How to find the right bank that suits your needs

Every bank is going to tell a prospective client that they can serve their needs, but asking the right questions will reveal whether a bank is the right one for your business.
“Banks say they serve all businesses but you need to find one who has experience in your industry, who will share your priorities and focus their resources in areas that are important to you,” says Caroline Harkins, senior vice president and Southern California regional manager at Bridge Bank.
Smart Business spoke with Harkins about the process of choosing a bank.
How can you benefit from a bank that knows your business?
This is especially important when operating in an industry that has unique risks. For example, an early-stage technology company is going to have challenges that aren’t common in other industries. Most lenders are looking for businesses that have two or three years of profitability, are steady and have products not prone to obsolescence.
Early-stage companies are unlikely to be able to pass any of these requirements. Unless the prospective bank has a business unit dedicated to meeting the unique needs of tech companies, other options should probably be considered.
Health care is another industry with unique needs. Businesses might be receiving payments from federal agencies and are facing a regulatory environment that is ever changing. Industry knowledge can even be useful to something like a car dealership, where certain banks are set up specifically to work with them.
While these examples might be somewhat extreme, as you get closer to these extremes it becomes increasingly important for businesses to carefully consider what bank to choose.
How can you verify industry experience?
When you’re interviewing prospective banks, be sure to ask for examples of similar companies they’ve worked with in the industry. Inquire about the challenges those companies have faced and how the banks helped the company overcome those challenges. If they can provide a list of companies they’ve worked with and intelligently discuss industry challenges, it’s probably a good fit.
Trade organizations are also good sources of information. Find out which banks are active and check their reputations within the industry.
How can you maximize interviews with prospective bankers?
First, prepare for the interview by developing questions that will reveal the bank’s priorities.
This will help ensure that the conversation doesn’t default to the banker asking questions about your company. Bankers are trained to formulate questions and can monopolize the discussion by conducting their due diligence and uncovering sales opportunities.
Make sure your interview questions prioritize your type of company and products. If your business model includes aggressive growth and relies heavily on debt, ensure the bank does that routinely. Some banks prefer to collect deposits and lend out conservatively.
Banks often prioritize certain markets in which they’re eager to expand. Find a marriage between your needs and the bank’s priorities. They will not say your industry isn’t emphasized, but you can look at the bank’s financial statements to check its assets and where loans are concentrated.
Does having access to decision-makers matter?
Having access to decision-makers is an indication that the bank values you as a client and that will flow into other areas of your banking relationship. Also, you want to know the sensitivities of the people making decisions. When you face a challenging situation or have an opportunity, will they be open-minded or are they going to quote policy?
If you’re considering an acquisition to double your size, how would they structure a credit facility to accomplish that goal?
Ask how they’ve worked with other companies and check references to determine how they’ll work with you. ●
Insights Banking & Finance is brought to you by Bridge Bank