Working With Your Bank During An Economic Downturn

By Scott Little
Vice President, Commercial Lending Officer
3rd Federal Bank

With the current state of the nation’s economy, many businesses, particularly small businesses, are struggling financially. Financial hardship can sometimes cause business owners and executives to be wary of dealing with their banks. However, many businesses fail to realize that their bank is a valuable resource, and developing a relationship with a banker may make it easier to navigate periods of economic downturn. There are simple steps any business can take to work with their bank to foster a positive and mutually beneficial relationship.

Initially, the most effective step for any business is to get to know the people that work at your bank. Call the institution, find out who your lender is, and then contact that person. Introduce yourself and your business, and invite your lender to visit the organization. Once a relationship has been established, it’s wise to maintain contact and keep your lender informed about how your business is functioning. Your lender can provide better advice and assistance if he or she knows your business and how it is run, as well as who runs it. If your business finds itself in need of help or faces a financial crisis, your lender will be able to provide the best and most appropriate service possible.

Your bank is a valuable resource not only for general banking information, but in a variety of other aspects of business as well.  Oftentimes, banks are well connected within your community and can offer referrals and recommendations for a variety of services, including appropriate accountants or insurance companies. In many cases, it’s easier to call your bank than it is to spend time and money searching elsewhere for answers.

But as supportive as your bank may be, businesses that expect a bank’s help must be willing to initiate the outreach and work to maintain the relationship. Your bank can be of better assistance if you keep them informed and engaged. The key to a successful relationship is communication and proactive behavior.
Another vital component of a business’ relationship with a bank is honesty about the state of your business. Banks appreciate business owners or executives who don’t try to hide their problems, whether related to business or personal finances. Pay your bills on time and keep credit in check, since personal finances can negatively affect business prosperity. If you are experiencing personal financial issues, alert your bank right away.

In addition to keeping your bank informed about a situation, you should be prepared to offer solutions, whether it is an alternative payment plan or ideas for cutting business costs so that bills can be paid. Additionally, you should offer support for the bank’s recommendations and ideas, and explain why these adjustments are necessary and how they will help. Take responsibility for your actions and show that you’re able to meet the challenges that come with running a business. Once you show that you’re making an effort and are invested in your business’ success, your bank will be invested too and more likely to make adjustments and concessions to help.

While your bank is a valuable resource for your business, it is important to have reasonable expectations regarding what your bank can do for you. Any solution to a financial crisis will still require financial dedication and work – there are no easy fixes. Your bank may be able to offer a variety of solutions, but those suggestions may not always be the solutions you’re looking for.

As a business owner, it’s important to find a bank that is willing to listen and form a relationship with you. In a smaller bank, a lender has more time to become acclimated with your business, and has the ability to work with you more intimately to sort out problems and find viable solutions. If you are willing to take these steps to actively engage your bank, the more help and support you’ll have during periods of economic distress. Creating and establishing a relationship with your bank, and supporting that relationship through communication and honesty, is key for any business.

Scott Little is vice president and commercial lending officer for 3rd Federal Bank. Founded in Philadelphia in 1921, 3rd Federal Bank is headquartered in Newtown, Pennsylvania with branches serving Philadelphia and Bucks County, Pennsylvania and Mercer County, New Jersey.  3rd Federal Bank offers a full line of personal and commercial banking solutions with the excellent service of a community-based bank.  TF Financial Corporation, 3rd Federal Bank’s parent company’s, common stock is traded on the NASDAQ under the symbol “THRD.”  For more information, visit the 3rd Federal Bank Web site (www.thirdfedbank.com), or call 1-888-918-4473.