Building a Business Law Relationship with your Lender
Here are the three best ways to develop a relationship with a community lender from your local KC Business Law firm:
1. Make a good first impression. Small lenders take referrals from the business owner’s lawyer or CPA very serious, especially if that professional has previously made referrals to the lender that resulted in a strong relationship. Once the initial appointment is set up, owners should treat it as they would the first day of school by bringing in as much documentation–including financial statements and tax returns–as possible to demonstrate eagerness and preparedness. Also, they should come with a list of questions and a detailed business plan that illustrates both how lending assistance will propel the business and how the business will repay the debt.
.”When meeting for the first time, you have to articulate what you need. I’m not a mind reader,” says Don Kidd, president of Western Commerce Bank in Carlsbad, N.M. “Run us over with information. A lot of small-business people are reluctant to provide information, but we need it even if it is bad. There should be no secrets.”
2. Woo the bank. From that introductory point, business owners need to work diligently to cultivate the relationship. Many lenders will ask to visit the business to better understand its operations, but owners should take the initiative to extend the invitation early in the process.
Also, consider giving the bank more business. “More and more, banks don’t want you to just open a checking account and then give you a loan,” says Mr. Carlson, who points to online banking, remote deposit capture and credit cards as services that business owners can use. “The bank makes money on all those things, but also, it shows more commitment on the borrower’s side. In banking, if you sell one service, [customers] can leave easily. With six services, they will stick with you.”
3. Stay current. Most banks want financial information on a regular–as often as a biweekly–basis so that they are abreast of how the company is performing. They also want to personally check in to discuss the direction of the company and the challenges it may be facing. “When the business owner can’t provide current financial information, that’s a red flag,” says California Business Attorney Steven C. Peck.
This isn’t just to make sure the loan products are in line with what the business can repay. It’s also so that the lending managers can act in an advisory role to stave off any bumps in the road before they happen. “The best relationships are when the accountant and the banker and the business lawyer work together with the owner in a consulting relationship,” “What most bankers have seen in the long run that if you work with that trifecta, the result is a more successful business.”