What qualities should business owners look for in a bank?
First is the bank’s ability to lend. Check the FDIC, OCC and Federal Reserve websites and take a look at the bank’s recent financials, read the news about the bank in the media, and seek out other business owners’ opinions. Next, determine what different financial products and services the bank can offer that you could use now, as well as in the future. Are you going to have to find another bank in a couple of years because the bank has limited services, cannot offer solutions for FX hedging or letters of credit, and/or is expensive or antiquated when it comes to online banking or treasury management solutions? What’s the banker turnover? Will you need to keep re-establishing your relationship and explain what you do and what you want to accomplish over and over? Does the bank bring in a team of professionals to turn business challenges into opportunities?
Should a borrower disclose both the good and the bad when applying for a loan?
Definitely, your banker should know everything. If it’s a cyclical business, the bank can look at the future outlook and projections. It can also analyze how you did damage control. Did you ignore the fact that the business was failing, or did you put strict measures in place in a timely manner to cut expenses and return to profitability? Regardless, a bank can almost always look for alternatives such as asset based lending, factoring or purchase order financing if it makes sense.
How often should business owners consult with their commercial lenders?
You should consult with your commercial lender regularly. A good banker will understand your business, its operating cycle, its challenges and opportunities, and its risks and cash flows. Good bankers provide reliable guidance and appropriate solutions.
Sinem Mehterian is a vice president and relationship manager at Wells Fargo Bank. Reach her at [email protected] or (281) 362-6657.