How to Guide

How to Choose a Commercial Lender

Hard work and dedication are critical to growing your business. But just as important is gaining access to capital.

Finding the right commercial lender is vital to your success as a business owner. Access to capital on the right terms can help you expand your business, unhealthy finance equipment to keep your company running smoothly, pilule or pay to renovate or expand your facility.

Beyond the basics of how your loan is structured and what interest rate you’re being offered, doctor there are a lot of considerations when picking your lender. Here are a few things to think about.

RELATIONSHIP

Few relationships are as critical to your success as that with your commercial lender.

Why does it matter?

For one thing, your lender needs to have a thorough knowledge of your business to be able to offer the best financial products to meet your needs. Most businesses have a long, detailed financial history, making it tough to explain your operations and financial requirements in one brief sitting.

If you can develop a relationship over time and stick with one experienced, capable, understanding banker, you’ll be much more likely to get access to the capital you need. The banker will be able to understand that your business has healthy enough cash flow to repay your loans, and you’ll be able to trust your banker to provide the right financial products when you need them.

THE SIZE

Many of the very biggest national banks have gained a reputation for poor customer service and bureaucratic, hard-to-navigate departments based in far-flung cities. That makes it tough for small and mid-size businesses to get the level of service they need.

Likewise, the very smallest banks may not have a deep enough pool of capital to do the lending directly to your business, so they might only do the application themselves and outsource the actual financing to a larger institution in another city, if they’re able to handle it at all.

It’s best to find a bank that’s big enough to have strong financial backing — and allow room for your company’s growth in the future — but small enough to still give you personal, individualized service. That’s why a mid-size, regional bank is a great option for commercial lending at most businesses.

IN HOUSE

Another thing to consider is who will actually be doing your banking. Just like with other kinds of businesses, banks come in all sorts of sizes and specialize in different types of products, some of which they outsource off-site to other providers.

You want to look for a financial institution that does the banking itself. If they outsource their financial services, letting someone else do the work and make the decisions, you’re much more likely to run into problems.

You should have a direct line of contact with your bank. The more layers of bureaucracy and lower-level staffers you have to deal with, the more likely you are to experience problems or misunderstandings in the lending process.

The important thing is to build a relationship with the real decision maker at your bank — an actual banker, not just an application taker — who can become an asset for your financial success.

The best bankers will not only offer you financial products, but also the advice about how best to utilize them. That means they’ll become a long-term partner in your business’s growth and development through the years.