When Your Banker Says "No"

Your company is growing, entering new markets, developing and supporting new products. As the owner you have to face a truth you have been avoiding. Your company needs money. Where do you find it?

While there are numerous financing choices for small and medium sized owner-managed businesses ranging from asset-based financing to factoring to the SBA (Small Business Administration), most company owners are going to see a local bank first.

For most business people a visit with their banker is in the same category as a trip to the dentist--necessary, but not something they look forward to. Even though you have exactly the kind of company the bank advertises it supports, i.e., a successful, locally owned small business, you are wary and unsure of the bank's commitment to your company. Banks still possess a forbidding mystique that can intimidate even the most experienced business person.

Your meeting with Mr. or Mrs. Banker seems to go well. Three days later you get a call from the bank. The loan committee has denied your request. What do you do? Turn immediately to another source of funds? Shrug it off and figure that you will find a way to grow without outside money? No. Go back to a bank, a different bank this time, and go prepared.

You can try your original bank again, but first impressions are hard to overcome. (You never get a second chance to make a first impression.) The loan committee will be placed in the awkward position of overturning their initial decision. Better to make a fresh start unless you have compelling reasons to stay with your original bank. By turning you down the bank was making a pretty strong statement. Listen to it. That bank doesn't particularly want your business.

Bankers turn down thousands of company owners just like you every business day. Unfortunately, it's a case of what can best be described as "professional" lender meets "amateur" borrower. You probably see a banker a few times a year, if that. Your banker meets with potential borrowers every day of his or her career. That does not exactly make for a level playing field. Your meeting was a mismatch from the start.