When we talk to lenders, a common theme we hear is that they wish more businesses built lasting relationships with them. Having a strong relationship with a lender can be vital to the success of your business. Your lender should be someone who understands your business as well as someone you can turn to for advice. They should be able to offer solutions for problems your business might be experiencing and help you gain access to the capital your business needs, when you need it most. The stronger your relationship is with your lender, the better they will be able to understand your business when you come to them for advice and solutions to help it grow.
The key to creating a solid relationship with your lender is to begin long before you apply for a loan. Here are some ways to begin establishing a relationship with your bank or lender:
Start small. You can begin building a relationship with a bank whenever—but the best time is when you’re just starting out. Spending time with the business banker at your local branch allows you to develop and nurture a relationship that can benefit you for years to come. This kind of relationship is comparable to a long-term relationship with your doctor. Where a doctor can give you advice based on your health history, a lender can you give advice about your business based on their knowledge of your company’s business history.
Share information. Knowledge is key when working with a lender. It is important for them to really understand your business. Who are your customers? Who are your vendors? What is going on in your industry? It’s a good idea to visit your lender at least quarterly to keep them up-to-date and allow them to leverage information to properly assess your financial situation.
“Probably one of the most important things about building a relationship with a banker, an individual banker, is the trust factor,” says Brian Moeller, Senior Vice President and Director of Small Business Banking for Wells Fargo & Company. “That’s something that is hard won and easily lost, and you just don’t get that with a stranger. It comes over time.”
Ask for advice. A banker can walk a business owner through a balance sheet analysis and explain how the bank sees their finances and business. While you learn more about finances, the bank can learn more about your personal assets vs. your business assets and where you and your business need the money to go to grow your business. Without having a history, this process would take significantly more time.
Build trust. The process of giving information and asking for advice allows you to build trust between you and your lender that extends in both directions. With this higher degree of trust, you can believe in your lender’s advice while they can trust in your ability to repay your loans. If your business is having financial problems, let your lender know early on. If you anticipate missing payments or are late in paying vendors, giving your lender advance notice of this allows them to assess the situation and provide you with options. It also shows that you are able to manage your business objectively and that you can be trusted to inform the bank before a problem gets worse. Depending on the lender, they may temporarily waive fees, extend credit lines or advise you on next steps.
Both in good times and bad, having a solid relationship with a lender can be key to growing your business. The more your lender is informed of your company’s needs and wants, the more they’ll be able to provide solutions. When you treat your lender like a partner in business, chances are, they’ll be there for you when your business needs them most.
For information on the products and services Dun & Bradstreet Credibility Corp. provides, visit us online at DandB.com or call (800) 536-5070 to speak with a credit advisor.