4 Questions Every Business Owner Should Ask Their Bank

07/21/23

There’s no such thing as one-size-fits-all when it comes to business banking. But what really sets banks apart from one another is the relationship you build with your banker. Here are some questions to ask to help you find the best banking relationship for you and your business:

1. Will I know my banker?
Knowing your banker is essential in today’s business environment. Why? Because they can provide customized, personal attention to you as a business owner. Having a trusted relationship with your banker will really benefit you and your business as your needs grow and change. Imagine having a banker you can call in good times and bad, and know they will be there to support you.

2. Does my banker know the local market?
Community bankers can simply be a better fit for businesses because they know the local market and the local economic picture, which can provide greater insight when recommending services or handling loan approvals. And, they often have deep roots in the community and connections that can assist you in developing networks to help you grow your business.

3. What is the lending process?
Make sure that the initial stage of the process includes the opportunity for you to sit down with your banker to discuss why you believe you need financing and be ready to identify the stages of your operations, such as when cash flows in and when it is paid out, your growth plans, or equipment purchase plans. Your banker should be able to propose options for your specific need, rather than an off-the-shelf solution. You will want to know if the approval decisions are made locally, and what is the anticipated timeline from application to approval. Local decision-making can be an advantage for businesses and can allow for greater flexibility than when working with large national bankers that are not as familiar with the local economic environment.

4. Is the bank’s financial condition strong and stable?
Of course, you will want to know if the bank is FDIC-insured. That should be a given. But, how well-capitalized is it? You can certainly ask and should receive a direct answer. That information is also available to the public via Call Reports that are filed quarterly. The level of non-current loans as a percentage of total loans can also be a key indicator. You will want this to be a very low number. There are also industry ratings available, such as Bauer’s 5-star rating system, which takes a number of these factors into account before assigning a rating. In this case, the higher number the better.

In the end, open communication is key to a successful banking relationship. You should feel comfortable and confident asking any question that is important to you, to know you have found the right fit for your banking needs!