Banking relationships are very difficult to establish ex post facto. Specifically, your banking relationship, like your relationship with your CPA, must be well-cultivated before the day arrives that you need to borrow funds for your business.
The responsibilities for providing short- and long-term sources of funding and for controlling the use of money within an organization frequently falls into the province of many small business owners who do not have the luxury to hire a treasurer nor a controller.
It is key, therefore, that owners and managers with overall control of company funds strive to develop banking relationships with three goals in mind.
The first goal is to create a relationship of trust between you and your banker. Give your banker an opportunity to observe how well-versed you are in your trade or business. Remember, you are trying to get him or her to make financial commitments to your company. This can be achieved through informal monthly meetings to discuss lesser business concerns, and re-enforced with quarterly or semi-annual meetings that involve your entire management team to discuss detailed financial reports, bank agreements, credit and security agreements, etc. Occasional social meetings or events to discuss one or two brief business topics is acceptable, provided fraternizing beyond the business relationship is avoided to maintain integrity within the relationship.
The second goal is to help your banker become an expert in your business or industry. As his or her expertise increases, you will realize time savings as requests to borrow funds or extend credit lines require considerably less explanation to receive approval. In addition, your banker will be in a position to recommend alternative solutions from their total portfolio of banking services that may provide a better solution to meet your liquidity needs.
The final goal is to provide detailed financial information to your banker on a consistent monthly basis that meets or exceeds reporting requirements stipulated by the bank. The availability of this information should satisfy the strictest banking requirements and put you well on the way to obtaining financing when you need it most.