Starting a business

10 Questions Every Small Business Owner Should Ask Their Banker

When starting your small to medium sized business it is important to come to your financial meetings prepared. After all, your cash and creditability are on the line, so it is important to get it right.

Securing financing is just the first step on your journey to become a business owner. Having a good relationship with your banker and financial institution is important to the future growth of your small business. To make sure you’re starting your small business journey on the right track, there are key questions you can ask to be sure that the financial institution is a good match for you and your company.

Here are 10 important questions that every small business owner should ask their banker.

1. What services do you offer?

This may be one of the more critical questions to ask your banker. It is important that you know what services they offer before you start doing business with them. Your point of contact should be able to send you or tell you a list of services they offer that are relevant to you and your small business needs.

Here are few examples of the different types of services banks offer:

  • Business bank accounts – some offer accounts specific to your industry
  • Savings accounts and investments
  • Business credit cards
  • Business loans and leases
  • Business lines of credit
  • Payment and merchant services
  • Partnerships with government funding and grant opportunities
  • An individual or group of financial advisors

2. What types of small business loans do you offer?

Business loans and lines of credit come in all sorts of shapes and sizes. Make sure you are aware of the different interest rates, fees, payment terms, and credit limits that are available to you as a small business owner.

Some banks offer flexible plans that allow the terms of your loans to change as your small business grows.

3. Do you offer competitive products?

It is important that the bank knows you are shopping around for the best financial institution for your small business. If they are aware, they will sometimes be able to offer you a better deal than their competitor. They may have better interest rates or payment terms on their loans. Or they may waive bank account fees for the first 90 days.

Comparison shopping is always a good idea. Some banks will offer products that are specific to your business. Do they offer products like agriculture loans or loans for leasing farm equipment? It is important they have the best options available for your specific business needs.

4. Should I revise my business plan?

Remember that while you might be green to the small business world, your banker is not. They have experience with dealing with small business owners of every kind, so if they have any feedback on your business plan, it’s always a good idea to take their advice.

Their expertise in business plans could potentially help you secure more funding for your small business.

5. Will I have a specific banker that deals with my business accounts and everything related to it?

Knowing what type of advice and attention you will receive from the bank you choose is critical when running a small business. It is important that you are aware if you will get one-on-one attention or more of a general guidance on your finances.

Depending on your industry or small business, you will have to decide which works well for you and your business.

6. What tools should I use so my small business has some sort of financial predictability?

Predictability is not something that is common when dealing finances and running a small business. But if your banker knows of any tools that can aid in helping you project your small business dealings; it is important that they share that with you.

Some banks will allow you to sync your business bank account to accounting software. This will help you manage your cashflow in real time.

7. Will you work with my small business if we can’t afford the full fees in the beginning?

When you’re starting a new business sometimes it can take a while to get your books into the green. Figuring out if the bank offers any relief for their fees or interest payments is something that should be done before you sign on that dotted line.

Many financial institutions will offer flexibility in payment terms. You’ll also want to make sure you understand the process if there is an issue and there are not enough funds in your account when payments are due.

8. Can you show me how I would assess the health of my cash flow?

Financial advisors are experts in how to deal with money. Don’t be afraid to ask for some tips when it comes to managing your small business’ cash flow. They will be able to walk you through key things to watch out for when assessing the health of your business finances.

Bankers may ask you for a cash flow projection when you apply for loans or lines of credit. With the help of software, you can get an accurate cash flow projection of your small business in real time.

9. Do you have experience working with other clients in my industry?

Every industry is unique with a different set of challenges and strategies for each. Depending on your industry, you may want to deal with someone who has experience in your area of business. They can bring their experience with others in your industry to the table and offer some perspectives on what is normal and help you set some expectations.

10. Can you grow with me?

When you start your small business, you may have 1 or 2 employees, but as time goes on your business will grow and you have to make sure your financial institution will grow with you. Take a look at the range of small business products and services they offer, for example you may want to start with leasing but move into purchasing an actual location. Depending on your goals, be sure the bank you select is a good fit for your business now and in the future.

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