Build a Banking Relationship

When building corporate lines of credit, most businesses concentrate on submitting applications and trying to adjust their business numbers. They spend time trying to figure out how to get the most credit and how to get as large as a loan as possible. Trying to get large loans or any loans without a relationship is very foolish. Ask yourself, would you loan money to someone you didn’t know or had just met? Well banks are the same way. They value relationships when giving money out and working with customers.

Here are the five key things to remember and what banks value when establishing relationships for loans and lines of credits.

1. Banks value time of length of relationships
   When applying for a loan, one of the key factors of the loan is how long that customer has been with bank. The longer the relationship the better the bank feels that they can gage what type of customer your business has been. Has there been many bounced checks? Overdrafts? Or has this customer borrowed before and paid back the money. Keep this in mind when applying for a loan.
2. Banks value types of relationships
   Banks values customers who has many types of services (relationships) with a bank. For example, the bank will value a customer who has a savings account, checking account, bill pay services, atm/debit cards and merchants accounts, more than a customer who just has a checking account. Why is this? Banks make more money off of the former customer than the later. The former customer is more valuable and the banks know they will make more money if they give them a loan.
3. Banks value locations of relationships in conjunction with local branches
   Banks want to think they are a valued part of the community and they would like to deal with customers who are closer to them than farther away. Another way of thinking about this is that the closer a customer is to a bank branch, the less chance of fraud for a bank. If the customer is close by, the bank has the ability to drop by the customers location to see what type of business that they are in. With a customer who is farther away, the less likely the bank will drop by and the greater risk of fraud from their banking relationships.
4. Banks value history of relationships
   Banks know if they know a customers patterns of borrowing, cash flow and the personal face to face time with customers, the lower the risk of fraud with those customers. A banks ability to see or predict troubles is greatly enhanced before problems happen. With a new customer, there is a lot of guess work until that customer becomes trustworthy in the bankers eyes.
5. Banks value other banking relationships
   There is a saying, “Giants respect giants”. Well this saying is very apropos when establishing banking relationships. If a customer has large loans with other banks, the new bank will think “If bank A thought they were creditworthy, we will probably not have any problems giving them a comparable loan or line of credit. The same is true with other services such as low interest merchant accounts, CDs and other banking services. So overall, learn to develop good strong banking relationships. It will pay when applying for loans, lines of credit and other banking services.
   

This article was written by Charles White of Corporate Credit Builders, Portland, Oregon. He is one of the top small business credit specialist in the US with years of experience in consulting small businesses.