By John Marder, Senior Vice President, C & I Commercial Lending
Originally published in the Orange County Business Journal
Recently, I was given a great opportunity to show just what I can do as a relationship manager and what we can do as a bank. The owner of a distribution company I was recently introduced to said, “I liked the guy at the other bank that came out to see me but I gave him my financial package and, after three months, nothing ever happened.” Does this sound familiar?
Let me give you a few tips on how to best avoid this scenario if you’re looking for a commercial loan or line of credit for your business, or if you are a trusted advisor helping your client through this process.
- Don’t just rely on one lender. It is helpful to shop a small, medium, and large bank to see what each has to offer.
- Realize a good offer can take time, so ask how the process works. You should get a pretty good indication of how the bank will view your company within the first few weeks, although it may take up to a few months to finalize funding,depending on the complexity. If you don’t have a sense of how things are progressing within a few weeks though, this lack of responsiveness should demonstrate the bank is not a good fit.
- Get the bank started in its evaluation with a complete financial package. Especially focus on how your business works, the past three years of financial performance, and even better, a forecast of where you are going this year and next. If you have some negatives or some one-time events that impacted your financial performance, explain it in detail and in writing at the beginning.
- Make it a priority to work with your bank if you are serious about getting a good offer in a timely manner. Banks always need additional information, and will have additional questions, so make sure to reply ASAP with the information or explanations. Don’t be concerned if this communication repeats itself a few times. The better they know you, the better the relationship will be in the long run.
- If the process of seeking banks for commercial lending is foreign to you, ask for some help! Your CPA or attorney can help, or ask them for a broker or consultant that can prepare a full package for you. The good ones will keep the process on point, while ultimately, paying for themselves in the long run by offering better deals.
- Following these steps will give you some good choices, but remember it isn’t all about cost or loan structure! Make an assessment of who you can work with and how the bank is set up to serve its clientele. For example, do they offer local decision making and customer service or simply ask you to, “call our 800 number?” Consider the importance of other members of the banking team in specialty areas that are important to the long-term success of your business, like cash management or international banking. Remember, the duration it took during the initial lending process is a good hint of how long it will take to get other things done in the future.
The most important question to answer is, “Will my business and the bank be a good fit for a strategic partnership?” Good luck in the long-term success of your business, but with the right banker and the right bank, you won’t need it!