Picking the right banker to deal with can make all the difference when it comes to get financing for your business. You might think that picking the right bank is the most important thing, and while it’s important, picking the right individual to deal with is equally important.
The first thing I would look for in a banker is experience. Unfortunately, age does not equal experience. When banks have difficulty filling a commercial account manager position, they have been known to persuade one of their personal lending staff to take the job. These personal lenders are usually very good at their jobs and they know their way around the bank, but it takes experience with business lending to be really good at the job. Personal lending is based a lot on credit scores and well defined rules, which makes lending decisions straightforward. Businesses vary widely between industries and because of this, a simple decision model for lending isn’t possible. Commercial lenders have a lot more responsibility for coming up with a decision on their own.
Commercial account managers don’t have very much lending authority at the branch level so most larger loan requests will go to a regional risk management centre for approval. Having the respect of the credit managers will get a commercial account manager the benefit of the doubt when a decision is close. It takes some experience to gain this respect.
Take a look at the branch where you are considering doing business. If everyone is under 30, it implies that the bank has trouble hanging on to staff in that location and you may not get the most capable service. It’s like a hockey team; you need a few veterans around to make sure the job gets done when things get tough.
Business knowledge is a very important attribute for a commercial account manager. This can be gained on the job but real world experience in business can be a great help in many instances. This is particularity true in specialized lending like real estate or agriculture. Don’t be too worried if your banker does not have direct knowledge of your particular business. For example, if you are a manufacturer, your banker might not have direct knowledge of your product but he or she might have knowledge in other manufacturing that he or she can apply to your situation. Remember, your banker doesn’t have to run your business, he or she only has to know how to lend to it.
It’s important to have good communication with your banker. Invite him or her to your place of business for a tour. It’s a lot easier to lend when he or she has seen what you do firsthand. It’s even more important to keep in contact with your account manager when things are going badly. Everyone wants to see you succeed. If your business fails and you can’t repay your loans, everyone loses. Your banker won’t give you consulting advice, but if they feel your business is viable in the long term, they will adjust financing and payments to help get you through a difficult time.
Take time to pick your bank and your banker. There is a cost to switching banks and a long term relationship can be worth a lot.