I'm amazed at some of the interesting stories I've heard over the years from entrepreneurs about their banking relationship. Your bank and its bankers should be key professional advisors and advocates for your success. Please take a moment to consider these scenarios – hopefully none will apply to you.
- Who calls whom? In today's challenging business environment your banker must be your partner, and he/she should be very proactive in managing the bank's relationship with your business. If you haven't heard from your banker within the past 90 days, it may suggest that you don't have that two-way relationship that the very best bankers deliver to all of their clients, not just their biggest.
- When you call your banker, do you get a return call within a reasonable timeframe, or must you follow-up to make the connection? Many banks have changed the profile of their "ideal" client types in recent months. Sometimes you don't hear from your banker because he/she is reluctant to share the bad news that you don't fit their profile any longer.
- You have a maturity on a credit facility coming up in the next 90 days. Has your banker sat down with you to review your needs and the changes you and the bank have experienced over the past year? If not, how can he/she possibly develop the "right" solution for your business? Credit renewals (and new loans) demand advocacy and action by your banker, well ahead of maturity dates or other triggers. What seemed automatic in the past is now likely to require more scrutiny by your bank.
- Your credit facility is only renewed for a short period (30 or 90 days quite commonly) instead of for the year (or longer) you've usually seen. This can be a result of several issues, none of which are positive to your business. Poor planning by your banker, inadequate staffing at the bank, lack of understanding of your business and its needs, lack of confidence in you or your business, lack of full financial information on the business; I could go on and on. If it is you that has caused the problem, look in the mirror when assessing blame. If not, your relationship is probably not well.
- You really "know" only two people at your bank – your banker and his/her assistant. Your banker could: win the lottery and decide to quit work; take a new opportunity outside banking or current geographical area; encouraged to explore other market opportunities, or any number of other things. If your point of contact is just your banker (and his/her assistant), your relationship is unnecessarily imperiled. You must get to know the credit and underwriting teams and the local executive at the minimum. You need multiple advocates supporting you at the bank.
- Your longtime contact at the bank introduces you to a new account officer, and their title has the words special assets, SAG, asset management, resolution or other cryptic yet ominous sounding phrase, your relationship may be suspect. Let me assure you that not every client that has to deal with a bank's "special assets" group is a doomed company, and banks sometimes erroneously paint a client with this tag, but it is imperative that you recognize that this change in account officer is NOT minor, and that you need to "think differently" about your bank relationship. Special assets bankers often measure success by moving clients out of the bank.
- You have a long-term real estate loan that has a "bullet" maturity coming up within the next two years. While your bank may have renewed this very same loan multiple times in the past, this is not the time to assume that the same will hold true. The banking industry has undergone considerable change in the past two years, and the industry's appetite, particularly for investor real estate, has changed the most. If yours is a multi-tenant shopping center or low-rise office property, or a hotel, or other property that relies on rental from tenants, start talking to your bank right now about what's in store at renewal time.
If you find yourself burdened by one (or more) of the above issues, take action NOW. Even in today's tough business environment, there are a few banks that are looking to add great new clients, and will be very proactive to win a new relationship. Your CPA, lawyer or insurance agent will often know who is in the market and who is out. Also, just because your bank has delegated your relationship to their special assets group, I've seen many situations where another bank will see that same company as a great new relationship.
Please share your relationship story with me – I am always interested in learning.
I hope that your business already enjoys a great banking relationship…
Bruce Bradford
214-799-0395
http://www.criteriumsolutions.com
© Criterium Solutions LLC, 2011
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