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Finding The Right Bank

Taking the time to search for the right bank, or potential investor is critical to a company’s long-term success. Regardless of whether you borrow from a bank, you should still establish a working relationship with a financial institution that provides you with services you may need. Many sources can assist you in finding the best bank for your business needs one way is to search the newspaper and Yellow Pages to research how banks position themselves to the public. Look for banks that market themselves as lenders to small and mid-size businesses, or for those with a business lending division. You may also look for referrals from accountants, attorneys, insurance agents, trade associations, vendors, and business peers. Do your homework. Assemble your financials. Know your history. Have information in a readily accessible form, including cash flow and balance sheets, for at least two or three years. The bank will want to see forward projections of how you will be using any money that you borrow and, most importantly, how you plan to pay it back. Go for compatibility. Choose a banker you’ll be comfortable talking with. Pick someone you can trust, because your banker becomes your agent inside the bank.Line up more than one bank contact. Establish at least two contacts inside the bank, beyond your loan officer. Like any other business, bank staffs change, so you should have more than one person familiar with you and your business. Look for the two-way street. Bankers who earn their keep are more than bankers, they’re sources of good business referrals. Ask your banker what business he or she can bring to your company. If the banker is not interested in sending business your way, then he or she is probably not the right banker for your business. Be honest. Solidify your relationship by assuring your banker that you will share everything,the good news and the bad. Then follow through. There should be no hidden agenda. You can’t expect your banker to take a risk if he or she is not certain that you have been open and straightforward. Check capacity for growth. If you’ll be approaching the lending limits of the bank, chances are it is not the right bank for you. Banks can be too large, but they can also be too small. Choose a bank that can grow with you. Peter K. Rooney is a free lance financial consultant based in San Francisco

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