Should My Business Pay Employees Through Direct Deposit?

Merchants Bank, direct deposit

In 2014, 77% of business payment fraud occurred in the form of paper checks.* Did you know that you can help prevent fraud and provide a benefit to your employees by implementing one simple solution? The answer is direct deposit.

What is direct deposit? Direct deposit of payroll is the electronic transfer and deposit of employees’ net pay to their bank accounts anywhere in the U.S. through the Automated Clearing House (ACH) system. You, or your payroll processor, provide the Bank with your employees’ net pay information. Then we process your payroll file and deposit your employees’ paychecks into their bank account(s).

Many of our customers find it easier and quicker to generate ACH files using Merchants Online Banking. Your employees’ net pay is deposited automatically into their account(s) at the opening of bank business on pay day and is immediately available as cash. Your account is debited for the total net pay amount. It’s that easy.

Can direct deposit save my business time and money? Simply put, yes. Here’s how:

  • Spend less time on payroll by no longer needing to write/print, sign, fold and deliver checks
  • Stop re-issuing lost or stolen checks, which could also be a source for identity theft
  • Stop spending money on stop payment fees for lost or stolen checks
  • Stop spending money to print checks

According to Paychex, direct deposit can save a business anywhere from $2.87 to $3.15 per check.** Depending on the size of your business, this could amount to thousands of dollars each year.

How can direct deposit benefit my employees? While providing direct deposit is a benefit to your business, it is also a service many employees have come to expect. Employees appreciate the convenience that comes with direct deposit, including:

  • Immediate access to funds on payday without having to run to the bank to cash a check
  • Ability to direct funds into the account(s) of their preference by dollar amount or percentage
  • Protection from fraud by eliminating the possibility of a stolen or lost check with their personal information

To get started with direct deposit for your business, contact your local Merchants Bank.

Are you unsure about how to set up a payroll system for your business? Read this article from the SBA and then talk to one of our local Cash Management experts.




Would You Increase Your Holiday Sales if You Could?

Business Gift Cards

For the past eight years, gift cards have been the number one most wanted holiday wish list item, according to the National Retail Foundation. In addition, 62% of shoppers say they would like to receive a gift card.* The popularity of gift cards has steadily increased since 2003 and spending on gift cards reached more than $31 billion in 2014.*

Still not sure if gift cards are right for your business? Here are some incredible statistics:

  • 83% Total spending on gift cards has increased by 83% since 2003.**
  • $23 – On average, consumers spend $23 more than the original value of the gift card at a store. **
  • 3x more – On average, consumers visit a store three or more times to spend the balance of a gift card.**


Watch Now: Mike Swanson, Senior Consumer Banker and Branch Manager in Lakeville, explains how personalized business gift cards can benefit your business.

Offering gift cards is not only what your customers want, but it’s easy with Merchants Bank! Through our partnership with Valutec, you can begin offering personalized gift cards at your business in as little as 10 days. Simply speak to our Credit Card department by calling (507) 457-1160 or (800) 944-6285 to get started.



SBA Loans: Frequently Asked Questions

Merchants Bank Small Business Loans, Commerical Lenders

Are you thinking about starting a small business? Have you heard about the Small Business Administration and the loan programs it offers? You might be wondering if an SBA loan is right for you or simply how SBA loans work. Here are answers to frequently asked questions about SBA loans

1. What is an SBA loan?

While the Small Business administration oversees a number of loan programs, the SBA does not lend money itself. When you apply for an SBA loan, you’ll work with a local bank to receive financing for your project and a portion of the loan is guaranteed by the SBA.

SBA Loan programs include:

  • 7(a) Loan Program – The most common general small business loan offered by the SBA.
  • Microloan Program – Small, short-term small business loans.
  • Real Estate & Equipment Loans or CDC/504 Loan Program – Loans for real estate and equipment.
  • Disaster Loans – Low interest loans to repair or replace items damaged in a disaster.

Learn more about these SBA loan programs and eligibility on the SBA website.

2. Should I apply for an SBA loan or traditional bank loan?

Which loan is right for your business depends on a number of factors. First, you’ll want to know which SBA loan programs you may or may not qualify for. In addition, you’ll want to compare the SBA loan programs versus a traditional commercial loan. While an SBA loan might not be a fit for every business, it may provide certain benefits over traditional loans, in certain situations, including:

  • Longer terms
  • Lower down payments
  • Increased cash flow
  • Flexible repayment options

As an SBA Preferred Lender, Merchants Bank has experience helping businesses choose between SBA and traditional commercial loans. Your local Merchants Bank Commercial Banker can guide you through our options to find the right loan program for you.

Use SBA’s Online Loans and Grants Search Tool to begin research which government financial programs may help your business.

3. What information do I need to complete my loan application?

Educating yourself on the SBA loan processing and knowing what information you need for the application can save you a lot of time. Use these resources to prepare yourself when applying for an SBA loan:

For more information on SBA loans, talk to a Commercial Banker at your local Merchants Bank. We’re proud to be an SBA Preferred Lender.

Subject to credit approval. Equal Housing Lender.


Jim Vrchota Joins Merchants Bank in Winona as a Vice President and Commercial Banker

Jim Vrchota, Vice President and Commercial Banker

Jim Vrchota, Vice President and Commercial Banker

Jim Vrchota has joined the team at Merchants Bank as Vice President and Commercial Banker, according to Randy Domeyer, Senior Vice President and Commercial Banking Department Manager

“We are excited to have Jim join our team in Winona,” Domeyer said. “His experience in business development and lending will benefit our customers and our lending team here at Merchants Bank.”

Vrchota has more than 33 years of experience in the banking industry, much of it as a Senior Lender and Market President. Most recently he served as Senior Vice President at United Prairie Bank in Spicer, Minnesota, where he worked in commercial and ag lending. Vrchota also has a great deal of experience in SBA (Small Business Administration) lending.

“I am happy to be a part of a banking organization that has such a tremendous reputation for helping its customers meet their goals,” Vrchota said. “I look forward to becoming a part of the Winona community.”

Vrchota has a long history of community involvement, especially in the areas of economic development and community service.

Liz Diggins Joins Merchants Bank in Red Wing as a Commercial Banker

Liz Diggins, Commercial Banker

Liz Diggins, Commercial Banker

Liz Diggins has joined Merchants Bank in Red Wing as a Commercial Banker, according to Brian Hokanson, Senior Vice President and Senior Lender for Merchants Bank.

Diggins is well known in the Red Wing area, spending the past 12 years working with commercial and agricultural loans and loan customers at Associated Bank in Red Wing.

“Liz is a tremendous communicator, who enjoys working with clients and helping them to achieve success,” Hokanson said. “We are fortunate she has chosen Merchants Bank, and we look forward to working with her as she utilizes her skills helping others reach their goals.”

A Red Wing native, Diggins is currently the treasurer for the United Way of Goodhue, Wabasha and Pierce Counties. She also serves as treasurer for the Wells Creek Riders Snowmobile Club.

“I am thrilled to be working with Merchants Bank because of its commitment to the community,” Diggins said. “Helping Red Wing to continue to grow is important to me, and there’s no better place to make that commitment to the future than at Merchants Bank.”

In addition to graduating from Red Wing Central High School, Diggins has an undergraduate degree in business management from the College of Saint Benedict and a graduate degree from the University of Wisconsin-River Falls.

Concerned About FDIC Insurance Coverage for Your Business?

Merchants Bank, CDARs, ICS

Deanna Ellinghuysen, Merchants Bank Customer Service Representative and CDARS/ICS expert, explains the details and benefits of CDARS (Certificate of Deposit Account Registry Service) and ICS (Insured Cash Sweep) accounts.

Q: How does a CDARS or ICS account work?
Deanna: CDARS, a Certificate of Deposit account, and ICS, an insured cash sweep account, provide additional FDIC insurance for deposits in excess of $250,000 – the standard insurance amount set by the Federal Deposit Insurance Corporation. Your money is automatically deposited in amounts of less than $250,000, which allows for compounding of interest, through a network of pre-selected, highly rated banks. This ensures that your entire amount on deposit is FDIC insured.

Q: Why would my business open a CDARS or ICS account?
Deanna: If your business has over $250,000 worth of excess funds and is concerned about FDIC insurance, a CDARS or ICS account is for you. If you want to protect your large deposits with FDIC insurance…these two products are the tools. It’s really about peace of mind. In addition, if you’re publicly funded, a CDARS or ICS account could help you avoid the extra bookwork associated with pledged funds.

Q: What are the terms rates for CDARS and ICS accounts?
Deanna: CDARS accounts are similar to other certificates of deposit at Merchants Bank. Businesses can choose a term from four weeks up to three years. The rates follow our CD rates by market and can be found at

ICS accounts allow for more flexibility because it works like a savings account. Businesses can make unlimited deposits, there is no minimum balance and six withdrawals are allowed per month. Current rates can be found at

Q: How do I open a CDARS or ICS account for my business?
Deanna: You can contact the Customer Service Representative at your local Merchants Bank to start the process. We open it for you and the distribution of funds to other banks is automatic. We like to say these accounts are great because the customer works with one bank, has one rate and gets one statement. It’s that simple.

To learn more about CDARS and ICS for your business, contact us.

CDARS and ICS accounts are also available for individuals. Ask us for more details.

Are Idle Balances Costing Your Business Money?


Did you know there are several easy, automatic ways to manage the cash flow of your business? You can use sweep, target or zero balance accounts to efficiently direct your money. Here’s how it works:

Sweep Accounts: A Cash Management Sweep account allows your business to earn income on its extra balance. Your Business Checking account is reviewed daily and excess funds are automatically “swept” into a savings account to earn interest or to a Line of Credit to pay down balances. When you need the funds, the money is swept back in to your Business Checking account. This is a great way for your business to optimize its cash flow. Merchants offers two types of sweep accounts to fit your needs.

Target or Zero Balance Accounts: A Target or Zero-Balance Account is a business checking account that is automatically maintained at a “zero balance” or at a target balance that you specify. Target/Zero-Balance Accounts allow businesses to maintain separate accounts for various divisions, locations, or functions such as payroll, while automatically consolidating cash from those accounts.

If you’d like to learn more about how easy and convenient sweep and target/zero balances accounts could be for your business, contact one of our Cash Management specialists today.