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What your small-business banker won't tell you

Published: Friday, Nov. 8 2013 1:38 p.m. MST

The right banker could be an important partner for your business, but there are some things you need to know about the relationship that your banker probably won't tell you. For starters, don't expect your banker to make the first move.

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The right banker can become a very important partner to your small business. Years ago, I learned how important a good relationship with a banker could be. Some partners and I had a small photography supply store. We sold cameras, but our focus was the props, albums and other items portrait photographers used every day. Our banker spent the time to really get to know our business, our market and us. In fact, I think he stopped by our small business at least once a month, and I can’t remember a time we ever had a meeting in his office. I don’t think I realized it at the time, but we were very lucky.

Surprisingly, he wasn’t from a small community bank — he was just a really good banker. He taught me that creating a good relationship with your banker was a good idea.

I’m not sure where I was originally introduced to this, but Mitch Hurley, who was a vice president at First Security Bank at the time, identified what he called the three T's of nurturing a good relationship:

Talk: I’m ashamed to admit it, but sometimes my wife will look at me and say something like, “Talk to me.” Communication is critical to building a relationship, and sometimes we need to be reminded that part of communication requires that we actually communicate.

Time: Nothing happens overnight. Forcing things never seems to work; and just because you are a bank customer doesn’t mean they are going to instantly love you. It took my wife awhile before she figured out how awesome I was — it might be the same way for your banker.

Trust: Honest communication + time = trust. Just this morning, my wife and I were discussing how she has lived with me a lot longer than she did with her mother. I think our relationship is built on trust. She’s never given me a reason not to trust her, and I’ve done the same. I suggest you take the same approach with your banker. Spend the same time and effort you spend with your customers and your vendors building trust with your banker.

Although I believe a good relationship with your banker is important, you still need to remember that they are not your best friend or your clergy. There are things you shouldn’t share with them and things they likely won’t share with you. My friend Tom Gazaway, president and CEO of Hawkeye Management, recently shared five things your banker won’t tell you with Jeff Haden at Inc.com. I think they bear repeating here, and would like to add my two cents:

“I’m hardly an impartial adviser.” Never forget that your banker doesn’t really work for you but for the bank. “This doesn’t mean they’re not nice people,” says Gazaway. It also doesn’t mean that you shouldn’t try to foster a good relationship with them. It does mean that when push comes to shove, the bank’s interests are the priority interests. If you’re lucky, they’ll be able to nudge you in the right direction if their bank can’t help you, but this might not be something the bank trains them to do. This comes from building a good relationship.

“I can’t really help you with credit or with credit issues.” Credit advocacy isn’t something most bankers will take on. Your banker will be trained to evaluate your credit score (and other criteria) to determine if you qualify for a loan, but the state of your credit report is up to you. I like the way Gazaway puts it, “Keep in mind credit advocacy doesn’t involve manipulating a credit profile — it’s all about accuracy and knowledge.” Before you apply for a loan, make sure you check your credit score and know that it’s accurate. The three major reporting bureaus are Equifax, Experian and TransUnion

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