What advice do you have for middle market business leaders looking to meet with a potential lender?
Probably the most important advice I can give is first to engage your web of advisors. It’s not just about the terms of a deal, it’s also largely about the fit. Accountants work with lots of clients and lots of banks. They know which bank may be a good fit. Attorneys are similarly informed about the banking landscape. They can help you with your due diligence on the bank, or banks, you want to approach.
Of course, you’ll want to do your own research, too. Talk to business peers, go on the FDIC website. Consider where a particular bank might be in the merger and acquisition cycle…are they an acquirer or a potential acquiree? Have they recently been in trouble? Where are they headquartered and, more importantly, where are the lending decisions made? Who are you meeting with? Is it just the relationship manager or will there be a credit officer or senior manager there as well?
In your meeting with the bank, ask them about the size and shape of the bank’s portfolio. Where will you stand on that list? If you’re the smallest you may end up being ignored. If you’re the biggest, the risk you represent may amplify attention to any bumps or bruises your business incurs along the way. And, if you’re a rapidly growing business, they may run out of room to help. True, some people like being small and under the radar and others enjoy being the big fish in the pond, but, regardless, know where you fit.
You should also consider things outside the scope of loan rates and terms. A main point in having a bank partner in your business is getting sound advice. If the bank doesn’t understand the peculiarities of your business cycle it can lead to misunderstandings. Having experience with other businesses similar to yours is a big plus. And don’t forget the cash management side. We’re finding that most of our new customers have been underutilizing and/or overpaying. Make sure you understand all the charges on your current statement so you know what your business needs and what your new banker can provide…and at what cost.
Meridian Bank is a member company of the Chamber’s Middle Market Action Team (MMAT), a consortium of leaders driving rapid growth in companies with annual revenues between $10M & $1B through targeted programs and strategies.
Upcoming Middle Market Event
Culture Spark: Engaging Employees to Drive Success
Tuesday, October 8 | The Museum of the American Revolution
Join us for a discussion with Jason Richmond, author of Culture Spark: 5 Steps to Ignite and Sustain Organizational Growth to learn what makes for a high-performance culture and how to incorporate these assets to drive business success.