Local banks make great partners when looking to raise your capital
As a business owner, you are keenly aware of the need for capital to finance growth—whether you’re planning to increase inventory, purchase a new building, or invest in new equipment. You’re also probably aware of several options for generating capital—including commercial loans or lines of credit from your financial institution:
Try local banks. Small businesses—and even mid- and larger-sized businesses—would be wise to check into local and regional banks to see what they can offer over the multinational banks.
“Our niche in the market is what we would call a community bank option for businesses,” says Steve Potter, Senior Vice President of Commercial Lending for Independent Bank. “The decision-making is local. You’ll know the people that are working on your [account], and you’ll live in the same community that they live in.”
Potter says, “What happens in large banks is that they make decisions that are good for the organization as a whole, but they may impact select communities differently. Whereas community banks, because of our local nature, we tend to have a friendlier attitude, more consistent toward businesses.”
Know the “Five Cs.” Potter says that banks rely on the “Five Cs” when evaluating a business owner’s credit worthiness: cash flow, capital, collateral, character, and conditions.
“Does the company have the cash flow to pay us back? Do we have the collateral to cover our loan? Is there adequate capital to help in the event of an adverse situation? An individual’s credit score and history are incredibly important. The credit score—character—is a reflection of their ability to repay a loan,” he says.
In the increasingly competitive market for business banking customers, Potter says Independent Bank differentiates itself through service.
“It’s a personal relationship that you have to build with that potential customer,” he says. “A dollar here or a dollar someplace else isn’t that much different. It’s more art than science. [A prospective customer] is going to put together a spreadsheet, and at the end of the day, how do they pick? Based on their comfort level with the people they’ve met and the relationship with personal advisors. It’s really that connection.”
Equal Housing Lender