How to build a relationship with your banker

05 Oct How to build a relationship with your banker

There might be no bit of advice given to business owners more often and understood less than the importance of establishing a relationship with your banker. Given this advice, one entrepreneur asked in response, What does that mean? Am I stopping by the branch with donuts every week to say hi?

“In a post-COVID world, it is a bit more difficult to go into the branch and bring donuts because they’re not going to let you in,” laughed Ann Duplessis, Senior Vice President at Liberty Bank and Trust Company. But there really isn’t much mystery to building a banking relationship. In fact, there are really two key steps.

Why Are Banking Relationships Important?

Why are small business owners so frequently encouraged to build relationships with their banker? Because, says Duplessis, it is critical to business growth – and the only way your bank can effectively partner with you.

“We don’t know your business, we know numbers,” she said. But, oftentimes numbers don’t tell the whole truth as it relates to an ability to manage a company or manage through some potential volatility that could happen through your business life cycle.

“The first way we kind of minimize that real or perceived risk is we learn more about your company and the industry and how your company works. Instead of us learning us through Googling and data, we really want to hear with you. When I can sit with someone and they can tell me with passion about that company and that resonates with me, then that gives me some comfort. It starts to minimize my concern that this person doesn’t know what they’re doing and that’s risky,” Duplessis said.

Know your numbers, even if you have to practice with your accountant. Know the trends in your business. You need to be able to tell your banker what happened. “Even if it’s a tight deal, that tells me you know what’s happening,” Duplessis said. And equally important to not sinking your banking relationship? Timely tax filings. “We have to have the tax returns because we have to be able to validate the information. Bankers don’t look kindly on businesses that don’t have their business together. We understand extensions, but if you’re extending a return for 3 years, something’s wrong,” Duplessis said.

Mistake #2- Not Keeping In Touch

And even when a business owner isn’t looking for a loan, keeping in touch can pay off. If you’re launching a new product or are in the newspaper or anything that’s been published, send it to your banker as an FYI.

“Sometimes that’s a wake-up call for me and will prompt me to give them a call,” Duplessis said. “That is a great way to keep your lender engaged. We’ll remember this because not many business owners do this. And the ones that do stick out.”

Understanding The Limitations Of Your Banking Relationship

Duplessis reminds small business owners to clearly understand their capacity as it relates to growth and what it means when they’re borrowing money for that growth. “A lot of that is going to come from having a source of consultation like Good Work Network. That is important because you’re in business to have it be sustainable. And that sometimes means getting advice from a third party because they’re not close to it,” she said. In the old days, bankers had the time to sit down and talk to customers and to counsel them. “We just don’t have the time to do that anymore. In many cases, not all, what you find is because of technology and the way banking has changed, you have more sales people who are more business development people. Much of the stuff we used to do personally is done by a computer or underwriting team. That’s why if there is a resource that can provide technical assistance that can help you evaluate your strategy to help you answer some of those questions that the bankers have, take advantage of it.”