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Business in Utah and Idaho is bustling. Despite an unprecedented year due to the pandemic, the Beehive State and Gem State continue to experience economic growth. Utah’s top rank as the Best Place to Start a Business in America, Best State for Entrepreneurs and Best Economy continues to fuel the fire on Utah commerce. Meanwhile, Idaho boasts Best Economy, Highest Projected Job Growth Rate and Most Friendly State for Small Business. Idaho and Utah businesses—big and small—are primed this year to invest in talent, equipment, stocks, and real estate.

Perhaps it’s time to launch your side hustle, open a brewery, invest in a biotech company, partner with a fintech startup, initiate a construction project, or grow your outdoor adventure outfitter. Whatever your business plan includes this year, there are many financial options at your disposal.

Because business and banking go hand in hand, finding the right banking platform is vital. New and seasoned business owners may be asking themselves: Do I need a commercial bank or an investment bank to grow my business?

What is the difference between commercial banking and investment banking?

Commercial banks and investment banks provide their own unique services to different financial clients. Commercial banks offer loans, deposits, treasury management, and safeguard assets for businesses; while investment banks are in the business of helping clients buy and sell stocks and bonds (and in some cases, assist with mergers and acquisitions). Which one you choose is based entirely on your needs. Here are some differences to consider:

1. Clients’ needs

Investment banks differ from commercial banks in that they: (1) exist as entirely different entities from commercial banks and (2) service corporations, pension funds, governments, and hedge funds. Sometimes, investment banks act as financial advisors for their institutional clients.

A commercial bank offers several options to help manage and grow your business. All commercial banks accept deposits and lend funds, but some offer a deeper well of services that may include treasury management, cash flow management, and fraud prevention, as well as specialized loans for agriculture, real estate, or inventory.

2. Cash management

Money in, money out. A commercial banker manages the ins-and-outs of deposits and withdrawals, much like a personal checking and savings account. Automation and ease of access — whether onsite, online, or remote — is key to choosing the right commercial bank for your business. A commercial bank with 24/7 accessibility helps a business owner focus on day-to-day management of staff, customer service, inventory, and marketing, instead of payables and receivables.

Investment banks enable their clients to grow their cash earnings through asset management, corporate finance, equity research, merger and acquisitions, and securities selling and trading.

3. Lending

Interested in a commercial real estate loan? Or an equipment loan? Agriculture loans? Real estate SBA loan? Or a non-real estate SBA loan? Commercial lending assists with equipment loans for the purchase of equipment, such as trucks, machinery, furniture, or office fixtures. This type of lending can also assist with inventory cash conversion cycle management, agricultural loans, real estate loans, construction loans, and SBA loans. Ultimately, you want a commercial bank to act as a consultant to match your business with the right loan.

Investment banks do not provide loans and mortgages, rather they focus on investment-related activities.

4. Insurance protection and risk

Typically, commercial banks are insured and regulated by government authorities like the Federal Reserve and the Federal Deposit Insurance Corporation. They are insured to protect account deposits, sometimes up to $250,000.

Investment banks have different government regulations than commercial banks. The Securities and Exchange Commission governs them, meaning investment banks are assisting clients with market transactions and don’t have the protections of FDIC insurance. Due to the unpredictable nature of investment markets, clients of investment banks assume more risk than a commercial account but operate with the intention of earning gains in the long run.

5. Associated fees

In general, commercial banks make their money mainly through loan interest rates, origination fees, and account service charges. They also can provide customers with affordable rates and fees because customer deposits are the sources of the bank loans. They may also offer free checking, online and mobile account access, and competitive loan terms. Investment banks profit from charging fees and commissions on their asset management services. They also earn commission and fees on underwriting new security.

What type of bank is best for your business?

If you decided a commercial bank is best for your business, you have two options: a community bank or a national bank. While national banks may be more familiar based on ads and name recognition, shopping around at community banks may unlock some perks you didn’t consider. Oftentimes, community banks like Altabank offer a larger portfolio of commercial loan options than national banks — with competitive fees, interest rates, and added flexibility. Community banking clients often experience more individualized customer service via one-to-one communication and expertise of the regional business environment in your community. When you win, they do too.

If regional industry acumen gains points with you, consider a commercial bank like Altabank with expertise in your specific geographic community. Click to see how Altabank’s automation and ease of access — onsite, online, and remote — can give your new business venture a boost.