Founder and CEO of Credit Counsel Elite.
As someone in the credit industry, I have learned much about what it takes to get the most out of your business credit. And one of the most essential things to do is to develop relationships with banks.
You might wonder, “Why would I want to do that?” Well, there are a ton of benefits. For example, a strong relationship with the bank and its employees can help improve your chances of approval for any product the bank offers. You may receive low-interest offers or sign-up bonuses when you apply and are approved for a new card. And even when you are denied, if you call the reconsideration line and mention your ongoing relationship, some banks may be more willing to reconsider if you are otherwise qualified.
The Importance Of Developing Relationships
Here are several reasons why developing relationships with banks is beneficial for businesses:
Be Known By The Staff
Developing relationships at banks and your local branches is essential. You want to be known by the staff. When you go into the branch, they should recognize you by name. The more they see you, the more they’ll like you and the more likely they are to want to help you. So get to know the staff and their names and learn any personal information you can about them.
Receive Support From Employees
If you build a strong relationship with employees, they’re more likely to be willing to do what they can to see you succeed. They may advocate for you to help you get the best offers and products.
Receive Offers For Products
When you have a personal checking and savings account and a business checking and savings account that you’re utilizing, banks will often make offers to you to expand the relationship. This means you could receive good offers for your business that will also help you expand that relationship with them.
Know Your Banker
Having a “friend” at the bank will always be beneficial. They can help you get that slight edge when you need something done. For example, someone fighting for you may be able to help you get an application over the finish line. When I go into a bank, I take notes on this and use it to my advantage when I need help in the future. You will be interacting a lot, and this just makes for a better experience for you and for them.
Benefit From A Strong Relationship History
If they know you and your strong relationship history can be shown with the bank, they will likely do whatever you need within their power.
How To Get The Most Out Of Your Relationship With Banks
Stay Organized
To ensure you know each account and what it offers, stay organized. Create a spreadsheet that tells you important information about the bank and what they require to offer bonuses, keep fees at a minimum and so on.
Understand What It Takes To Qualify
Banks make lending decisions using several factors. These are generally combined in an algorithm that helps make the decision. Get to know factors such as:
• Length of relationship: The bank may look at how long you have had a relationship with them. Some will not lend if your relationship is too new.
• Length of time in business: How long has your company been around? The longer the better: There may be requirements that your company has been in business for 90 days, six months, one year, two years, five years or more for certain products.
• The average value in the account: More is likely to be better, and the length of time for this average may also factor in.
• Account movement: What is moving through the account? Do you make daily and weekly deposits, withdrawals, ACH transactions or use mobile checks, for example?
Creating Mutually Beneficial Relationships
Remember, banks make money when their relationship with you is better. They may lose some money on transactions but make money when you borrow from them. Show them that their lending decision is easy, and they will likely help you. Even if your business is not profitable yet, you can prove that you’re a reasonable lending risk by showing money moving in and out of your accounts with the bank. The more that they see coming in and out, the better. In my experience, they’re like to care most about the average balance that you maintain in the account over the past 30-60 days (sometimes up to 180 days). Additionally, if you have good personal credit, you may be able to leverage this with a personal guarantee.
In conclusion, building relationships with banks can help you maximize the benefits they offer your business. Moreover, maintaining multiple accounts with different banks allows you to take advantage of their unique offers and benefits. By staying organized and closely monitoring minimum balances and fees, you can ensure that you get the most out of each bank relationship. So, start building those relationships today.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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