“Brick and Mortar Banks Are Dead” was the headline of a Business Insider story in October 2011. Other sentiments abound on online financing sites, but in a thriving entrepreneurial ecosystem like Northwest Arkansas, the role of a brick-and-mortar, small-business banker is still vital.
One of the reasons is because a banker will introduce you to the world of vital financial statements and walk you through a clear and honest loan process. I have very often met with newer business owners who are still operating out of their homes, are only online or have been open for just a few years. Some of them have yet to create a profit loss statement, don’t know their cost of goods sold percentages and have never created an equipment list with values for a balance sheet.
Every business owner needs to know this data inside and out. The 1-800 agent you talk to on the phone at “getabusinessloan.com” is neither going to help with the preparation of these nor with care. For startup owners, an introduction to the world of financial statements is sometimes something they have not yet considered while they were busy developing their products or service offerings.
I have been asked to help a new business refinance online loans taken out during the first year of operation with a much better SBA loan product that spreads the payments out over a longer term. The newbie owner did not fully understand the terms they read online, and has now been hit with the realization that fee structures and payments are killing their cash flow during crucial early years. Brick-and-mortar banks are highly regulated, and the terms of their loans are thus spelled out extensively and clearly. There are no surprises down the road.
And in Northwest Arkansas, a community banker’s work hours are never 9-5. They are out in the community 24/7, gaining valuable knowledge for their customers. Every good small-business banker I know has a business cellphone attached at the hip. They are often meeting with customers at their businesses early, late or on the weekends. They are available for emergency consultations to answer questions at crucial times, like the week before a loan closing or the days before a store opens. They are attending local community events and chamber of commerce meetings, and are networking to learn about the current state of the business scene, gathering information to share with busy owners who don’t have the time to attend.
Experienced bankers have valuable information to share about local, free resources to help develop a business or marketing plan, how to find local manufacturing venues and places to contact for affordable part-time employees.
Community bankers in Northwest Arkansas can also help owners find other small-business professionals to assist them. Your sister’s divorce attorney, the accountant who does your personal taxes or your home owner’s insurance agent are often not the best persons to hire to create legal entities, to assist with preparing financials, and to find small-business insurance policies. Some accountants and attorneys don’t provide small-business services at all because of the multiple needs and issues involved. Active, experienced business bankers know these local professionals who provide these services.
This saves a lot of search time, and the owners know they will be well advised at the first meeting. These services may be needed very quickly, and, for example, if a business loan requires assignments of life insurance proceeds, an agent not familiar with this process can take way too long to get the forms in place for a deadline looming for closing.
Many of our personal need services in this modern world have gone online and are much more efficiently served today. However, a matter as important and vital as funding the future of your business is still best handled in person, one-on-one, with an experienced, small-business banker who cares and wants to be part of your business’ future success.
Editor’s note: Martha Londagin is an SBA/commercial loan officer with Springdale-based Legacy National Bank, and a former business consultant with the Arkansas Small Business and Technology Development Center at the Sam M. Walton College of Business at the University of Arkansas. The opinions expressed are those of the author.