Multi-Unit Franchisee Magazine Issue III, 2014 | Page 84

Finance BY STEVE LEFEVER

7 Tips for Managing Your Banker
Banking basics for tough times

I

n these challenging times, it pays to
be as prepared as possible. Here are
some suggestions from the banker’s
side of the desk that will help increase
your chances of success when it comes time
to renew or renegotiate your current loan
structure.
First, it’s no secret that the banking
industry has taken a hit over the past 48
months. Bank performance (or lack thereof)
has been front-page news for some time.
Here’s an overview of what’s happened,
where we are, and what it means to you.
A generally robust economy since 2003
lulled banks into more of a “sales” mentality and less of a “credit analysis” mentality.
As a result, credit standards were lowered,
documentation pared down, and the loan
decision process watered down. Not by
every bank, mind you, but by enough. The
result? An accident waiting to happen. The
economic meltdown may have been caused
by bad lending. However, the ripple effect
(some would say tidal wave) has now affected most banking entities.
What does this mean to you? Simple:
the sales guys are out, and the credit guys
are in. Period. More documentation, more
scrutiny, less leverage, more collateral. The
“lending circle” has been tightened. So it’s
not rocket science what it means to you:
just like any good Boy Scout, be prepared.
Here’s how.
1) Stay in touch with your banker.
Bankers don’t like surprises. Even if you
don’t like the results, share your financial
statements with them on a timely basis.
Don’t wait until they come to you. “Make
sure you share all the news with your
banker: the good, the bad, the ugly,” says
John Paul, president and CEO of The
Bank of Northern Michigan. You have a
partner relationship with your banker. You
wouldn’t keep your other partners in the
dark, would you?
2) Don’t kid yourself (or your banker).
Your banker sees a lot of businesses in all

82

MULTI-UNIT FRANCHISEE IS S QHRRK