Whether you go with a larger institution or a small community institution, what matters most is the relationship you develop with it.
According to an article by the staff of Entrepreneur, the definition of a banking relationship is “the rapport you establish with the [financial institution] with whom you conduct business transactions, which could help smooth the way when it comes to loan applications or special requests.”
It would therefore behoove you to make the most out of your relationship with your business’s financial institution to ensure future business growth needs, in terms of loans and lines of credit, are readily accessible.
“A banker with a personal interest in you is more likely to look favorably on your loan application,” Entrepreneur adds.
Yet, choosing the right lender is not just about the money. In effect, you’re choosing a strategic partner to help grow and sustain your business. In a June 2011 article in DBS News Money Watch, contributors Rich Russakoff and Mary Goodman write that as with any relationship, that means putting in effort to make it work for both parties.
How to Develop a Strong Relationship with Your Banker
“Treat your banker like any other valuable client or strategic vendor. The best banking relationships are based on pro-active communication. By establishing a pattern of regular communication -- and not just when you need something -- you build a relationship,” Russakoff and Goodman advise.
According to Russakoff and Goodman, here are five ways to develop a better relationship with your banker:
- Stay in contact
At least once per quarter, call your banker to update them on any business projections that may have changed, or even to just share some positive news.
- Make your banker feel welcome
You should regularly invite your banker or loan officer to stop in to your business, to see its operations first-hand and allow for personal interest to develop.
- Stay personal
Just as you would with your clients or customers, make sure to send your banker personalized birthday cards and holiday cards. It shows them you actually care and appreciate them.
- Always check for accuracy before sending financial documents
Even though it may be an accident, sending your banker incomplete or incorrect financial information when applying for loans or lines of credit, or even if you’re doing a year-end revenue review, could cause turmoil. This could, in turn, cause tension between you and your banker, which could then lead to negative actions.
- Be proactive, even with bad news
Your bank doesn’t need to know all the bad news, but it’s important that your banker hear the sales failure from you directly and not through a secondary source. When you’re forthcoming, your banker will likely try to be a part of the solution, especially if you speak to how you’re addressing the issue. Just be sure not to air all your negative news, as the perception of your business (and its potential for success) could suffer. Your banker is there to lend your business money, after all.
The bottom line, for your bottom line, is to make sure you’re not being superficial with your banker just to get money. The relationship you develop could turn into the strongest strategy your business will have for success.
If you have questions on how else to make the most out of your banking relationship, contact us and we’ll be happy to guide you.