“Harp”ing on About Small Business

“What Does Your Business Look Like to Your Banker?”

By: Chip Harp

July 10, 2014

All businesses have one thing in common: They need a bank. Not just a place to make deposits, but the ability to access lines of credit, term debt and letters of credit when needed.

Don’t take this relationship lightly. Though you may know your banker, do you now what your banker needs from you to provide the services your business needs to grow?

  • How do you make your business look its best to your bank?
  • What do banks look for in making lending/credit decisions?
  • How do you know your bank is looking out for your business’ best interests?
  • Are you even at the right bank?
  • What sort of bank does your business need?
  • Do you need more than one bank?

These are all very important questions you should be able to answer. However, with the time it takes to manage your business, how can you possibly be expected to stay on top of this crucial relationship on an ongoing basis?

Regardless, it’s too important to not address, especially if you want your business to grow. Remember, banking is not accounting. If you don’t have the time or internal resources to manage this relationship properly, find external resources to do so such as a firm (or someone) who has:

  • Real Banking Experience
  • Involvement in the Lending Decision Process
  • Understands Underwriting and Risk Mitigation
  • Knows Available Banking Tools
  • Can Prepare a Favorable Request for Funding/Banking
  • Understands the All‐In Cost of Funds

Have them review your current situation and where your business needs to go. From there, they should be able to provide a plan that will get your banking relationship where it needs to be. Don’t neglect this strategic management component. Savings in time and money now putting this relationship off will only cost you much more later.

(The author, Chip Harp, is the principal for Northampton Business Consulting, a provider of small business services, banking advocacy, and non-recourse multi-family lending.  He is available for free initial consultations should you or your firm have need.  He can be reached at www.northamptonbc.com or by emailing him directly at chipharp@northamptonbc.com.)