Guest Blog by Craig Ehrmantraut, Cornerstone Bank
As a start-up company or young entrepreneur, finding a supportive banking relationship is no easy task. Banks look to lend money to individuals or businesses where there is not only a reasonable belief of repayment, but that reasonable belief also needs to be supported by documentation. In other words, if you don’t have a company history (even a very short one), you have some convincing to do. And why wouldn’t you? As a business owner you are constantly selling investors, customers, prospects, etc. on your products and/or business. Finding a bank that is willing to put their money on the line is no different. They need to have faith in your ability to run a business as well as confidence in your products and services.
The banking needs of every industry are different. Maybe you only need a checking account, in which case finding a bank is fairly noneventful. However, if you have equipment purchasing needs, fit-up expenses for your office or store, or if you need to finance input costs before you are paid by your customers, you will likely need a financing relationship. This relationship can be very important to the success and longevity of your business. Many business owners refer to their bank as a partner in their business. Therefore, you need to choose wisely.
Here are a few steps to take when trying to find a bank:
- ASK. Ask other business owners, accountants, lawyers and business professionals for a recommendation. No need to reinvent the wheel, especially since many of them have worked with numerous banks in the past.
- MEET. Take the time to meet with more than one bank. Banks are a business too, and depending on what is happening within the business or industry, some banks are willing to take on more risk than others.
- For example, if Cornerstone Bank has just merged with another bank and has a significant amount of money available to lend out, they may be wiling to take on more risk relative to other banks in town.
- KNOW YOUR ACCOUNTANT. Meet with your accountant before your meeting with the bank. The majority of accountants have a good understanding what banks are willing to do and what will be needed to make a decision.
- PERSONALITY IS KEY. Find a banker that fits your personality. The reality is that while risk profiles for each bank may differ, the majority of their products are very similar. Find a banker you trust, one where you are comfortable asking questions, one that can provide you insight into your business and challenge you by asking the hard questions. You want a banker that will be there for you when times are tough. Too often businesses end up picking the bank with the lowest interest rate and fees. In reality, you want a bank that will provide you with advice and insight. One that will be there for you when you lose your biggest client and need to make payroll, or when an expensive piece of machinery breaks and you need to buy a new one. A relationship like this will be key to your business’s success.