Vetting a New Bank for Your Business? Ask These 4 Questions

by Elizabeth Sherman 16. September 2016

I have a friend who researches everything to the Nth degree. He dives deep and never lets a penny get by him. You probably have a friend just like him. (If you’re smart, you are him.)                         

We were talking recently about his relationship with his bank. And when I asked him what questions he asks whenever he’s vetting a new bank, his answer intrigued me.

His most important query wasn’t about the bank’s services or its lending process. “Those are questions I ask, of course,” he said. “But really, here’s what I want to know: Am I going to be able to get in touch with you? And how do I get in touch with you? Do I get your phone number and email, or do I have to make my way through a phone tree?”

I got what he was saying. He was asking about what kind of relationship he could expect to have with his bank. Would it be hands-off or collaborative? Would he work with an individual, a team, or a machine. 
And so, in the spirit of my friend’s questions, we’ve put together this list of Top Questions to Ask Your Banker. You’ve checked the bank’s interest rates and branch locations, and you likely are ready with some inquiries specific to your situation – but these are four questions you should always ask.

“What will our relationship be like if I bank here?”

As my friend’s passion demonstrated, he thinks it’s essential to have an advocate at your bank. If you agree, make sure you’ll be assigned a relationship manager, and clarify how they’ll handle your business. Will you meet regularly at the bank or at your business? Will you be able to get your relationship manager on the phone quickly?

Your advocate can guide you through the loan process. They can let you know about important new products and answer questions about them. They’ll give you news about the bank before you hear about it on social media or the evening news.

Nail down how easy it is to get in touch when you need to – and typical response time to such queries. Be assured that your phone calls and emails will be answered quickly.                              

Plus, that relationship shouldn't end at the bank itself. Community banks can help you connect with the local business circle. Those sorts of connections can lead to customers, advisors, contractors, and even other lending options.

Finally, don’t just take the bank’s answer to these questions for granted. Seek out your peers and grill them about their relationships with their banks. Let that lead you to a great choice.

What Is Your Lending Process for Businesses Like Mine?

It’s tough to get a loan. Community banks are approving only about half of their loan requests. Big banks are even more daunting; they approve just 21 percent. So before applying, you want to know that the process is simple and straightforward. If it’s not – if the banks starts obfuscating before you even submit an application – walk on. Here are three things you should determine before you get started …

  • Does your company qualify for the loans this bank offers? Many banks won’t loan to businesses under a certain size, or that have less than a three-year track record, or that are seeking a loan of less than $5,000.
  • What is the lending process? What financial records and tax records are required? Will there be interviews, and to whom will you speak? Is the decision made locally?
  • What’s the timeline? How long does the approval process take after you apply?

Most importantly, find out whether you will have an opportunity to sit down with bank representatives before you kick off the loan process. This is yet another chance to build a relationship and pick up advocates who can guide you through the lending process.

What Is the Financial Strength of the Bank?

Do some homework before sitting down with a bank representative. First off, don’t even think of approaching a financial institution not insured by the FDIC. Additionally, look at the bank’s ratio of non-current loans to total loans (if it’s above 10 percent, walk away), deposit growth, available cash, and “record” with the FDIC.

Then, when you get in the room with a bank rep, get a feeling for the overall health of the bank. You want to hear – with confidence – that the bank is doing very, very well, that it’s well capitalized, that it’s lending lots of money. Listen for buts. 

What Are the Banking Services I Need Right Now? What Will I Need in the Future?

Have a list of what services you think you need: easy online access, anti-check fraud services, wire transfers, credit lines that cover cash shortfalls, etc. If you’re not sure what you need, then just be ready to discuss your business; a good banking relationship manager should be able to connect you to the right services for you. Also, ask how the bank charges its business customers: Is it à la carte or a full menu?

As for the services you’ll need in the future, your representative should be able to make some predictions but the answer mainly depends on how your business evolves. The important thing here is to start building a relationship. You want to bank with someone who’ll let you know what you need to add – and what you can drop – as your business grows. They’ll also alert you to new services the bank is offering.

Finally, keep an eye on this during the vetting process. If the bank asks you what services you’re currently paying for and, critically, whether you’re using them, that’s a good sign. This is our chance to save you money. If the bank you’re assessing is smart, they’ll want to do just that.

If you have any further questions – or if you want to get started your vetting process – get in touch. 

Business Finance: A Fixed-Rate Long-Term Loan? It’s Possible

by Lonnie Bass 12. August 2016

When I talk to acquaintances outside the finance world about my job, they’re sometimes taken aback when I remind them that banks are in the business of selling loans. That’s because, as business leaders, they know how difficult it can be to land a loan.

But the truth is that growing, well-run businesses are great customers for banks, so we work hard to earn their trust. That’s why I’m glad we’re able to provide a solution to a dilemma that many have faced for a long time.

Those in search of a low fixed-rate loan, payable over a time horizon of at least seven years, have had limited options.

Big banks can sometimes offer such loans to qualified applicants, but they don’t usually provide the kind of personalized service that many businesses seek. Yet local community banks that specialize in relationship banking have faced too great a risk in a rising-interest rate environment to make fixed-rate long-term loans.

That’s changing. Thanks to a loan product that utilizes a third-party as a kind of interest-rate insurance company, banks like 1st Mariner can fulfill that need. For loans of $750,000 to $15 million, a hedge product called an interest rate swap might be a good solution for qualified borrowers who want a low fixed rate over a long time horizon at a community bank.

Here’s how it works.

In an interest rate swap, also known as Borrower’s Loan Protection (BLP), the bank makes a long-term, fixed-rate loan to its borrower. Then, it works to hedge against rising interest rates. The hedging goes on behind the scenes and in no way affects the borrower, who simply makes a flat payment each month. Bottom line for borrowers: Once they sign the documents, they’ll make fixed payments until the loan matures.

The Details

Although there are exceptions, these loans are usually for businesses whose net worth is at least $1 million or who have assets of at least $10 million. We can loan up to a maximum 85% of the value (LTV) of the customer’s property. And the borrower can use the loan for a variety of purposes, including acquisitions, refinancing, real estate, heavy equipment, or cash-out. While the bank cannot change a borrower’s interest rate, there may be a payoff penalty if you choose to prepay or payoff the loan early.


We find that this product may not be a fit for all borrowers but it gives them another option. One of the benefits of relationship-based banking is that we strive to work with our business customers to find the best financing solution for them, so we’re not going to recommend a loan involving an interest-rate swap to a business that wouldn’t qualify or, for some other reason, wouldn’t benefit.


A community bank can also offer a bit more “deal customization” than big banks, which traffic in large loan volumes. A good community lender will personalize these loans so they work for everyone. Community lenders are here to build relationships and reputations – our own and our customers’.


If you have any further questions about whether you qualify for an interest rate swap, and whether it’s right for you, don’t wait any longer to contact us.

What's a Good Use for a HELOC?

by Nerd Wallet 8. July 2016

When you take out a home equity line of credit, you're offering your house as collateral to secure another loan. The upside: You can gain access to up to 80% of your home's value, minus your current mortgage balance and adjusted based on your creditworthiness.

The downside? If you can't make your payments, you could lose where you live.

Because the stakes are high, you want to make sure you use a HELOC for the right reasons. Here are a few.

Making home improvements 

Most people who take out a HELOC do so to make home improvements. Experts say you should only do this if the improvements you're considering will increase your home's value. This way, the money you're borrowing will be returned when you sell your house at a higher price.

The National Association of Realtors' 2015 Remodeling Impact Report lists these six changes as the ones with the best return on investment:

  • Installing a new front door.
  • Installing new siding.
  • Upgrading your kitchen.
  • Adding on to your deck and patio.
  • Making an attic into a bedroom.
  • Installing a new garage door.

These improvements can range from a few hundred to tens of thousands of dollars, but they don't change the footprint of your home and tend to be what future buyers look for.

Supplementing an emergency fund

Everyone should have an emergency fund to cover events such as unexpected car repairs and appliance breakdowns. Most people keep these in savings accounts, but you might consider a home equity line of credit as another source of cash. You only pay interest on the amount you borrow, and you could pay the loan off quickly to save money. Still, it makes more sense to have an emergency fund that's earning a little interest rather than one that charges you interest.

Paying off high-interest debt

Because the average interest rate on a HELOC is much lower than the average credit card interest rate, many people think about using a HELOC to pay off their credit cards. This is a great strategy if you're committed to never carrying a balance again. Otherwise, you're just adding another debt at a lower rate.

Regardless of how you use a HELOC, remember that the interest rate is variable and may change each time you tap it. And you'll have to repay the entire loan by the end of the payment period set by the lender. On the upside, the interest you pay on a HELOC is tax deductible*, like your mortgage interest. If you use a HELOC for the right reason, that's just one more benefit.

*You may be able to deduct 100% of your Home Equity Line of Credit interest on your income tax returns. Remember to consult your tax advisor to determine whether your Home Equity interest is tax deductible.

NerdWallet is focused on helping people lead better lives through financial education and empowerment. When it comes to credit cards, insurance, loans or expenses like hospital costs, NerdWallet provides accessible online tools and useful information to help consumers take control of their financial choices.

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