It happens all too often; we hear from clients, Attorneys, CPA’s and friends; the same sad story. A business owner needs financing for their business, whether it’s a Commercial Mortgage or a business loan or business line of credit. The business owner turns to one of “the usual suspects”, the banker.
Weeks or months later, after spending money on application and appraisal fees, after wasting time submitting countless documents, the banker responds with an offer (if the business owner is lucky!). But the offer to lend from the banker falls far short of the requested financing from the business owner. Time and money wasted: not a proper way to run your business.
But, WHY? Asks the business owner. The banker responds with all kinds of technical jargon and hyperbole which boils down to one concept: the bank doesn’t want to make the loan the business owner needs; the bank wants to control the money and lend what it deems to be the lowest risk to its banking business.
But…but…but…the business owner has all her accounts with the bank! Business checking account, payroll account, even her personal accounts and probably her retirement accounts too! “You have all my money! You know how good a risk I am!”, screams the business owner. The banker has no response to this outburst.
Banks are very good at collecting money. Building deposits, building accounts, building liquidity, collecting fees, collecting payments for credit accounts, mortgages, loans and etc., ad nauseum.
Banks are not good at lending. They’re not. Accept this as the norm. Disabuse yourself of the notion that the bank, your “usual suspect” where you keep all your money, is interested in actually making loans. They are NOT unless the terms are absolutely the most favorable for the bank, including the lowest tolerance for risk on the planet.
The usual suspects are not the friends of small business owners.
But there’s good news. There are other Lenders out there, Lenders who thrive on the amazing prospects of small businesses growing. Those Lenders are very interested, and VERY GOOD, at lending money to small business owners.
Visit our YouTube channel for our Financing Fodder playlist on how to prepare for your loan application process.