Business Credit Sherpa: Ten Tips to Choosing Your Bank

Business Credit

: Finding the right bank for your business is a lot like finding a mechanic for your car. You  need some objective information first, and the best way to determine whether or not to use a particular bank is to answer the following ten questions. You can use them as your starting point, but remember to dig deeper if you can.

Is the bank healthy with strong financials? Today’s economic climate has caused a recent dramatic rise in bank failures, and you might want to check into the health of any bank you are seriously considering. Don’t pick a bank that you might see the government bailing out six months from now.

Does the bank have a business division focused on lending to small and medium-sized companies? What percentage of the bank’s business is geared towards this market? Look to see if your bank has a number for a business division. You’ll get much more information if you connect with the
right person who can answer your more detailed questions.

Is the bank on the SBA’s current list of top small business lenders? This information can be found on SBA’s most recent study of small business lending activities. Entrepreneur Magazine created a great website on business-friendly banks, broken down nationally and by state. Is the bank familiar and comfortable with your industry? Does the bank lend to your type of business, and what industries does it specialize in? When you contact a business loan officer on the phone, explain your business. Tell them what you do, how long you’ve been doing it, and how fast you are growing. Let her know what you are looking for in a bank, both the relationship you would like to have and the line of credit you want. If they don’t work with people in your industry, ask for bank recommendations. Local banking markets are very well aware of what types of loans their competitors are offering.

Does the bank offer the mix of services and products you want? What kind of services and products do you need? Traditional loans or lines of credit? Credit card or direct deposit? This is the next question after confirming the bank does business in your industry.

Does your desired loan amount fit within the bank’s lending limits? What is their average small business loan? Can the bank grow with you as your financial needs increase? Many banks have different divisions for the different sizes of companies. Smaller banks may have a ceiling on how much they can loan to one business, while larger banks will have a minimum for the loan they give.

Can you secure a meeting with the right person? Get introduced or referred to the bank officers who make the lending decisions. It is great if their superior takes an interest in you, or if your referral is someone they respect. While this won’t guarantee you a loan, it can get you preferred treatment. Is the banker willing to meet with you at your company? Will your banker take time to meet you at your business? If your business “shows” well, a meeting at your company can be a positive.

Does the banker have local lending authority? Some of the largest national and international banks leave lending decisions to each branch. If it’s possible, connect with the person at the branch who is responsible for the overall lending decisions. Connecting personally with them can give you a benefit if you become a preferred customer.

How long has the loan officer been with the bank? What is their level of expertise in working with small and mid-sized businesses? Check their background in both the business and their skills with working with loans in your industry. Most of the time, the person who appears the
most authoritative has the least lending power, so do your homework on who you talk to if possible.

If you need help building business credit or funding solutions, we invite you to register for our complimentary webinar today.



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