Forming a relationship with your local bank should be one of the most important financial steps taken for your business. But what does it really mean to have a relationship with a bank, and why is it so important?
The first reason it is important is because local, community-focused banks have deep and helpful information about the business conditions, needs and opportunities of the community. They work with all aspects of the local economy, and that insight is invaluable to their customers.
Secondly, bankers take pride in knowing their customers, their financial needs and the ins and outs of their customers’ business. Good banks consider the customer relationship a primary responsibility in order to offer meaningful financial advice.
Over the past decade there has been a proliferation of national companies offering loans and other services to small businesses across the country with aggressive marketing programs. The “neo-banks” utilize digital delivery that is fast and efficient for the end-user, which can be a real benefit. But there is often a trade-off in that these providers typically sell a product or service without developing a relationship with their customers.
By having a relationship with a local, community-focused bank that also provides digital solutions, your specific needs or particular situation can more quickly be addressed, because your banker will have an in-depth knowledge of your business before something might arise. Firsthand knowledge is critical for assisting customers intelligently and efficiently in times of need.
It’s one thing to have accounts or loans at a bank. Every business needs standard banking products to fund their business, process payments, handle payroll and operating expenses. And when the economy is humming along, those can oftentimes be all you need.
But when disruptions occur, like the coronavirus and resulting economic shock, that’s when you need a real personal relationship with a bank.
The massive U.S. Small Business Administration’s Paycheck Protection Program made that clear to many businesses and nonprofits across the country. Luckily, smaller community banks were able to help more small, local businesses obtain a loan. And a handful of banks across the country, like Arvest, were more than happy to start new relationships by assisting local companies with no prior affiliation receive this important funding. Unfortunately, many banks made very few loans to businesses that were not already customers.
It’s important for your bank to know you and understand your business, as well as the local economy in which your business operates. That allows the bank to give you sound advice and know exactly what you need to get through times like these.
Owning and running a small business is hard enough and can, especially during disruptions, lead to people isolating themselves while they focus on their business. But now is the time when, collectively, our local businesses will benefit from working together. We will be stronger when we are all active and involved in the broader business community. Businesses and business owners who have developed and nurtured strong relationships in their communities are more likely to survive — and even thrive.
As business owners look ahead, they should be asking their bank what tools are available outside of accounts and loans to help manage future cash flow needs and adapt to changing consumer behaviors.
Look for services such as treasury management, remote deposit capture, lockbox services, sweep accounts, equipment leasing to preserve working capital, e-payables and purchasing cards.
If you don’t already benefit from a meaningful banking relationship that adds value to you and your business, make it a priority to develop one today. Businesses in Northwest Arkansas are fortunate to have many options of local, community-focused banks eager to help. By doing so, business owners are more likely to manage through these unprecedented times.
Robyn Breshears is the executive vice president/sales manager for Arvest Bank in Benton County. The opinions expressed are those of the author.