Small business, small bank Featured

11:52am EDT September 22, 2003
When you choose a bank, you are not just selecting where you have your checking accounts, you are selecting a partner that will have an impact on your business.

The relationship you have with your bank can affect how quickly and easily you receive loans and the kind of service you receive. Here are four questions to ask as you look at the banking options available to today's business owner.

1. Are you a big fish in a small pond or a small fish in a big pond? In general, the bigger the bank, the less personalized service a small business owner will receive. Relationships under certain dollar amounts are often given an 800 phone number to call for assistance. A smaller bank is more likely to look at you as a person, not just an account balance. Smaller banks often have a greater focus on building strong customer relationships.

2. Does the bank prove it wants your business through superior customer service? Small banks are often hungrier to get small business customers and are willing to work with you one-on-one to find solutions for your financial needs.

Larger banks place greater emphasis on new business development, sometimes to the detriment of their present customers. Again, if your balance isn't big enough, they are more likely to spend less time trying to meet your needs. Often the equation is bigger bank equals emphasis on bigger customers; smaller bank equals emphasis on smaller business customers. Choose the best fit for you.

3. Does the bank understand your business? Most smaller banks are small businesses themselves, giving them a unique understanding of the needs and challenges small business owners face. They typically hire more seasoned lenders with years of experience. Larger banks often start new loan officers on small business lending. As lenders gain experience, they move up to larger relationships.

This means that not only do small business owners work with lenders with minimal experience, they also have to deal with consistent turnover. It's hard to build a relationship with someone you work with for only a few months.

4. Can you get the loan you need quickly and easily? Small business owners don't have time for a cumbersome loan process. When you need a loan, you want it now with no hassles.

Because bigger banks have so much volume, they often rely on a credit scoring or a cookie-cutter approach to loan approval and structure. A smaller bank may be able to offer more flexibility and work with you to meet your particular needs. Smaller banks also tend to have a more streamlined loan process. The person you meet with is probably the person making the decision.

Plus, smaller banks are typically more technology driven, offering streamlined processes that allow timely responses to loan requests. A larger bank may have many layers for credit approval. The ultimate decision-maker might not even be located in the same city or state as the branch you're working with. Bigger banks may have a more negative perception of small businesses and make a business owner feel like they are doing him or her a favor by granting a loan.

As you evaluate your banking partner, keep in mind that all financial institutions are not alike. Look at your needs and find the partner who is willing to meet them. In today's banking environment, the customer does the bank a favor by selecting it as a partner. Dan Flynn is a commercial lender with The Grange Bank. He is located at the firm's South Front Street main location in Columbus. Reach him at (614) 449-5338 or flynnd@grangeinsurance.com.