Get a Business Loan : Build a Relationship With Your Bank
Let’s be honest, countless entrepreneurs have seen their relationship with their banker go from lovers to divorcees over the last few years! Gone are the days when loans were willingly and freely dished out; previously strong relationships have been put under severe pressure and relentlessly tested.
But as we see the emergence of a recovery now is the time to think about re-building your relationship with your bank.
Business owners have found times tough over the last two to three years. Customers have stubbornly kept their credit cards hidden away, and to exacerbate the problem banks, almost overnight, went from best friend to worst enemy. Relationships which had been nurtured for years seemed to mean nothing and the support business owners had relied upon was abruptly cut off at the time when you needed it most.
But are banks totally to blame? Maybe. But as you’ll find in many relationship where problems exist, both parties are sometimes to blame. During the ‘good’ times did you make decisions which in hindsight were not the right ones for your business? It seemed that nothing could go wrong during those happy days. Your bank, in pursuit for ever larger profits, would have been the last ones to question the flaws in your plan.
So possibly the relationship breakdowns we have seen have an element of equal blame and now is the time to move on.
With the economic recovery firming up businesses are going to need banks again to support their expansion plans and banks are going to need business owners like to restore profitability. The time is ripe for a truce!
So are you going to make the first move? If you’re confident enough to take the first step here are some ideas on how to get your broken relationship back on track.
Accept What’s Happened and Move On
The first step in re-building any relationship is to draw a line under the past. Don’t get into a blame game, no one wins. Whilst it’s tough to forgive and forget both you and the bank will have to accept that rash decisions may have been made on both sides. If you had a part to play here then now is the time to play the honesty card; hold your hand up, admit the mistakes you made and acknowledge that you could have handled things better. Avoiding the blame game is down to accepting that building and maintaining a strong business relationship is a joint responsibility.
So, if you want to start again, accept what has happened, admit your mistakes and move on.
Understand Why They Do What They Do
Many sources of relationship breakdowns are simply down to a lack of understanding of the ground rules. There are some things that will never change so you need to take time to understand how banks make their money and why they do what they do.
Steven Covey’s fifth habit sums this up perfectly:
“Seek first to understand and then to be understood.”
Understand the constraints your Manager is working under; understand the guidelines and the stupid rules he’s bound by. Once you understand you’ll then realise there are some things that you can’t push against, so eliminating future relationship flash points.
One of the common frustrations business owners have is that very few Relationship Managers have the ability to say ‘yes’ on their own. In the majority of cases credit decisions are taken by a faceless person hidden in a bunker 30 feet under the ground! You have no chance to speak to the person who’s coming up with a list of twenty five questions and there’s no point in taking it out on your Manager. He’s probably just as frustrated as you are.
Take time to find out the ground rules. Once you have understood you are better placed for your Manager to understand you.
Improve Upon the Way You Communicate
A relationship is only as strong as the style of communication between both parties. Trading insults or taking the bank’s support for granted is not going to get you very far. If your communication style is naturally aggressive then don’t forget the saying that people do business with people they like. Don’t expect your Manager to totally support you if there’s no mutual respect or understanding. Equally, if your Manager treats you this way, get your concerns out in the open before you attempt to move on. Take away the aggression otherwise you’ll get nowhere.
Communication is also about information flows. Banks thrive on information; decisions are based upon what they know about your business. In re-establishing a new way forward, commit to providing a quarterly or even monthly update on what is happening in your business. In the document include the good news and the bad news; provide your latest Management Accounts together with commentary on the results. The more information the bank has the better informed they are.
Listen More
Many relationship problems can be traced back to not listening carefully enough to what is being told to us. You can be convinced that your plans are sound and so you don’t listen to the questions or concerns being thrown back at you. Learn that by proactively listening you can benefit from an additional insight. If your Relationship Manager doesn’t offer any opinion then ask for it. You need to know what the bank is thinking from the very outset so you can correct any misunderstandings or to make any adjustments to your plan.
Discovering that either one of you missed a crucial point because neither was actively listening can waste valuable time.
Be Patient!
In today’s environment if you are expecting to get an answer to your request in two weeks… double that time and then double it again. Whilst banks are waking up from their lending hibernation their appetite is still poor and they are taking some convincing to do deals.
If you are going to move forward understand that you are going to need a large dose of patience. Expect the stupid questions; expect the weeks of silence; and expect a long and detailed terms and conditions letter.
You can do your bit by planning well in advance. There’s no point shouting the roof off if it’s clear that with a bit of careful planning you could have foreseen your current cash flow process. Monitoring and planning ahead is a crucial part you have to play in getting the bank to support you.
And Finally… If It’s Not Going to Work Get Out
As with all relationships, sometimes the damage done by past events is too deep, and it’s better to part company. If the mutual distrust is so ingrained in both parties then it’s better you go and look for a new partner instead of wasting time re-building that which can’t be re-built.
In going down this route the previous point about being patient is even more relevant. Expect painful and time consuming meetings, some of which will come to nothing. It’s a step which can take away your focus on the day-to-day activities of running your business, but you may consider the effort is more than worthwhile.