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.