance!
On the eastern seaboard, TD Bank is our pick for a bank that has breadth and depth. They never got involved in the sub-prime nonsense and they’re one of just a few triple AAA rated banks in North America. If that changes, we’ll let you know.
In your corner.
Dawn Fotopulos
