What Questions Are Safe to Ask Your Banker?
Article By: Kimberly Bunce, Relationship Manager for SFB
If you are a small agency, sometimes you may have the feeling that your bank is always the one with the leverage, the one that has loaned you the money and therefore has some control over you. This doesn't have to be the case.
For one, your banker is expected to make loans and often derives compensation for making them. If you are fortunate, you have several banks that want your business. The banker-client relationship should be more of a 50/50 partnership where you expect certain things from each other.
Bankers want to make sure their loan is safe, your company is strong, and you will stay loyal to them. They should and will likely ask a lot of questions, and request all kinds of financial information to help them sleep at night.
If I were an agency owner, there are a few things I would want to know from my bank.
- First of all, do they understand my industry? Let's face it, the insurance business is very unique and not all banks are comfortable lending to agencies. Find out how much they know and whether they have dealt with other agencies.
- What does your attorney, your accountant, or your other agency contacts know about your bank's reputation?
- Will your bank share information about you? If you have a good relationship with your banker, they will tell you how the bank perceives your agency; what are seen as your company's strengths and weaknesses, and maybe the bank's risk rating assigned to your loan relationship. (A risk rating is a number, usually from 1-10, that rates from the bank's perspective the riskiness of your agency.) Your banker should be able to go over your financial statements with you and tell you what they like and also what they don't like.
- What does their loan approval process look like? Will they respond timely? How long does it take to turn a loan request around?
The relationship you have with your banker, accountant, and attorney can make or break you in the long run. Make sure you choose advisors that understand you and your agency.
Kimberly Bunce, a relationship manager at SFB, brings a fresh perspective to the team. During her tenure at the bank, she has been involved with a complicated, ever-changing partner buyout that morphed into a partner buydown over a five-year period. Kimberly's experience as a CPA and her attention to detail helped the transaction run smoothly. Kimberly has since been involved in additional projects for the same owners as well as acting as a key advisor for other professionals.