AWC Small Business Development Center (SBDC)

We are seeing many more clients, who, with a downturn in sales, are having trouble making loan payments. Debt that wasn’t bad when sales were more “normal” now looks like this daunting mountain. One concern is that the banker is going to immediately come in a start foreclosure proceedings.

What you really need to know is that they really don’t want to do that unless there is absolutely, positively no other recourse than that. Just remember that a bank is a private business. It doesn’t make huge amount of profit on bank accounts, but it lives on loaning out money and getting it all back with interest. While yes, a banker will take as much collateral as possible, a banker will always tell you that they don’t want to see liquidation value as a first source of repayment of a debt. They want your business to succeed and pay them out of cash flow and profits.

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Whether you already have a merchant account to process credit card transactions, are looking to switch or compare merchant account providers, or need a merchant account for the first time, there are many pitfalls to avoid. These include processing delays, changing fees and rates, rules on chargebacks — and the latest hot button on “holdbacks.”

Tight credit, rising business bankruptcies and changes in how consumers use their credit cards are contributing to an unusual amount of financial ferment involving credit cards.

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How ironic it is that America’s largest banks, in their ever-increasing quest for growth at any cost, drifted horribly away from their skill-sets and knowledge-base and into exotic financial instruments few people sold and even less understood. Now we continue to bailout these “too-big-to-fail” institutions while America’s small businesses eagerly wait to see if anyone in Washington will even remember them and offer a hand-up. Well…you’ve been waiting a while, haven’t you?

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The Washington Post last week reported that “Two weeks after President Obama announced a $15 billion initiative to spark lending for small businesses, every major provider of these kinds of loans says the plan will not work as designed.” The Post article quotes the Chief Executive of Signature Bank as saying; “Why would you participate?….

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Maintaining a solid relationship with a lender is important in good…and bad…economic times

Mark Twain once wrote: “A banker is a fellow who lends you his umbrella when the sun is shining and wants it back when it starts to rain.”

Unfortunately, Twain may have had a point about how some entrepreneurs see their banker. Small business owners often view their banker as their adversary rather than as an advocate, but the fact is that your relationship with your local bank is among the most critical for your business success. Just because the loan is closed and you’re making problem-free, regular payments doesn’t mean that you can neglect the relationship. In fact, that’s when you should work to keep communication open. Proper relationship management is critical to keeping you and your business in a position to gain assistance from your banker when it is needed the most.

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When it comes to helping entrepreneurs compete, I try to eat my own cooking. All the tips and strategies I share in this column I aim to apply at my 10-person technology consultancy. But I have to come clean: I’m woefully negligent in one crucial area–and it’s costing me.

I’m talking about online banking. Embarrassing as it sounds, I don’t do it. Nor, as it turns out, do roughly 95% of my 500 clients. Why? Sheer laziness, I suppose.

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