Finding The Right Lender

During a question and answer portion of a recent speaking engagement, I was asked “How do you find the right lender?” Great question. In establishing a good lender relationship, it is pivotal to find the right lending institution. The starting point in looking for a lending institution is to obtain financial information. A troubled or insolvent financial institution isn’t going to do you much good no matter how carefully you nurture a relationship with one of its lenders.
The next point you need to consider is to deal with officers as high up in the organization as possible. My reasoning is this; upper management tends to have greater job longevity than lower level employees.

The Financial Institution

You need to find the financial institution that is the right size for your company. Many of the small to medium sized lending institutions cater specifically to small businesses, while larger institutions have small business divisions. In lender’s terms, a small business normally means $500,000 to $40,000,000 in annual revenue. These institutions tend to have individuals who are very knowledgeable in small business issues, exactly the type of lender you want and need.

Interview the Lenders

Another thing you should consider is interviewing several lenders to fill your position of “The Right Lender”. Normally, you would not hire the first applicant you interviewed for an executive position, so why select the first lender you speak to? You should require the same relationship of trust and communication with your lender as you have with your physician. Additionally, you should expect the lender to have a great bedside manner!
The emotional and financial component in a relationship between you and your lender makes it one of your most important business decisions. You must be very comfortable with this relationship for it to succeed. Once you have established and nurtured a good relationship with a lender, you can count on a brighter future for your business.
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