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Building a Relationship with a Commercial Lender

There are many reasons businesses need a source of capital. Perhaps they need to expand and purchase new equipment, purchase or refinance a commercial building, or fund short-term cash-flow needs associated with revenue growth.   

Taking on debt is one of the most critical decisions a business can make. Businesses may find it challenging if they don’t have a full financial team in place to lend the critical eye needed to review financial statements and develop potential solutions.

Business owners need to be creative when putting together a team of outside partners to help with critical decision-making, such as knowing the right time to seek an influx of capital. The external partner team should include the business’s attorney, CPA and commercial lender. In the midst of ongoing changes to the regulatory and business environments, the value of a trusted relationship with a commercial lender may be one of the most important contributors to the long-term success of a business.

Experienced commercial lenders provide no-cost resources for business owners to discuss and review their business objectives and challenges.

Here are a few simple tips that can help you as a business owner find and build a productive relationship with a commercial lender.  

#1: Do the research. Seek out banks in your area. Consider banks with a local connection or regional banks that know the market, know the region’s strengths, and are vested in the local economy.

#2: Begin an ongoing dialogue. Start with a simple conversation. Make the call and begin the dialogue. Conversations with a banker are free. A call is a way to determine if the match between you and the bank is a good fit. Ask the critical questions: does the lender have knowledge of your industry, and if not, is the lender willing to roll up his or her sleeves and learn about it?

#3: Know that every business is unique. Getting a relationship started with a commercial lender can be hard. Be aware of any lender’s attempt to fit your business into a pre-existing lending formula that was constructed as a one-size-fits-all solution.

#4: Find a lender that is engaged. A good commercial lender bases decisions on the merits, prospects and performance of a specific business. He or she is ready to learn everything about your business right down to your vision and hope for the future. As a rule, lenders should be willing to meet with their clients at the client’s location to get a full scope of the business. Nothing is more informative for a commercial lender than a visit to a business. Once there, a lender can see first-hand the way the business functions and spot the needs for capital.

#5: Welcome your banker to your business team. Finding the perfect commercial lender for your business may take some time, but once you create that relationship, make this person part of your larger business team.

#6: Rely on your lender for advice. A good commercial lender will learn about your business or industry, his or her real area of expertise is commercial lending. The lender will be able to guide you through fundamental questions such as when to add capital, when to grow, and when to add capacity against demands.

#7: Have an open and honest relationship. Be open with your commercial lender about what you really want, need and require. Trust is one of the most important keys to any successful relationship. Be willing to have the tough conversations, and remember that it’s all right to share bad news with your banker. He or she needs to know every aspect of your business in order to offer you the best advice.

#8: Help your lender help you. The more your lender understands your purpose and vision, the easier it will be for him or her to prepare an accurate and appropriate loan presentation for the bank’s credit team . Your banker’s credibility with the credit administration group at the bank ultimately impacts your  ability to obtain the appropriate credit.

When it works right and when there is trust, honest discussion and clear goals, a business owner will find that a relationship with a commercial lender is crucial to a business’s success.