ONE OF THE most important relationships any new business can establish is with its bank. But thanks to the mortgage meltdown, that relationship is far less certain these days.

The Federal Deposit Insurance Corp. recently seized IndyMac Bank, a Pasadena, Calif., lender that specialized in high-risk loans, after it failed. With $32 billion in assets, IndyMac is the largest of five banks to collapse this year. And more banking woes are expected: Some analysts predict that as many as 150 banks could shutter in about a year's time.

As banks and other lenders continue to buckle under the weight of mounting defaults, small businesses are at risk of losing their ability to raise financing. "Not only will it become more difficult as banks become more selective in who they loan to, it will cost more," says Gregg S. Fisher, president and chief investment officer at New York financial advisory firm Gerstein Fisher.

Indeed, a Federal Reserve survey from April shows that half of banks polled have already toughened their standards on commercial loans to smaller firms, up from a third of banks in January. About 65% of banks said they were charging higher interest rates on those loans, up from about 40% in January.

That's particularly painful for small businesses that are now struggling through today's rocky economy. When consumers are less willing to spend, "access to credit becomes even more critical," says Trish Costello, director of Babson College's Arthur M. Blank Center for Entrepreneurship in Wellesley, Mass. With business owners needing a way to purchase inventory and pay vendors and employees, financing "fuels so much of what small businesses do," she says.

Since running out of money is a fast path to business failure, entrepreneurs will want to be extra vigilant about whom they form banking relationships with. While it's difficult to judge which bank will topple or tighten its credit standards next, be sure to weigh your options carefully and devise a back-up plan just in case.

Here's how to select and protect your banking interests:

Size Up Banks

Your first inclination may be to avoid small and medium-sized banks altogether, as larger banks appear more stable. And for the most part, "closures will likely hit [more] smaller ones than larger ones," says John W. McCune, an analyst at SNL Financial, a Charlottesville, Va., research firm. That's chiefly because smaller banks are more plentiful, have fewer capital resources and less operational flexibility than larger banks.

But keep them on your radar screen. Often, "it's the smaller entrepreneurial bankers that will take the time to figure you out and provide access to the cash you need to keep your business running smoothly," Costello says. For start-up businesses, this more relaxed philosophy toward banking may be the only way you can even attain credit in the first place, as larger banks tend to be more rigid in their lending practices.

Shop Around

Regardless of size, business owners should shop around before settling on a bank, suggests Dennis J. Ceru, president of Strategic Management Associates, a Wellesley Hills, Mass., consulting firm. "You would want to go where you get the best deal and the best relationship," he says, adding that canvassing at least 10 banks is a good idea. Look for a bank that's flexible, willing to offer free business checking and a line of credit that's in range with what you need, he suggests.

And of course, make sure deposits are FDIC-insured. That way, if the bank shuts down, deposits of up to $100,000 in a checking or savings account (or $250,000 in retirement accounts such as IRAs or Keoghs) will be covered by the government. To see if a bank is FDIC-insured, click here.

Ask Questions

While you're shopping, it's important to be assertive and ask difficult questions, says Dawn Bennett, chief executive at wealth management firm Bennett Group Financial Services in Washington, D.C. These days, "small businesses have to be a little more forthright and step up to the president [of the bank] and say: 'I need to know what your balance sheet looks like,'" she says.

Inquire about the bank's exposure to residential and commercial mortgages, she says, adding that a red flag might be too many so-called Alt-A loans, which is a type of mortgage typically reserved for the riskiest borrowers. Ask about their primary source of revenue. Do they have exposure abroad? If not, and they're relying on U.S.-based consumers entirely, that's a bad sign, says Bennett.

Do the Math

To truly assess a bank's financial health, take a look at its debt, profitability, liquidity and leverage ratios, suggests Fisher from Gerstein Fisher. These ratios can indicate a bank's solvency — that is, whether or not a bank is able to meet its financial obligations in a timely manner — so you'll be able to judge if that bank is healthy and able to withstand added economic shocks, says Fisher. To get a clear idea of the health of a prospective bank, compare its ratios to those of about five or six similarly sized institutions, he suggests. (The information is typically included on a bank's financial statements, including 10Ks, balance sheets and income statements.)

A number of private companies also provide ratings of financial institutions. Bankrate.com, for instance, offers its free Safe and Sound system. Other services that rank financial institutions are listed on the FDIC's site.

Cover Yourself

Once you've found the best bank to work with, find a second one that fits your parameters, suggests George Cloutier, chief executive at American Management Services, a small-business consulting firm in Orlando, Fla. By forming relationships with not just one but two banks, "you're hedging your bets," he says. If something goes wrong at your first bank, you'll still have the other to fall back on. (And once you have more than $100,000 in deposits, it's a good idea to spread them to another FDIC-insured bank.) Keep in mind that dealing with two banks is optimal. However, some banks may frown on sharing your business with too many others, Cloutier says.

Other recent Starting Up columns:

• Starting Up: Entrepreneurs Turn to Moonlighting
• Starting Up: The New Path to Dot-Com Success

("Starting Up," a weekly column written by Diana Ransom for smSmallBiz.com, follows entrepreneurs through the early stages of launching a business. Write to her at dransom@smartmoney.com.)