Many small business owners wonder, what is the “trick” to accessing affordable capital? While there are many technical answers to building your business credit, one of most impactful ways to ensure access to capital is quite simple: build a relationship with your banker.
The better a banker understands a business, the less risky the business will be perceived. By building a relationship with a banker, a small business owner has the opportunity to educate the banker of his/her business. Furthermore, the small business owner will learn more about the lending process and how to dodge potential road blocks ahead.
Over the past few weeks, Camino Financial has interviewed several business bankers to better understand simple ways of building a lending relationship. Below is a summary of the top 3 techniques to building a relationship with your banker:
1. Touch Base Periodically
A good practice is to touch base with your banker every quarter. If you’re going to commit to this, DO IT. Consistency is the key to any relationship. During a first visit with a banker, set an agenda for the rest of the year. For example: introduce your business, review financial services available at bank, how to prepare for loan application, and review financial statements/performance. Since businesses change all the time, it is imperative that owners meet with their banker on a periodic basis. Bottom line: it’s a two way street, you set expectations in the beginning of the relationship and if you commit and do it, you will be successful.
2. Get a Loan Application (even if you are not in the market)
Check to see if you prequalify for a loan. If you don’t, learn what the gaps are in your application and take steps over the next months to fill those gaps.
3. Share Objectives and Keep Your Records Current
Begin a relationship with sharing the objectives for the business and how you plan to achieve them. In addition, keep your records current so your banker can monitor your growth and potential. If you want to grow your business you should always have your financials updated and current. Not only keep them current but accessible.