Building a Good Relationship With Your Financial Institution

Tips for small business owners who want a better financial relationship

05/20/2015

If you’re a small business owner, it’s important that you not see banking as a chore, but instead, as an opportunity to network and build a mutually beneficial relationship. The way that you approach your relationship with your financial institution can impact many aspects of your business, so it’s important to put an effort into making the relationship strong.
 
If you want to have a good relationship with your financial institution, the first thing you need to consider is what type of financial institution you work with. When it comes to small business banking, the benefits of using a community-based financial institution are clear. Local financial institutions have a long record of giving out loans to small businesses at a higher rate than the national banking giants.
 
“Even given today's banking climate, it's easier to get a startup loan from community [financial institutions], according to the Independent Community Bankers of America,” states Entrepreneur.com. “They can be a little more flexible, don't have a bureaucracy to deal with, and are more apt to make character loans.”
 
There are many reasons why local financial institutions may be more flexible and likely to give out small business loans. First, community-based financial institutions know the businesses in the area and can more easily evaluate the business’s worth to the community and potential for success. At a national chain, however, the people who make the big decisions may not be the people you meet with at your branch, and they have to rely primarily upon hard numbers instead of local knowledge.
 
If you already do your personal banking at a community-based financial institution and have a relationship with the people who work there, then you are in luck when seeking to start a business banking relationship.
 
“If you don't have that kind of relationship, start to get to know your bankers now,” states Entrepreneur.com. “Visit chamber of commerce meetings; go to networking events; take part in community functions that local bankers or other movers and shakers are a part of. A banker with a personal interest in you is more likely to look favorably on your loan application.”
 
Using the same financial institution for a variety of services is another great way to build a beneficial relationship. If you have already demonstrated a good record of paying back personal loans and directly depositing a steady paycheck at your financial institution, then there is a clear history of trust already established when you seek to start accounts for your business or take out new loans.
 

“In essence, because a bank is already familiar with your financial situation, it takes less time to gather your information and vet the accuracy of what you report,” states Casey Bond, contributor to the Huffington Post. “This is not only beneficial when it comes to things like combining statements or transferring money, but also when applying for loans when the approval process can be lengthy and complicated if the lending institution doesn't ‘know’ you from a previous business relationship.”
 
When you build a strong relationship with your community financial institution by establishing a history of trustworthiness and commitment, you will be building a strong foundation for your small business.

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