Your BBF - Banking Best Friend

As a small business, your future and survival has never been tested more than in the current environment with the COVID-19 Pandemic.  In 1989, the economy was challenged by the S&L financial crisis impacting the real estate economy.  In 2008 the economy was tested one more time with a collapse of the financial markets.  Never has the entire economy experienced a complete shut down as it has today.  In a crisis, a small business has to utilize all of the resources available.   One of those resources is your Banker.  What kind of relationship you have with your Banker will impact how you fare getting through a crisis.  If your relationship with a Banker doesn’t exist or is not what you think it should be, here are a few hints to develop and maintain a meaningful relationship.

Before you choose a Banker, choose the Bank that is right for your business.  Not all Banks are the same and one size does not fit all.  Money Center Banks, Regional Banks and Community Banks have different specialties: Consumer, Small Business, Commercial, International, Investment etc.  Community Banks tend to execute better in delivering products and services to the small business market.  Case in point, the recent launch of the SBA Paycheck Protection Plan (PPP) is a perfect example. It has been communicated that the Community Banks were the shining star in delivering the PPP product. If you did not have a relationship with your Banker or if you bank at a large institution, your application may not have been processed or was lost in a sea of applications.   Do your homework and check references.  Ask fellow small businesses where they bank and what their experiences have been.    

 When it comes to your Banker, “communicate, communicate, communicate.”   Your Banker should hear from you not only when you are facing a crisis but also when things are going well.   Invite your Banker to visit with you periodically and be receptive to share financial information, management information, industry information,  etc.  When a crisis occurs your Banker will be better prepared to be a resource to help in a timely manner.

If you have had to shut down or shrink your business during this pandemic, you are now making plans how to transition back to normal.  Share with your Banker your plans and what your business needs may be.

  • What impact and how will your business comply with the “Opening Up America Guidelines” ?
  • What is your business plan to transition to a “normal” operation?
  • How will your business model change in the transition and normal stage?
  • What will your working capital needs be during the transition and normal stage?

When the economy gets back to normal, and it will, share with your Banker your roadmap or vision for your business.   What are your plans for expansion, succession or exit strategies?  Your Banker may be able to assist you with different stages of your business as well as working with your other advisors, your accountant and your attorney.

Focus on building your Banker into one of your strongest advocates.  Your Banker will have to relate your story to the Bank’s internal credit group and in doing so you want your Banker to be as knowledgeable as possible and confident in you as a business operator.  Being transparent about all news, both good and bad, in a timely manner allows for open and candid discussions that will help build trust in the long term.


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