Doron F. Eghbali Business Planning Law Blog on Lawyers.com

How to Forge Relationships with Community Banks

Tuesday, May 18, 2010 by Doron F. Eghbali

Many entrepreneurs might come across an opportunity of a lifetime which requires some capital upfront. Community banks might be one of the places to borrow given their relative lack of bureaucracy, availability of in-house underwriter and intimate understanding of the local economy and even the particular business sector. Let us review some guidelines to cultivate long-term relationships with community banks.

1. PREPARE FOR THE FIRST ENCOUNTER

Think of your first encounter with a community banker like the first meeting with a wealthy investor thinking of lending you some money. In particular, you MUST

Have your tax returns of the past three years.
Have your business plan.
Have your references from vendors or other creditors.

In addition, you should be ready to discuss at length about your business strenths and weaknesses. You should articulate what you want, why you want it and how you realistically will return it with reasonable interest.

2. PREPARE FOR A LONG HAUL

This is very important to understand cultivating a long lasting relationship with community banks takes time, energy and effort. It does not happen over night. You should prove yourselves to be trustworthy able borrower. In fact, these are some of what you could do:

Ask them to meet your business frequently. And,
Open up more than a checking account. If you need and the terms are right, open up a credit card with them. Have an active savings account with them.

3. PREPARE FOR A BILATERAL RELATIONSHIP

You should update your community banks of the financial status of your business regularly, preferably on a monthly basis. The more your community bank knows about you the more confident they feel to keep doing business with you or even stop problems from happening.

Your community bank might also want to check in on the financial health of your business. You should encourage such bilateral communication. If you waver or show reluctance, community banks might view it as red flags.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

Posted at 11:12 AM

Topic: Business Planning