The Most Bank for Your Buck

Building the Relationship

The amount of money you pay for loans and other financial products is important, but so is the quality of the connection you make with your commercial banker. That relationship can garner you referrals, ideas, and flexibility—but only if you create it with the right person.

Make sure you’ll be able to build a lasting, profitable relationship by asking prospective banks about the experience and tenure of their commercial lending staff. If turnover is high, you’ll find yourself constantly rebuilding the relationship with each new person.

Ask whether a prospective banker has experience in your industry. “Say you’re a manufacturer of plastic parts,” Bilski says. “If you’re dealing with a bank that understands injected molding instead of cut and die, the banker’s going to understand why you need a particular piece of equipment.” That familiarity may expedite a future loan. Your trade association may be able to recommend banks with experience in your industry.

Expect your banker to offer contacts and connections, just as your attorney or accountant might. A bank interacts with many different companies, so a banker should be able to connect clients and suggest solutions to business problems that have worked for other companies. “We can be a tremendous source of knowledge,” says Gerry Stenson, executive vice president and head of commercial banking for Minnesota and the Dakotas at Wells Fargo.

Expect a banker to educate you about financial options, too. Wells Fargo, for instance, introduced Ergotron to interest rate swaps, which allow parties to exchange interest payments on a specific principal amount. The vehicle lets Ergotron have additional flexibility on their fixed- and floating-rate loans.

Most of all, Stenson says, you need to feel that you can trust your banker. “If they view their banker more as a trusted advisor and let them in on knowing their strategies and vision for the company, we can help them more than if they view us as a vendor,” he says.

Local bankers stress the importance of providing good records. Banks typically need two to three years of financial information before granting a loan, Wilmer says, including year-end financial statements and tax returns, accounts receivable, accounts payable, inventory reports, and equipment lists. But providing that information ahead of the need may speed approval on future loan requests and help your banker suggest useful products and services.

A banker may also want two years of personal tax returns for the company’s owner, particularly if the company’s finances are intertwined with those of its owner. A banker will want to clarify how things are owned and by whom, especially when the business picture includes spouses and business partners. Some banks review contracts and other documentation, depending on your business.

A banker will also be interested in your business plan and projections, because these give a preview of your likely future financial needs. “We want to understand what their financing needs may be in the next twelve to eighteen months,” Wilmer says.