Let’s see if this sounds like you. You want to have a banking relationship where your business is valued and you’re treated like a human being. You want a bank that looks at your business and not just your credit score. You might even want a bank that stays with you when you have temporary setbacks.
At the end of this video I want you to know why using a money center bank isn’t for you and why using a community bank is. So, let’s jump right in.
Let’s see if this sounds like you, you want to have a banking relationship where your business is valued and you’re treated like a human being. You want a bank that looks at your business and not just your credit score. You might even want a bank that stays with you when you have temporary setbacks.
You know if this is true, and for most of the people I speak with in the private business world, it is. Why are you still with the money center banks? You know the ones like Bank of America, Wells Fargo or Chase. You’re never going to be big enough to get their attention. And all they see when they look at you is your credit score. Not you and certainly not your business.
You might even be saying to yourself that you hate your bank, you don’t understand why they don’t pay attention to you. If that’s you, now let’s find out what you can do about it.
At the end of this video I want you to know why using a money center bank isn’t for you and why using a community bank is.
So let’s jump right in.
- First you don’t want to be just another number for your bank. You know, this is something that’s really important. All businesses along the way are gonna have ups and downs. And if you’re having a down and you’re just a number to your bank, there’s a really good chance they’re gonna say goodbye to you at the very, very worst time.
- The second thing you want is you want to have consistency in your banking relationship. This means the people you’re working with are the people you know, they get to know you, you know them, you live in the same community and they’re not gonna be replaced tomorrow, which happens in the money center banks all the time. There’s constant turnover in the long relationship people. In the community bank that happens less often, it still happens, but in the community bank is easier to find other people in the bank that you can have relationships with, who are there for a long period of time.
- Next with the right size bank you become important to their success. You know if you need to borrow a $100,000 or $50,000 or even $25,000, you can use a teeny, teeny, teeny bank. They’re gonna get to know you, they’re gonna value your relationship. And they’re gonna work with you to become successful. If you only want to borrow $100,000 which could be very significant for you and you go to Chase, they don’t care whether you’re successful or not. They’re happy to shut you off. So finding the right size bank for the amount of money you need to borrow is really important.
- Next, if you’re a small company you want to go with a smaller bank. If you’re larger, you go with a midsize bank. Here’s the secret, people often are afraid. Say, well I can’t go with that bank because they won’t be able to loan me all the money I need. You know, even with a midsize community bank, you likely, unless you are very, very large company, never to run into their credit limit. And if you do they do what’s called, where they work with other banks and they put together a syndicate to loan you money. But my guess is almost nobody watching this video is ever going to be in that situation.
- So these are some of the things for banking success.
- You know, you want to make sure that you can talk to your loan officer and more importantly, their boss, because loan officers do come and go. And if you have a relationship with a loan officer and the next person up on the feeding chain, and even go a level above that there’s a really good chance when your loan officer changes you’re gonna be able to go to that boss and say, okay what do we need to do to make this relationship work right?
- The next thing you want to do is you want to make sure that you understand the loan process and it can be easily explained to you. Some banks use a sign-off process where your loan officer has a certain amount of money they can loan to you on their signature. Other banks use lending committees. So you want to make sure how the process works. And more importantly what the credit people look at before they make a loan.
- And that’s where you get into understanding how the bank analyzes your business. This is really, really important. You know, I have my vending company. We had a horrible balance sheet but because the bank understood cashflow lending and understood that we would have interest coverage of 10 to 14 times, they were comfortable making the loan even though our balance sheet was completely upside down. The only reason we ever got that loan was because I took the time to learn about how the bank analyze my business. You need to do the same thing.
- The next thing you want to be really, really cognizant of is when you have a setback you don’t need to be your bank to be one of the problems. Now to make sure this doesn’t happen you have to keep the bank informed when things aren’t going well and not wait for them to find out about it.
- Then finally, you want your bank to be a partner and not an adversary. Too often I hear people like you say, you know my bank is not a partner. I wish they would work with me but every time I go to see them I feel like I’m getting my teeth pulled. That’s not what you want. When you go into your bank, you want to feel comfortable, you want to feel relaxed, you want to feel they have your back. Those are the things that are really, really important when you’re choosing a bank.
So here’s what I want you to do.
- First search out who the community banks are in your area. That might take you some time. It could be two, three, it could be a 100. Depends how big your community is. And by the way every single city in the country has community banks. In fact there’s a lot more community banks then there are the big banks. So it’s easy to find them. You just have to take some time interviewing them and understanding who they are. Remember a bank is a supplier. Now the commodity that they provide is money. So they’re very careful about who they give it to. But at the end of the day, the bank is a provider.
- Next thing you want to do is interview them to find out one that’s a good fit. Review what a good fit is.
- You are the right size company. If you’re a small company, you go with a smaller bank. If you’re a larger go with a midsize bank and you’re likely never to run past the amount of money they can loan.
- Next thing you want to do is you can talk to your loan officer’s boss. If you can’t do that, move on to another bank. That way you’re gonna have a relationship if the loan officer leaves.
- Next you want to make sure you understand the loan process and you understand how the bank analyzes your business.
- You know, choosing a bank that will support your needs and show them loyalty for doing so, that’s something that’s really important for you. Loyalty goes both ways. You can’t just choose a bank that’s supporting you then say, you know I’m gonna leave you for a quarter percent of interest. It’s not the interest rate that’s so important, it’s the relationship that you have with a bank. If you pay a quarter of a percent or a half a percent more for your loan, that’s okay if it’s the right bank for you.
So what do you think about choosing the right size bank? I hope you now know what a money center bank is probably not for you. And while you’re at it, why don’t you scroll down and leave a comment and DOWNLOAD our Free eBook on Simplified Budgeting. This will make it easier to explain to the bank exactly what you do.
Hey, this is Josh Patrick. You’re at the sustainable business. Thanks a lot for stopping by. I hope to see you back here really soon.