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OWNER'S MANUAL

5 Things Your Banker Won't Tell You

Before you try to get a small business loan, know what your banker can--and can't--tell you.
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You need a business loan. You walk in, hat in proverbial hand, hoping to build your case and impress your banker.

During that conversation, though, there are a few things you definitely won't hear your banker say, according to Tom Gazaway, president and CEO of Hawkeye Management, a New Jersey-based capital solutions firm that focuses on helping clients obtain unsecured funding (and is #177 on the 2013 Inc. 500):

1. "I'm hardly an impartial advisor."

This doesn't mean you can't trust your banker. This doesn't mean they're not nice people. This doesn't mean they don't know their products.

But if a trusted advisor knows the entire lending landscape and has put in his or her 10,000 Gladwellian hours to be a true expert on the subject, that also means they know all the other bank solutions in the market. That means they will be willing to lead you to the appropriate bank or non-bank lending solution based on your industry, location, credit profile, revenue, cash flow, liquidity, collateral, etc.

Bankers simply are not trained this way by their banks. You should be able to trust any banker--but you can't trust your banker to be impartial, because ultimately every banker works for his or her bank, not for you.

2. "I can't really help you with credit, or with credit issues."

Everyone knows how important personal credit is, but your banker isn't really trained to understand the true dynamics of credit.  It's unlikely the average banker even has a basic certification like a FICO Pro Certification. Why? Most banks don't value this form of advocacy.

Keep in mind credit advocacy doesn't involve manipulating a credit profile--it's all about accuracy and knowledge.

For example, 30 percent of your FICO score is determined by the amount you owe in relation to your available credit (your debt to credit ratio.) Most people think they are okay because they pay their credit card bill in full, but that simply isn't true.  Most lenders report your balance to the credit bureau when they cut the statement, not after your payment due date.  That means your balance is reported to the credit bureaus and your FICO scores are probably lower than they could be.

If you submit an application prior to checking your FICO scores and your utilization percentage, before you ensure there are no errors on your credit reports, and before you make sure to remove any fraud alerts, then you make it tougher to get your loan approved and even risk being denied.

Think about it this way: Would you go to your wedding in cut-off jeans and a stained t-shirt? No, you dress up for big events.  Why should your loan application be any different?

3. "I won't treat you the way Zappos will." 

At Zappos, if there's a better product somewhere else they help you find it. If the same product is a lower price somewhere else then they match it.  (And of course Amazon constantly scours the Web in an effort to maintain the lowest prices.)

Not your banker. For example, if you need a $100,000 business loan or business line of credit, some banks will give you the same terms or similar terms without requiring you to pledge collateral; other banks will go so far as to take a lien against your primary residence and a lien against your business--for the same $100,000 loan.

Do you think a banker will tell you to go two blocks south, make a left, and the first bank on your right will make the same exact loan without any liens and without any collateral?

Shopping for rates and terms and conditions--and making sense of those rates and terms and conditions--will be your job.

4. "I probably won't be here for long."

Bankers switch banks more often than you think. They make most of their income from salary, not performance, so it's natural to chase a higher salary at a bank down the street. (Wouldn't you do the same?) It's hard to find a small business banker who has been with his or her bank for more than five years.

If building professional relationships is important to you, know that you may have to switch banks to maintain that relationship with an individual banker.

5. "So, if I'm skilled I'm worth hanging on to."

It's easy to find friendly bankers. It's a lot harder to find skilled, experienced, highly knowledgeable bankers.

A good business banker who can be a trusted advisor is very hard to find--and, when you find one, absolutely invaluable.

IMAGE: Getty Images
Last updated: Oct 23, 2013

JEFF HADEN | Columnist

Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up from ghostwriting books for some of the smartest leaders he knows in business.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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