I am hearing from virtually all clients and colleagues that business is improving, that opportunity is presenting itself, and businesses are jumping on board to capitalize on it. But many businesses still struggle with the “capital” part of capitalizing on these opportunities. Banks of virtually every size and scope consistently say they have money to lend yet businesses consistently say they can’t get money. What’s causing this gap?
Much of it is due to the stringent regulatory requirements banks must adhere to. We all know these requirements exist but banks are now being held to a higher standard than ever before. In light of these restrictions, a business must be more prepared and anticipate the questions that will inevitably arise from their financial and corporate records. You should take a look at your books with a critical eye and think about what questions you would ask or what red flags would you see looking at your business from the outside. Better yet, have a trusted advisor such as your business lawyer, CPA or financial advisor take a look and offer their questions and concerns. Remember that the bank is interested in your long term growth, so their questions will not only address the company’s financials but also how the company is protecting its assets, both physical and intellectual. The ability to show that insurance and contracts are in place, that key employees are insured and intellectual property is protected will go a long way in demonstrating that you are aware of not only the opportunities but also the risks associated with your business.
Finally, remember that the time to get to know your banker is when you don’t need your banker. Develop a trusting relationship with a bank so they get to know your character as well as your collateral! In knowing who you are through honest pro-active conversations about the business, the banker is able to trust you and assist the business when it needs the support of the bank.
Your thoughtful preparation and presentation of your business’ story and demonstration of your business acumen and trustworthiness will help your banker understand t your business and “go to bat” for you when the going gets tough.