A bank relationship that has stood the test of time is a rarity, given changes in the banking profession and difficult market conditions both for banks and for small businesses.Are you a CEO who has reconsidered your company's bank relationship? Are you proactively deciding whether and how you might go about the process of switching? If so, here are five suggestions:
Treat the bank as a relationship, not a commodity to be priced
If you are shopping simply because the bank down the street is offering a rate that is a half-point better, don't! Relationships are two-way streets, and your loyalty will count for something when you most need it.
Also, don't think that all banks essentially are the same. As an investor, we see great variability in bank terms and levels of support that go beyond the pricing on the loans they offer.
Determine your bank's the economic health of your bank
A bank that isn't strong may be forced to shed customers or move them into "workout," even when it is not rational to do so. Research the bank's financial condition. One option is bankrate.com's Search for Safe Financial Institutions page.
Research the bank's focus in the commercial market
Know whether your business is in the bank's "sweet spot," or on the edge of its market. You don't want to fall off your bank's radar based on too much or not enough growth. Banks that lose interest in serving your market segment tend to be the most inflexible.
Understand who makes loan decisions
Some banks separate the credit analyst from the sales broker, while others integrate these functions. Some banks make credit decisions at the regional level; others do it locally. Which is best for your business?
Consider the banker, not just the bank
Qualities to look for in a banker include someone with whom you can make a personal connection, who is trained in the banking profession, who will take the time to understand your business and be your advocate within the bank, and who has credibility with the bank's decision makers.
Need referrals? Call a retired banker. They know who it was hardest to steal customers from. Or call an investor. They see a high volume of deals and can suggest how to start your search.
Do you have a banker to recommend? Let us know who and why. Advice from peers is always appreciated.
Also, are there other criteria you feel are worth considering? Post that as well!
Read about how Vested for Growth's investment structures differ from bank loans.