Taking the time to search for the right bank or lender may mean the difference between borrowing success and failure. A commercial loan officer at your bank not only provides the short- and long-term financing your company needs, they are a great source for information on networking opportunities, contacts, and professional advice.
Unlike private investors or partners, a bank’s commercial loan officer won’t interfere in your day-to-day business operations. Traditional bank lenders will expect to be repaid for the loans they provide to finance your new expansion initiative. However, they leave managing the business to you – the company owner.
A commercial banker will be interested in the success of your business. Look for a banker who knows your community, industry, market, business, and the influential individuals who can help your business not only survive, but thrive – even in difficult economic times. It’s worth the effort to find the best source of a capital loan for the fiscal health of your company, so do the heavy lifting, talk to different sources and choose the right lender to fit your company’s capital needs.
Start the Search for the Right Commercial Lender
When should you start looking for the right lender? Ideally, before you need one. When you need cash right now, there are fewer options, so start your research before you actually need a loan.
Here’s what to look for in a commercial lender:
- Experience in structuring commercial loans for businesses like yours
- Service and support during the development of the loan agreement
- Numerous lending options – one of which suits your business needs
- Referrals from business friends, employees, and colleagues
- Lender participation in Small Business Administration (SBA) or other government-backed loan
programs designed to boost local economies
Also ask about what other business banking services the bank provides and be sure to learn more about how they operate. For example, many banks may provide services that enable you to accept credit card payments at your business. But one bank may process credit card transactions and place those funds in your business account within three business days, while other banks may complete the process in two days or less. The longer it takes to process credit card purchases the longer it takes for you to have access to your funds. Ask how long it takes for deposits to clear for withdrawal, about the average loan approval period, and about web-based banking options that save time and money.
Look for a lender who wants to participate in your business’s success. Having a lender that works as a trusted partner for your business can help your business grow and thrive.
Choosing the Right Commercial Lender
Make appointments to meet with various lenders and shop around. At this stage of the lending process you’re in complete control. You can walk away from any offer and take the better deal from the lender across the street–it is definitely the best strategic move to interview multiple potential lenders.
During each interview, ask the same questions and collect the same data so you can compare apples to apples, not apples to oranges. Here are some good questions to ask:
- With whom specifically will my company work: one individual, an associate, or a group of decision makers? In short, who’s the point of contact within the lending group? Decisions by committee always take longer so look for a sole source who decides if your company is, indeed, credit-worthy.
- What skills and experience does the lender bring to the table?
- Will your relationship be transactional, or can you expect additional advice, guidance, and support throughout the term of the loan?
- What networking possibilities does the lending bank offer?
- Is the lending organization a member of professional associations, the Better Business Bureau, and the local Chamber of Commerce? Membership in these organizations indicates a good corporate citizen – a lender in whom you can have trust.
- What is each lender’s approach to your company’s needs? Do you feel comfortable talking with the loan officer? If times get tough, do you feel you’ll be treated with courtesy, dignity, and respect? And, will the lender work with you in good times and bad?
The banker you select should have the right combination of skills, experience, flexibility, and creativity to craft a loan agreement to suit your business needs and your personal business goals.
Grow the Lender-Borrower Relationship
Once you’ve made a decision, keep going! Help your bankerprovide better quality terms and services that benefit you and your company. Talk to your banker about your business and your plans for the future. Share any challenges you may be facing with managing your business’s finances. The more your banker knows, the more likely they will be able to offer solutions to make your business better.
Lenders – especially traditional lenders like commercial banks – don’t tend to like surprises, so it is advisable to give your banker the chance to help you overcome problems and roadblocks before they occur!
Finally, build trust. Cultivate confidence on the part of the lender. If you pay off the loan on time, it’ll be a whole lot easier to obtain another loan 12 months from now. Why? Simple. It is because you’ve already proven you’re a good credit risk – exactly the kind of borrower lenders like to see walk through the front door.
We hope this article has been informative and helpful to you and your business, and that you are able to use our advice to find the absolute best commercial lender to suit your business needs in the months and years to come.
