Banking on It - December 2008

Identifying a Strong Business Bank

Asking questions is imperative

by Kathy Phillips

Choosing a bank for your business is significantly different than choosing a bank to handle your personal finances. Having the right business bank on your side can help your company begin, expand and achieve financial prosperity.

While numerous locations and an ever-expanding array of services might be important for your personal banking, business banking requires planning, understanding of the business’ goals and a good partnership that will grow with you and your business.

With so many options to choose from, it is imperative to find a bank that caters to your business’ unique needs. To find the right financial partner for your business, here are some tips to consider:

Look at the bank’s approach to your relationship. Is the relationship focused on transactions or serving as a financial partner and advisor? A bank’s interest should mean more than just an interest rate. A business benefits most when the bank truly understands the client’s vision and has the resources and expertise to make those ideas come to fruition. A business can best determine where a bank’s interest lies by inquiring: (1) Is the bank genuinely concerned with the business by taking the time to listen to your business plan? (2) Is the bank a true resource for financial assistance and a trusted partner rather than merely a financial storage facility? (3) Does the bank share pride in recognizing your business accomplishments? Remember, a bank is only as successful as its clients and the interest should be vested in you.

Know the difference between a bank and a banker. Whether a business is just starting out or well on its way, there is always a need for a banking partner that is truly a partner. A bank provides an array of general banking services, whereas a banker is an experienced financial professional who understands business and the economic environment in which you are doing business. A bank advertises customer service, while a banker delivers the advice, support and assistance your business needs to succeed. Making the determination between an institution being a good bank and one that employs good bankers may not be as simple as opening an account across the street at the closest location. Rather, the distinction will be found among the intangibles. Consider the question: Who do you bank with? If you are more inclined to say your banker’s name over the bank’s name, you are likely with a bank that houses good bankers. A good bank realizes it is only as good as the sum of its parts and trusts its bankers to nurture the relationship with each client.

Make sure products are business oriented. Personal banking requirements differ greatly from business banking needs. With business banks, the product line should have a stronger emphasis on the business side of their client’s wishes. While some business banks will cater to the personal banking desires of the business owner, the focus of a business bank should be foremost on products and services that save your business time and money such as remote deposit services, which allow qualified business customers to scan check deposits and transmit the images electronically to the bank branch through the internet, as well as sweep accounts, which allow a business to earn more money on idle funds.

Investigate lending policies. Every company starts with an idea. Unless that idea receives the nurturing and the support it needs, it will never grow. Most businesses rely on the lending of banks to maintain this momentum and growth, because a good idea or well-planned business deserves the chance at success. Unfortunately, in tight economic times, many banks implement blanket lending policies, such as not lending to certain trades and/or types of businesses. However, a true business bank will value their individual relationships and make decisions based on the merit and integrity of the entrepreneur and his or her business plan rather than macroeconomic issues.

Listen to other business owners. The most influential piece of a bank’s reputation is, barnone, word of mouth. Speak to fellow business owners for a clear perspective on local business banks. Get their trusted opinion and then make your own assessment using the above guidelines.

Kathy Phillips
Kathy Phillips is the president and CEO of Nevada Commerce Bank.