If your business is homebased or has been in operation for less than two years, you're likely to face objections from the bank.
"Those are the ones we end up losing money on," Fazzini says. "We're really reluctant to take a homebased business unless we're loaning money to that business and we understand it."
If yours is a homebased or a brand-new company, be sure to meet with the banker to show your business plan, offer collateral and discuss your personal net worth. You are more likely to be able to overcome objections by being open and honest. Even if your bank turns you down, however, your ship hasn't necessarily sunk. You can always try other banks.
"Just because one bank says they're not going to do it doesn't mean you're not bankable," Fazzini says. "Everyone has different criteria." One bank, for instance, may make it a policy never to grant merchant status to a homebased business, whereas another might, if the business meets other criteria.
If you don't have any luck getting a bank to back you on your own, consider going through an Independent Sales Organization (ISO). These are field representatives from out-of-town banks who, for commission, help businesses find banks willing to grant them merchant status. Ask your bank to recommend an ISO, or look in the Yellow Pages under "credit cards."
The ISO may be able to help you simply because it represents dozens of banks, each with their own specialties and criteria. The ISO representative can match your needs with the needs of the banks he or she represents, without requiring you to go through the application process with all of them.
Steve and Shelly Bloom, owners of Crystal Collection, a glass art importer in Boca Raton, Florida, were turned down by their bank, because it doesn't grant merchant status to home-based businesses. So the Blooms worked with an ISO their bank recommended, and the ISO helped them get merchant status through another bank.
Of course, the Blooms pay higher fees because theirs is a homebased business, which presents more risks to the bank. They pay either 2.5 percent of their monthly credit transactions or $25, whichever is higher. They also pay a 20-cent-per-transaction handling fee, a $15 monthly fee and $32 per month to rent a point-of-sale terminal. If they operated a storefront rather than a homebased business, Shelly says, the bank would charge them only 1.5 percent in commission.