Venture Financing:

Dealing with Banks

After the Loan

Maintain Good Communication with the Bank

 

By Venture Planning Associates. Used by permission

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The KEY on how to maintain good banking relationships after you has received the loan.  A banker should take care of all your banking needs and you should always keep the line of communications open.  Some ways to accomplish this are:

  • It's in your and the bank's interest to keep your business going.

  • Be aware.  Regularly take your banking partners to lunch, usually monthly just to keep them up to date, and to provide current financial information on the business, in your geographic area and business segment. 

  • Bankers should have a broad business orientation, based upon experience.

  • Exchange industry trends, marketing information, and other issues that affect your business with your banker.

  • You should review your business plan quarterly with your banker. This is a good way to monitor against projections.

  • Have the banker visit your place of business.  Be prepared to show him your record keeping and accounting systems.

  • Banks offer an array of financial services, such as cash management, profit sharing, and trusts. Take advantage of these services.

  • The banker should take an active interest in your business.

  • Don't wait until the last minute before asking for financial help. It may be too late by then.

  • A good banking relationship takes time to establish. Don't change or evaluate banking services on just a 1/8 1/4 point discount. The overall loss of a good relationship could hurt your business more.

  • If you are going to have trouble meeting a payment, notify your banker in advance.

  • Banks offer work out plans, interest only plans, and other debt relief plans, so ask in advance if you have a problem.  They would rather collect a little than nothing and keep your business alive.

  • Always come with a solution for your financial woes.  Having a good plan and sticking to it will help you maintain that clean credit record.