It’s no secret that you need capital to operate and grow, but then comes the question how do you get it? For some of the lucky ones they have the personal cash to use or they are able to tap well heeled friends and family for the money. For the unlucky ones, you need money to operate and grow, but where do you get it?
Tap your community bank. An often overlooked source, this is a great place to begin. Your community bank has a vested interest in your success and unlike major banks they can’t afford to ignore small business. Community banks also have a unique perspective because most of them are small businesses as well; this common thread gives them the ability to understand your cash flow
problems and your individual scenarios. So why are community banks the new hot spot? They have money for you. Most of the money they have to lend are in the form of SBA backed loans, I can hear you groaning already but hear me out. I know the requirements are vigorous but by seeking out a community lender, you will gain a partner committed to helping you get a piece of that pie. So what do you need to know?
Look for a community bank that specializes in your field
The advantage of this is obvious; they know how you work and why you need the loan. They understand the pitfalls of your industry and can be a reliable source for identifying risks and appropriate solutions. The intimate knowledge of the industry also helps when creating loan packages and you gain a valuable partner.
Not all community banks are created equal, so your best strategy is to be informed before you pick a one. There are several resources to check out a bank and a few things to consider when choosing a community bank are:
- Is the bank SBA endorsed?
- Have you checked the FDIC troubled bank watch list?
- Have you checked the financial health of the bank?
- Have you checked the banks reputation and track record with small business?
Now a lot of people feel differently, but I believe with something as important as money you need to feel comfortable and confident in your bank. Do you have a relationship with the bank manager? By asking this question I mean do you feel comfortable talking about your financial shortcomings with this person? If the answer is no, then there is a strong possibility that you will not feel comfortable using the bank. Another thing to consider is the customer service standard of the bank. Does the bank ignore businesses that don’t carry a large account balance? If that is the case, maybe the bank isn’t for you. Many small businesses carry large balances, but some banks don’t want to deal with accounts less than a certain amount. You may want to find out what the expectation for a business balance is and where your business falls. My personal belief is that big or
small you should be important to the bank, a bank that only views your worth through monetary balances isn’t going to go to bat for you when you need it.
With a mixture of work and knowledge, you can find a new funding source in a community bank.