Benjamin Frank is the executive vice president, head of commercial lending at Sunwest Bank. He joined Sunwest Bank in 2006 and oversees the procurement and management of the bank’s commercial loan clients. With more than 15 years of experience servicing a broad array of commercial businesses, Frank’s skills include mergers & acquisitions, structured finance, healthcare, commercial real estate, treasury management and financial due diligence.
With the rise of large, global banks and internet banking, the relationship between a company and its bank has lost its luster. Gone are the days where a banker was a trusted advisor and an integral part of a company’s team. Now, the bigger the institution, the less ability it has to form a real relationship with its customer.
At the end of the day, all banks offer comparable products: loans, lines of credit, and private banking services. What differentiates institutions is service. Smaller, community-focused banks have a personal relationship with clients and can provide far more than standard products to customers.
The problem with being a small fish in a big banking pond is that your business doesn’t necessarily matter to the bank as much as the larger fish. This can lead to cookie-cutter products and services.
In the construction industry, a project’s success is often dependent on getting a personalized loan tailored to the situation. By banking with a smaller entity that knows you personally and understands your specific business needs, you can create a relationship where out-of-the-box solutions are possible.
When considering taking a risk that’s inherent in any lending situation, a large element of my assessment is the applicant's character. Trust and credibility are built over the length of that relationship.
A banker used to be an advisor, which is the kind of relationship many businesses desire today. A banker can do so much more than lend money if it is invested in your company and your success. When your banker understands your business, it can help you make smarter financial decisions that align with your longterm goals.
A banker that understands the “bigger picture,” can take a consultative approach. Many institutions will simply lend the max amount of money its “algorithm” says it can, even though this may not be the wisest decision. If you don't use it wisely, financing can kill a business just as much as it can grow it.
In 2008, savvy banks began to pull back on residential construction loans based on what their experience was telling them about the market. At the time, residential loans were running rampant, but clients who heeded their bankers' warning reaped reward when the housing market crashed.
When looking for a financial institution that values personal relationships, there are several key factors to consider:
- Competency—To serve your needs, your bank should have knowledge and experience within your industry. Banks that understand the construction industry, as well as the associated risks, are in a better position to offer good advice and the right kind of financing based on your needs both now and down the road.
- Personal banker—There should be someone at the bank that is your point person and advocates for all interactions at the bank. Your banker will know your business inside and out and can offer sage advice as well as have full accountability for your account. Personal customer service isn’t found calling a bank’s toll-free number or sending an email. It’s created by building a strong, personal relationship.
- Access—While having a personal banker is imperative, it’s also important to have access to the bank’s upper management team. An open-door policy to executives ensures you have the ear of the ultimate decision-makers when seeking financing.
- Importance—For a bank to understand your company’s needs, you need to be a meaningful part of the business. Avoid being just a cog in your financial institution’s machine.
- Financing expertise—Financing is critical to anyone in the construction business. A bank should have a variety of loan options and the ability to structure solutions that go outside the box, if necessary.
Relationships are never a one-way street. Business owners should also work on your business's behalf to foster a better relationship with it by utilizing the following:
- Communication—Be proactive and transparent in communications with your banker. You must know what is going on at your company, especially as it relates to cash flow. Your banker should know what is in the pipeline so it can understand how your resources are being allocated, potential risk factors and predict future needs.
- Share success stories—Share good news and good press. Banks like to lend to successful clients.
- Go beyond banking—Bankers are human. Don’t be afraid to share personal information, as you see fit, that goes outside the banking realm. At the end of the day, it only helps to further strengthen your relationship. Choosing a bank that values its relationships above all else means that a bank can offer personalized solutions.