If you’re an entrepreneur or small business owner, a great bank is crucial to the success of your business. From getting a loan or line of credit to getting help with invoices and tax season, it’s important to be on good terms with your bank. Being on good terms is more than just your credit score. You need to be able to have a banking relationship.

Why is a banking relationship beneficial for your business?

A bank is often a company’s life line when it encounters tough times. Banks often will not give loans unless they have a good understanding of the person or company requesting the loan. Banks frequently operate in this way. Before the time comes, building that trust can decide whether you get a rejection letter or a credit line. Having a banking relationship is good for business.

Women and people of color should maintain a banking relationship. Studies show that women are less likely to be paired with a banking partner, while people of color are less likely than Caucasians to have a banking relationship. This can have a severe impact on business in tough economic times. For instance, up to 90% of female and minority business owners affected by coronavirus were denied the 2020 Paycheck Protection Program.

Aside from increasing their chances of obtaining a loan or credit, there are other advantages to building a relationship with your financial institution. You may be able to get lower interest rates or lower fees. As your company expands, your banker might suggest products to aid you with cash flow. This is especially true if they know how your business has developed and have seen first-hand how much you’ve grown over time. It may also open opportunities further down the line. For example, your banker may have other contacts that could assist your business.

Do you need a lot of money to create a banking relationship?

The short answer is no. While some products may not be available to you until you reach a certain threshold, there’s no reason you can’t have a great relationship with your banker. In fact, if you start out as a small business owner and stick with one banker as you grow, they will naturally begin to form a relationship with your business and cause you to prosper.

How do you establish a banking relationship?

Looking for a reliable banking relationship takes effort. It is also true for a banking relationship. Here are suggestions on how to work with your banker and establish a trustworthy and long-term relationship.

Network and keep in touch

Treat your banker like other possible clients or business partners. Maintain open communication and inform them about significant milestones in your company. Contact your business representative or branch office manager in person. While a lot of business transactions can now be completed online, nothing beats a face-to-face meeting. This is especially true for smaller banks. Loan officers tend to be more motivated to help borrowers if they can make a personal connection. Remember that bankers are humans too! You are free to share personal information with them as you see fit.

Build A Banking Relationship

Explain your business plan

The more your banker knows of your business, the better. Keep them updated on your progress and the direction you’re taking. Bankers who are knowledgeable about your small business’ finances are more likely to suggest products that match your business strategies. It is also important to keep your banker informed of changes to your plans. If they know where you’re headed, they can advise you on how to best secure your company’s financial health.

Be honest and share information

Any relationship requires honesty, including with your banker. If you are experiencing financial difficulty or are concerned about future cash flow, be honest with your banker. Your bank is there to help you in both good and bad times. If they know your situation, they may recommend a product or service that you had not considered. None of this is possible if you do not keep your bank informed.

Define your goals and dreams

If you own a business, you’re probably thinking about how to expand it. Share your plans with your banker. Tell them how much you’d like to scale up in the coming years. Your banker can assist you meet your goals. For example, your bank may help you choose which vendors are best for you when changing payment services.

Build a strong financial history

If you need to ask your bank for something, it will help if you have a history of financial stability. Pay your bills on time, make frequent deposits, and pay off your debts in a timely manner. Banks make loans available to their customers and to businesses. If you can prove that you have adequate funds, then you are more likely to receive a loan when you apply.

Start building a banking relationship today

Wherever your business travels, having a productive banking relationship pays off. All you have to do is keep in touch with your bank and keep your bank informed regarding your enterprise. If you want to take out a loan, start that process today. Don’t wait until you will need to borrow something to get to know your banker.


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