What Businesses Should Look for in a Bank Partner
Even before your business earns its first dollar, you should look for a bank that can attend to all your needs. And no, it is not as simple as opening an account with them.
What does it mean to have a partner?
Many partnerships that are not “in sync” have failed. In the same way, the success of your business, while highly depending on its profitability, can be affected by how good your partner is in pulling its weight.
Why is finding “the one” important?
Let us take the case of Apple’s Steve Jobs and his former partner Stephen Wozniak. They may have a lot in common, both are basically computer geniuses and innovators. However, that partnership did not turn out so well.
A partnership is not just being a clone of each other. Instead, it should be a harmonious relationship where you fulfill different yet equally important roles. While the both of you enjoy success in different departments, you still are working towards a common goal.
Yes, there may be frictions in the process, but the vision should still be the same. Look at finding the right bank partner the same way. While your business is in charge of profiting and keeping itself afloat, your chosen bank should be able to advise you on which of their products you should avail of based on your financial situation.
What should your business look for in a bank partner?
Think of having a bank partner as having a human partner in business. What do you look for? That should be the same thinking you should have for your potential bank partners. Here are the qualities your perfect bank partner must possess:
- Great decision-making ability
Based on your credit worthiness and your business’ financial record, your bank should be able to decide on what you can avail of. How quickly they make their decision can help you hasten operations when you need a loan for an equipment, for example.
- Value on loyalty and relationship
With the many options you have now, your bank should place some value on your choosing them. This, they show by giving attention to your business when its needs arise and perhaps by incentivizing your banking with them through rewards and lower interest rates.
- Accessible to your business
Location, location, location. There is a reason why businesses, at least those non-SBA eligible, prefer traditional banks over online lenders. That is physical accessibility.
No matter how convenient the internet has become, nothing can replace the comfort of knowing you can go to your bank whenever you encounter a problem. Your chosen bank should be near your business for all your needs.
- Knows the needs of your business
Your bank should not simply hand out the loan that you request. Their representative should be able to make suggestions as well. A partner should not just do its part, but also make sure that its tasks are aligned with the goal of your business.
- Understands compromise
When both entities of the partnership want different things, there should always be compromise. In this case, it could be interest rates. Say, the bank offered 15% APR, while you expressed that can only handle 7%. Since you have been diligent in making your payments, they decided to bring it down to perhaps 9%.
- Well-versed in all their financial products
Unless your business is the bank, you or anyone in your business is probably not that well-versed in banking. Thus, the main source of information on these things becomes your partner bank. They should be able to provide you complete and accurate information about all their financial products. More importantly, they should know what fits your needs.
- Offers market competitive products
As it is always the case, you want to keep the profits high. Thus, your bank should have competitive interest rates and manageable repayment terms.
Moreover, their non-loan related products should help further your business interests. Above all, we believe that this is the most essential. However, you should not sacrifice too much of the other features mentioned above just to get the best banking products out there.
How to find the best bank partner for your business?
Ready to ease your way through the banking process with the right bank? Follow this step-by-step guide and find the perfect bank for you.
- Know the needs of your business
More importantly, anticipate what your business will need as your business grows. There will be changes for sure, and you should know them as early as now.
Before shopping around for prospective bank partners, you should figure out your business first. How can you compare banks when you do not have an idea on what features you are comparing them against?
- Compare features of your different prospects
Now that you know what you need and what your future needs might be, you can now start comparing banks. Which among them offers the best interest rates for short-term business loans? What offers the best interest rates?
This, you can do by calling them for specific information and by looking them up online. Consult friends and colleagues with first-hand experience with them. You can also check online. What are they saying, specifically about the banking products you need?
- Check your community banks
Your options should not be limited to the big names in the banking industry. Especially if your business does not fit a particular category of what large banks deem legitimate businesses, an online business for example, getting great interest rates might be difficult.
Community banks are essentially more human, and can make exceptions where the big names would not. They are less bureaucratic. To make things clear, you simply need to consider them as well. You still decide what works for you, whether it is a big bank or a community bank.
From time to time, you need to assess the needs of your business and if your bank partner still fulfills them. If not, you can always shop around again and change banks.
A bank partner is just that, a partner. It should help you reach your business’ goals by providing excellent and competitive services. Take this very seriously. With the right bank, your business has a greater chance of success.
Anne is a Senior Author for SBL. She began her career as an independent consultant for local businesses after graduating with a BA in Management. Since that time, she’s expanded to writing as well as consulting to spread helpful knowledge to small business owners across the country.