Previously I listed some keys for a successful commercial borrowing relationship. Now let’s dive deeper into staying close and being open with your lender.
- Stay Close to Your Lender: Your banking relationship will thrive with closeness. Lenders like to know you by face and name. Creating a close professional relationship may help you get better loan terms and pricing and may facilitate the credit approval process. A borrower that is familiar to a lender, when all else is equal from a credit perspective, will often be considered a better credit risk. Spend some time with your banker at lunch, on the golf course or a quick office visit to say hello. Be available to meet with your banker and senior executives. This will cultivate an environment of trust and respect.
- Be Open and Honest: There is a push and pull between the borrower and lender regarding disclosure. The lender prefers prompt and full disclosure. Many borrowers prefer selective disclosure when reasonably requested. The benefits of more full disclosure may include a greater trust between borrower and lender, potentially better terms and pricing on future loans, a more harmonious relationship and better dialogue if problems come up. Bad news doesn’t get better with age.
Staying close and being open with your lender will help create a productive borrowing relationship. Next post we’ll take a closer look at cultivating understanding and brokering peace.