259 - 3 Signs Your Lending Relationship May not be Working
When it comes to running a company, nothing is more important than its financial health and stability. For businesses looking to grow or expand, having the right financial partner in place is critical, both to smooth a path for growth and help manage the peaks and valleys that often wreak havoc with a business’ bottom line.
The right financial partner should be patient, open-minded and creative. And when they’re not, the lending relationship simply may not be working.
Here are three red flags that signal it may be time to find a new lender.
1. The dead giveaway
Most lenders will assure their clients that they understand the natural ebb and flow of their businesses. But when it comes to the issues that consistently crop up for a business, it’s clear many lenders do not appreciate how those challenges can affect – sometimes significantly – the overall financial health of a company.
Do lenders understand how seasonality affects a business’ cash flow or how the unpredictability of a large, unexpected order can put a strain on another company’s finances? Many businesses struggle with complex supply chains that require deposits or other cash outlays that are not necessarily factored into their initial financial plans.
For these businesses, flexibility is key, as is a lender’s ability to be responsive to the business’ unique circumstances. Simply put, a strong financial partner should know what a business needs before they know they need it.
2. Beware of regulatory pushback
Traditional banks rely on formulas and balance sheets, but many businesses don’t always fall squarely within a traditional model. More often than not, these businesses benefit from financial partners that are nimble and that have the ability and expertise to adapt quickly to problem solve and find solutions.
Large public banks and lenders are often slow to react – and lend – when businesses need over advances for seasonal lows or funding for the build-up of inventory for the holidays or other big moments.
Independent, privately held lenders that are not restricted by stringent banking regulations or lengthy committee reviews are often more flexible and able to help a business ride out a rough patch without a hit to their bottom line.
3. Nameless, faceless bankers
Every entrepreneur knows that everything in business is personal. It’s built on relationships, hard work, determination – and in many cases – a dream. An effective financial partner should always look out for a company’s best interests, flag bad debt so it can be avoided and help their clients navigate complex financial situations.
Lenders should be a true partner in every sense of the word – a sounding board for new ideas and a reliable cohort to support a company’s strategic and financial goals, whatever they may be. Anything less than that, and it’s probably about time to find a new one.
Source: Business Journals