Here is a bold statement: Your Naples/Ft Myers/SW Florida Banker is your friend, not your enemy! If you are trying to borrower money from a bank or if you have bank debt then you need to carefully manage your relationship with your banker. You need to treat him like he is your best customer. Let me explain.
There is a tremendous amount of subjectivity when a bank is making a commercial credit decision. A deal that may fly today could be turned down tomorrow. For the most part, the rules loan committees are following are guidelines. And if you think that the commercial lending department’s job is to make loans, you would be wrong. The commercial lending department’s job is to make loans that will be paid back. That one concept, loans need to be paid back, is the source of all your frustration with your bank.
How then do you get your loan approved? The answer is you make your banker your advocate. You put in a tremendous amount of effort convincing your banker that you are a safe bet. Do you know what your banker’s job is? He has to sell you and your loan to the loan committee. He is probably already inclined to make a loan to you because that is how he is measured. But if he does not believe in you or your company, if he does not understand your company and how you make money, if he cannot answer the tough questions the loan committee will put to him, your loan will not be approved. No matter how good a deal it is for the bank.
For you, the Finder, your best practice when it comes to your banker is treat him as if he is your best customer. Satisfy his needs as they relate to lending money to your business and you will be successful.
Here are some test items. Score each from 1 to 10 with 10 being a great score.
|I get financial statements to my banker every month like clockwork.|
|I take my banker out to dinner once a quarter|
|When getting ready for the loan committee, I get all documents to the banker that he asked for|
|I know the name of my banker’s spouse or significant other.|
|I do not overdraft my bank account|
|My accounting department has orders to answer financial questions the banker asks – and do it quickly.|
|My pro-forma cash flow statement tracks very closely to my actual cash flow statement.|
|I always take my banker’s calls|
|If I’m going to have trouble with a loan payment, I immediately contact my banker and work with him to find a solution to my problem.|
If you do not score at least an 8 on every one of these questions, you are doing yourself and your business an injustice.
As a long time CFO, my job (as it relates to the bank) has been to keep all scores on this test as close to 10 as possible. It is probably more important for your CFO (not your controller or bookkeeper) to manage this relationship. He generally understands the numbers better than the CEO/Owner and all of this work does not fall under the job description of the finder. If you do not have a CFO, it’s time we talk. It could be one of your better business decisions.
Have a great day,