We have heard it many times, “The first thing to do when you go into business is find a good accountant, lawyer, and banker.” The skills of each profession will be needed at multiple times during your business career and you never know exactly when.
Of the three advisors, Attorneys and Accounts, are traditionally thought of as individual professionals. You don’t necessary work with a law firm, you work with an attorney. Your taxes are not done by the firm, they are done by your accountant. When it comes to finding a banker, it can be much more complicated. The process of lending money needs an institution, so how do you select a good lending partner?
The best lending partner is traditionally one that takes the time to understand your business, that offers the type of financing that you need to accomplish your goals, and aligns with your personal values. In an effort to help you find the right partner, we have provided some things to looks for:
Understands Your Business – Finding a bank that will take the time to understand your business can sound simpler that it is. In today’s technology driven world, many times business banking relationships can become more computer facilitated than relationship driven. Look for a bank that will spend time to understand the what makes your business unique. Spend time to tell them about your needs, strategy, customers, and challenges.
Offers the Right Type of Financing – All loans are the same – right? Not necessarily. Banks have access to several different types of loans and each one has a unique purpose. Spend some time talking to your banker about the diverse types of programs and industries in which they have experience. Discuss what their underwriting criteria is for distinct types of industries and loans. Does the bank specialize in heavy machinery loans, do they have experience with complex real estate transactions, are they experienced with the cash flow challenges associated with insurance and Medicare that can burden healthcare providers? Understanding your banks experience, underwriting criteria, and loan appetite can make a powerful partnership.
Has the Authority – Getting a loan approved follows the same process regardless of the bank. Although this sound logical, it’s not how banking works. Individual bankers may have various levels of lending authority and decisions may, or may not be made, at the local level. Asking simple questions about lending authority, the approval process, and overall authority can help to give you a picture of the approval process and how long it may take.
Knows the Local Market - Smaller, regionally focused banks can sometimes be a better partner because they know and understand local market conditions. They know the leaders within the market, have knowledge of their customers, and have a view of an individual business owner’s management skills. Understanding this level of detail can result in an increased emphasis on a borrower’s character and skills rather than just the application of a credit-score model.
Understands SBA Loans – Does your banker have experience with the U.S. Small Business Administration (SBA) loan programs? Federally subsidized loans can reduce risk to the bank, which makes it easier for banks to lend money. SBA loans may be an option for businesses whose cash flow or collateral may be inadequate for them to obtain traditional bank loans.
Aligns with your Personal Values - Finally, does the Lender align with your personal values? Are they involved in the community, do you know multiple individuals within the bank, do they treat you like you are important? Working with a bank that not only understands your business, but also understand your personal goals can make a world of difference and make your proud of working with the institution.
Understanding what makes a good lending partner can help to streamline your selection of a bank and help expedite your business goals. Make sure to ask many questions when selecting a financial partner, so that you completely understand how they can assist your business. If you are interested in exploring how USAmeribank can help, please contact us at 866.979.2265 or USAmeriBank.com/SBA and we will connect you with a local professional.