For many established entrepreneurs, the local commercial bank or community bank may still be the best place in town to get a small business loan.  But too many small businesses try three or four banks and then stop looking. Ideally you should be eying several bankers. Find out which financial institutions in your market make loans to firms like yours. Not all banks specialize in business loans. Some specialize in lending only to firms in certain industries. Others lend only to those in certain stages of the business life cycle (usually, not startups).
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Once to find the right bank, the goal is to build a rapport with a banker long before asking for a small business loan. This person isn’t the local teller who knows your name when you make deposits. This is a banker who understands your industry. W You want to be able to sit down with that banker on a regular basis to share information about how you are growing your business.
BlackEnterprise.com wanted to find out what is the best way to build a banking relationship and reached out to the Young Entrepreneur Council (YEC), an invite only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective , a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses. Here are their responses:
1. Start Early
Start building a relationship well before you look for financing. Get recommendations and meet different bankers before opening an account. Find one experienced in working with startups, with products and services that can fit whatever stage of growth you’re in. To get bank funding, you’ll need a business plan, financial statements, assets to use as collateral, and a source of funds for repayment.
— David Ehrenberg, Early Growth Financial Services
2. Give It Time
When I first went to my bank for a line of credit, I was surprised to find out that I only qualified for a small amount about a third of what I had in the bank at the time. As I found out later, the problem was that nobody knew me. Since then I come in regularly, chat briefly with my banker, share my wins and ask for an increase every 9 and 1/2 months.
— Vladimir Gendelman , Company Folders, Inc
3. Look at Your Revenue
Revenue trumps everything. Every good lender will want to see a lot of revenue and history of revenue in the company. It will eventually come down to your revenues and relationship with the lender over time. Even your personal banker has a boss, and his boss’s boss will be making the decision. He’ll look at the bottom line.
— John Rampton , Due
4. Change Your Approach
I see many entrepreneurs going to bankers hat in hand. This is the worst type of attitude to adopt and will result in lost opportunity. Banks must lend money to stay afloat. They need you to keep their business going. Realize that paradigm and it will change how you interact. Try, “We have a growing business and are evaluating banks to see who will be the best partner for us.” Game changer.
— Jeremy Brandt, WeBuyHouses.com
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