The role of commercial banks is important when it comes to your business needs.  If you use a commercial bank, you may wonder what advantages there are compared to banking with other kinds of banks. As you’ll see, not all banks provide the same services, and it’s wise to compare banking services before selecting a financial institution, especially if you are a business owner.

Commercial banks are the most commonly used banks for business bank loans and banking services. This is because commercial banks are specifically designed to service businesses. All commercial banks provide a host of business-specific services, including business checking and savings accounts, business lines of credit, lockbox services, payment and transaction processing and foreign exchange services. Commercial banks do service individuals as well as businesses, but they are primarily designed for business transactions. Most commercial banks are FDIC-insured, something that is increasingly more important to business owners.

Retail banks are better suited to individuals instead of business customers. They specialize in the services individuals need more, like personal checking and savings accounts and smaller-scale loans.

Investment banks support the financial markets. They are the institutions that support public offerings for companies. So, while you may use an investment bank if your company goes public, you will probably deal with a commercial bank for your day-to-day business needs.

Credit unions can be quite beneficial for your business, but you have to become a member of the credit union to use its services, and there may be limitations on what you can do.

Savings and loans banks primarily support home mortgages.

The Federal Reserve—the central bank of the United States—functions as a manager of the country’s money and financial systems overall. While you wouldn’t use it directly, what happens at the Federal Reserve, such as the raising and lowering of interest rates, may have an impact on your business decisions.