Every business owner or entrepreneur who has a banking relationship and has received loans from a bank believes that the bank and banker really like them. And, they all feel this is the true measure of achieving a positive banking relationship.
To some extent this is true. From my personal experiences, I believe that business people prefer to do business with people they like. However, the likeability factor is not the most important factor that determines how a business can maintain a positive banking relationship.
Business owners and entrepreneurs devote their time and energies to running their businesses, making sure their businesses are growing sales and profits on a consistent basis while generating adequate levels of positive net cash flows that will provide needed capital to fund future growth. This also describes the types of businesses that banks and bankers want as their customers.
If all businesses attained these desired results all of the time, utopia would exist for all. But we all know that this isn't reality. It is for this reason that every business owner or entrepreneur needs to have a clear and complete understanding of the factors that really contribute to the establishment and maintenance of a positive banking relationship.
As a business owner or entrepreneur, do you understand the most important factors that contribute to a true positive banking relationship? Consider these facts:
- The most important factor influencing the borrower-banker relationship is the risk rating the bank assigns.
- The risk rating the bank assigns to the customer drives everything the bank will be able to do to help that customer.
- The assigned risk rating influences the pricing and terms of loans the banks can offer.
Are you aware of the factors affecting your risk rating? Ultimately, how the bank assesses your risk is much more important than whether the banker likes you.
Having a clear understanding of what your business needs to do to be classified as an "acceptable" borrower will go a long way towards helping you achieve a positive banking relationship. Paradigm Management has the capabilities to help you and your company answer these questions, and all you have to do is ask Paradigm to help.
