Are you happy with the financial institution you use for business banking? If you’re not already working with a community bank, which tends to be the most supportive of small businesses and dedicated to relationship banking, the answer is probably no. According to the Federal Reserve Bank of New York’s 2016 survey, 61 percent of small businesses interviewed had dealt with financial issues in the previous year, the majority of which involved access to credit. Luckily, a local relationship bank is well-positioned to help small and medium-sized businesses overcome these kinds of challenges. Keep reading to learn about all the benefits of partnering your Houston business with a relationship bank.
Developing a relationship with your business banker is an ongoing process that requires effort from both parties. Like any good relationship, it’s about listening, understanding, creativity, and collaboration. Bankers are looking for small business owners who will stay loyal to the bank as their company grows. While a start-up may not need much more than a business checking account, bankers want you to return to them as you develop the need for additional products and services, such as financing and wealth management.
In return for your loyalty, a good relationship banker does more than cross-sell. They will take the time to get to know you and your business. When you have a problem without an easy answer, your banker will collaborate with you to find a creative solution. At the same time, your relationship banker should make life easier for you wherever they can--by helping you consolidate redundant accounts, for example, or automating certain processes or transactions.
Communication is key in relationship banking. Small business owners who may have a question or problem at any time or day want to be able to reach their banker when needed. Relationship bankers who are responsive to email and/or provide a cell phone number for out-of-office accessibility will be especially appreciated by entrepreneurs. In return, business banking clients should communicate how much they value the experience of relationship banking.
Many of the best relationship banks also happen to be smaller community banks. Their niche focus on a particular geographic region gives them expertise in the local economy, real estate market, and business environment. Partnering with a local financial institution can provide valuable insight when it comes to important decisions and financing for your business. And because local relationship bankers have worked with other businesses in your industry or town, they may be able to help you avoid common mistakes and learn from the success of entrepreneurs like you.
Relationship banks make especially helpful partners to small and mid-sized businesses. These companies don’t just need business loans; they also need personalized service to help them grow and overcome obstacles along the way. The years of experience and knowledge community relationship bankers have accrued will be more helpful to your small business than any banking app or other flashy technology. And because community banks have a symbiotic relationship with the local businesses they serve, partnering with a relationship banker means there is another person in your corner who wants to see you succeed--and will help you reach your goals.
The current generation of entrepreneurs and small business owners may be more digitally savvy than their ancestors, but “fintech” (financial technology) will never completely replace the value of a human relationship and all that comes with it, such as face-to-face conversations. A true partnership with a relationship banker who understands the local nuances of your industries, as well as the specific challenges and goals of your business, can help you succeed in ways that apps simply can’t replicate. Here are the benefits of building a relationship with a bank, a process that takes time and is especially beneficial to new entrepreneurs and small to medium-sized local businesses. As your company grows, your relationship with your bank will grow, too, and your banker will be there to witness the ups and downs along the way, tailoring her advice to match the particular needs of your business.
When you meet with your banker regularly, especially for conversations that aren’t just about opening an account or applying for a loan, you can tap the expertise of a trusted advisor who knows how your company works--and can suggest ways to make it work better. A relationship banker focuses on matching your business needs with the financial products and services that will be most useful. They can also help you brainstorm solutions to a particular problem, based on their knowledge of the local community and similar businesses operating within it.
As mentioned, community bankers have a deep understanding of the local business environment. That also means they know plenty of people who operate within it. When you build a relationship with a bank you may get introduced to some of their other business clients or people they know in the community who could end up becoming customers or providing essential professional services for your company.
Community banks are generally better at providing financing to small businesses because of their local, flexible decision-making process. You can improve your chances of getting the financing you need when you develop a relationship with a particular loan officer at your community bank. They will have a detailed understanding of your company that can help them “sell” your loan application to underwriters. And your established relationship with your bank may also help you get the terms you need along with the best rates the bank offers.
As an SBA-approved lender, your bank has helped many other small businesses through the loan application process. You can benefit from this expertise when it’s time for you to apply for a federally-subsidized small business loan. In fact, your banker may introduce you to SBA financing options you weren’t even aware you qualified for.
Perhaps the most important benefit on this list, developing a relationship with your bank means they will be more than a “fair weather friend.” Yes, your banker will be happy to cheer for you during periods of exciting growth and success, but they will also support you during the harder times. Whether it’s a leaner-than-expected holiday retail season or the domino effect from a slumping economy, your relationship banker can help you get through it with the financing you need or simply the forgiveness of overdraft fees that can help you recover from a week when you couldn’t make payroll.
Now that you understand the benefits of relationship banking, it’s time to build a partnership with the bank you have or find a new one that can better meet your needs. Central Bank is Houston’s longest-serving independent bank. We believe that small businesses and community banks become a kind of “dream team” when they work together. Both are invested in the local economy, value relationship-building, and appreciate the important role local businesses play in the success and vibrancy of a community. Contact us today to learn more about our individualized approach to business banking. We can’t wait to help your business grow!