By Greg Hahn, Commercial Loan Officer, S. California Commercial
Originally published in the Orange County Business Journal
Having access to various banking services is essential; however, having a relationship with a dedicated banker could mean a lot more to business owners than expected.
- Be a business partner. Most commercial banks have dedicated relationship managers that work specifically with business owners. Banking services are evolving regularly, making it difficult to stay updated on what latest services are available. An experienced relationship manager will get to know their business clients’ needs, recommend new products and services to enhance daily operations, making necessary adjustments to meet changing needs.
- Provide sound advice. A business owner’s relationship manager should periodically be reviewing financial statements, while noticing positive and negative trends that the business is experiencing. This is valuable information as it could potentially help avoid financial problems that would result from missing their lender’s financial covenant requirements.
- Plan for future growth. It’s important for business owners to discuss immediate and future business growth plans with their relationship manager. This will help them to strategize and prepare to meet the requirements that the bank requires for financing. By staying ahead, he or she will be in the right financial position to buy an office building, equipment, or additional inventory.
- Make the right connections. A bank’s relationship manager can be a valuable source in referring the right advisors who can provide the services needed to run a successful business, such as a CPA, attorney, bookkeeper, or business consultant.
- Provide you with market data and research information. Most lenders have various resources available that could be useful in providing additional insight into any new projects. This could be real estate market information or business industry data.
- Provide value based on the overall relationship. Banks, like First Bank, place great value on client relationships. Having a comprehensive and full relationship with one bank allows more flexibility to request better pricing on services. Additionally, the longer a business has been with a bank and the more historical experience they have, the easier it could be when it comes to getting financing for projects.
For instance, many clients engage with their banking partner before looking at new opportunities, including straight purchases of income-producing property, land for commercial developments, or a value add property that requires upgrading and repositioning a property in the marketplace in order to maximize income and value. In order for clients to make informed decisions, it’s important to discuss loan structure and terms with their banker. Some of the more important matrixes would involve loan-to-cost (equity required); loan-to-value and whether the as-is value or stabilized value would be used; whether interest-only payments can be utilized; and loan costs (fees and interest rates).
As the loan structure and costs are becoming more dynamic in the current lending environment, meaningful conversations can shed light on whether a project is economically feasible and possibly influence the offering price for a property going forward.
Greg Hahn, a VP/Commercial Real Estate Relationship Manager, possesses over 20 years of commercial real estate lending experience. Providing a full range of lending products from construction, mini-perm and bridge transactions, Greg has successfully financed over $1.0 billion over his career. Greg holds a Bachelor of Arts in Business Administration from Cal State University, Fullerton.