Small Business Banks Want To Hear The Good --
The Bad -- And The Ugly...

The pillar of a solid relationship with a lender is honest communication on the part of the small business owner. Whether your business is struggling, or making money hand over fist, it's important that both situations be communicated to a lender.

Recently, I surveyed about a dozen senior, experienced lenders located in Massachusetts, New York, California, Texas, Florida, and Ohio¹, on the importance of being honest with a lender in good times and bad. All lenders responded that it is very important to keep lenders apprised of your company's financial health, particularly when it is experiencing -- or is likely to face -- financial problems. Respondents felt that a lender's direct involvement can help a company overcome financial challenges; however, when a business owner conceals the truth, lenders felt they would be less inclined to cooperate -- and more apt to act adversely.

When your company is performing well financially, when it generates sufficient profits and cash flow, and when loan repayment is not threatened, you certainly can get away with some things without jeopardizing your loan relationship. A loan officer will note your behavior for future reference, but he or she most likely will not end the relationship because of it, especially if things have been going smoothly.

Unethical behavior

Several situations, however, will raise red flags with your lender, and could cause him or her to re-evaluate your relationship with the bank. These include:

• Lenders may limit their desire to give you money in the future if they know that their existing loan repayment is already in jeopardy.
• Lenders may begin to look for additional collateral if they feel that the existing collateral is not adequate.
• Lenders may request additional financial information and request to meet to discuss an already unpleasant topic, bringing more attention to your loan relationship and putting pressure on you to come up with a strategy to resolve the situation.
• If your company is already in financial trouble but not yet defaulting on its loans, some lenders may take it a step further and ask you to take your business elsewhere.

Bob Ryan is widely acknowledged as one of the leading experts when it comes to helping ordinary people raise all the capital they need to fund their businesses.

His reputation for helping others succeed is well known in the business financing world.  Through his unique methods for raising capital he has helped his students raise over $456 Million dollars for their business ideas. You can find his insight and expertise when you visit his website www.fundmyideas.com or when you read his blockbuster course The Definitive Guide To Raising Capital® -- How To Fund Your Business In 30 Days Or Less!