A healthy relationship with your bank is critical for business success, particularly in early growth stages.
A steady stream of resources is necessary to scale. Small business loans provide much-needed cash for inventory, payroll, expansion projects, and other aspects of the business.
Small business owners may struggle to gain access to funds when and where they need them. Here are some potential banking challenges you may face:
1- You got turned down for a loan but they didn’t tell you why or didn’t explain their answer sufficiently.
Getting turned down for a loan without a sufficient explanation feels like hitting a brick wall.
Without a sufficient explanation for the rejection, it’s hard to solve the financial issue that caused the bank to deny your loan.
Even if the bank provides an explanation, there may be too much “finance-speak” to provide clarity. Vague explanations can leave you with more questions than answers.
2- Banking decisions are being made from higher levels with less input from local staff.
Banking has changed over the past few years. Fewer decisions are made at the local level for major banks.
This can make loan decisions a pure numbers game, with no regard for the reputation and drive of the individual business owner.
In short, your story can get lost in the numbers.
3- The bank is no longer interested in the industry vertical your business exists within.
While it is rare for a bank to write off an entire industry, it is possible that your specific industry vertical is no longer of interest to the banking institution.
In such cases, you’ll struggle to get funding regardless of the financial merits of your application.
If any of the challenges above sound familiar, here are four pieces of advice for achieving banking success.
1- Understand where you are and what you need.
Before you even consider a loan, you need to have a thorough understanding of the position of your business.
Early growth startups have one set of needs and family-owned “mom and pop shops” have another. It is critical to understand what banking services you need and why you need them.
You need the knowledge of both to handle the bank’s questions and to ask them thoughtful and relevant questions.
Equip yourself with the knowledge to assess the merits of each individual bank.
2- Have a realistic plan for success.
Loans are a numbers game, but there is also a crucial element of trust. Your banking institution needs to know that you have a realistic vision for the business and that you honor your commitments.
The more specific and precise your milestones, the easier they are to track.
Before you go in to request a loan, give your business plan as much thought as possible. Refine the details and identify possible objections. Most importantly, be prepared.
This strategy serves the dual purpose of making you more certain of your future path and shows the banking institution that you have a rational plan with a reasonable return-on-investment for their money.
3- Consider a local banking option.
If you are struggling to get any traction with major banks, a local bank might be a better option.
Community banking institutions are more likely to be interested, and you have a better chance of getting more facetime with the bankers. This gives you the chance to make a pitch and win their trust.
4- Utilize the services of a financial consultant such as CapShots™!
CapShots™ provides clients with access to our network of lenders and financial resources.
My team and I understand the unique challenges facing small business owners and can aid you in identifying the right banking option for your needs.
If you are struggling with banking issues or any other financial challenge, reach out today and we’ll discuss your next steps.