Lenders are gatekeepers to the capital you need to get your business off of the ground. Upon applying for a business loan, a lender will create a profile of you based on your credit score, credit report, repayment history, employment and more to determine your creditworthiness. But for those whose credit report does not accurately reflect their responsibility to repay a loan, it is important to start developing a relationship with a business lender long before applying for a loan. Let’s take a look at a few ways you can build a strong relationship with your financial institution or lender to set your business up for success.
Start from the Beginning
Compare a relationship with your lender to that of your physician – the more they know about your history, the better they can advise you to a healthy tomorrow. Start building a relationship with your financial institution from the time you open an account. Ask a business banking team member how to maximize your funds, options for investments or how to build your credit. Fostering and nurturing this relationship over time can be beneficial when it comes time for you to request a business loan.
Be Honest and Share Information
We all know the phrase, “Honesty is the best policy.” And with a lender, it’s true. Trust is likely the most important factor in building a relationship with your lender. It is crucial for lenders to thoroughly understand your business plan, audience, industry and intended vendors. Once you obtain the loan, consider providing your lender with a summary of operations and profits every quarter. Keeping your lender up-to-date on how your business is succeeding will allow them to accurately evaluate your financial standing and provide advice to improve next quarter.
Ask for the Bottom Line
Lenders have often assessed many business owners looking for a loan, so they are experienced in knowing whether a company is likely to succeed or not. Encourage your lender to be honest with you about the future of your company based on your mission and financial projections. Ask for advice on how to improve your spending and increase earnings for a more profitable and stable endeavor. Lenders may find this to be a promising quality of a borrower committed to bettering their business. Having a solid understanding of your financial history can also help lenders identify where your funds need to be stored to grow your business, which could take more time otherwise.
Follow Up
Don’t be afraid to contact your lender a few days or weeks after you’ve met with them to determine your application status and evaluate their stance on it. Remember to emphasize your passion for your intended business and how you think it will benefit consumers in a way no other company has.
Build Mutual Trust
Lending is a two-way street of trust: You are trusting the lender to give you accurate financial advice to better your business and your lender is trusting you to repay the loan. Be forthcoming with your lender about business updates, even if they are negative. If you anticipate being late on or missing a monthly payment, notify your lender as soon as possible so they are prepared and can identify the cause before the issue gets worse. This proactive approach will also show lenders that you can be trusted to view your business objectively and keep them informed along the way.
Having a solid, long-lasting relationship with your lender can benefit your business now and for years to come. Visit our website to learn how APGFCU has help business owners like you achieve their goals.