Getting the Best From Your Bank
A strong relationship with an interested bank is an important part of your business. But for many entrepreneurs banking relationships can be confusing, frustrating and intimidating. Here are some tips for fostering a healthy partnership and getting the best from your bank.
Know What your Banker is Looking For
First you need to understand how a bank thinks and what they consider to be a “bankable” business. While you might get most excited about things like product innovations and untapped markets, the bank is primarily interested in finding a business that will pay back its loans with little risk of anything going wrong. Before they open the purse strings, they’ll want to see clear evidence that you have adequate cash flow, liquidity, leverage and collateral. Focus your energy on addressing these specific issues and reassure your bank that you can repay your loan.
Get to Know Your Banker
The more the bank understands you and your business, the more they can help. Make yourself known at the bank, visiting from time to time so people know your face. Use these visits to keep senior-level bank personnel up to date on your business activities, informing them of both your achievements and the challenges you are facing.
The best time to establish a relationship with a banker is before you need money. And remember, a good banking partner can provide more than financing; they have a huge number of contacts and can help you network within the local business community
Hire a Pro
Not surprisingly, a bank looks hard at your books. A qualified financial professional can tell the story of your business in numbers. A professional can also help you compile current and accurate financial data. With this information in hand, you have more credibility and the process will be faster and more likely to be successful. Sloppy or incomplete information will raise an immediate red flag for the banker.
Studies show that businesses that have an association with a financial professional are less likely to have loans turned down and even get loans at slightly lower interest rates.
Know When to Switch
Be prepared to shop for a bank more than once during your business’s life cycle. Your needs can change, and there are times when your bank might stop being the right fit for your business. On a regular basis you should be asking yourself questions like these: Is my bank competitive? Does it offer the products and services I require? Is the quality of customer service high? Do I have a rapport with my banker?
Establish a trusting and rewarding banking relationship. Your business will thank you.
One of the best ways to gain a macro view of your business is through SG&A Reporting.
If you’re looking for a trustworthy bookkeeper or accountant, contact us today to learn how Owl can help you.
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