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Commercial Lending

Helping Create Small Businesses that Thrive...Advice from a Sales Manager

Clarke Farmer
Nov 4, 2016


Business owners are a vital part of our society. They fuel economic growth in our communities by innovating, creating jobs, and finding new avenues to solve problems. They are the virtual backbone of the U.S. economic machine. Your role as a financial institution and lender is more than to determine which loans provide the most value for your clients. Entrepreneurs often rely on their community financial institutions for guidance, expertise, and support when looking for working capital.

However, according to a 2012 survey by JD Power and Associates on U.S. Small Business Banking Satisfaction, small businesses feel they are underserved. That’s not good for bankers or businesses. Add to that, the small business sector is growing rapidly.

So, how you can you satisfy this growing segment? In short, by helping small businesses thrive. Here are five key strategies for doing so:

Provide Resources Beyond Financing to Businesses

Beyond providing your expertise on financing or business account services, it’s increasingly important that you provide resources that educate businesses. Whether on your website or physically at your bank, make sure you are providing content and materials that give businesses easy access to expert insight and industry knowledge. It’s also important to network with your clients’ accountants, attorneys, and other trusted advisors to promote continuity in business planning.

Provide Insight on Financial Health

Set quarterly or annual meetings with business owners to discuss their industry and assess the health of their company. Make the annual renewal process more impactful for key customers. This is a great time for lenders and relationships managers to proactively bring ideas to the table to help a business improve its overall financial fitness. Intelligence tools like First Research can help provide industry profiles, update-to-date statistics, and forecasts that truly empower you to coach your clients and deepen relationships.

Many newer technologies help lenders detail trends and analyze a business’s financial situation. ProfitStars now provides commercial lenders the ability to connect with a business’s accounting system and translate that data into business reports for a snapshot of the company’s overall financial status. This is especially helpful when deciding on the type of loan best suited for a business.

Hold Networking and Special Events for Business Leaders

Leveraging the power of your networks to build relationships with prospective lending clients is key. Businesses that realize success from their partnership with you become compelling advocates for your financial institution. Engaging the Chamber of Commerce or local entrepreneur center is a great way to build and nurture these relationships. Holding educational events hosted by your financial institution and inviting business leaders in the community is a proactive way to meet and mingle with potential business clients and an ideal time to update business owners on market trends, fraud prevention, tax changes, and financing options.

Show Business Owners a Strategy to Save for Personal Goals

Paying the business’s bills and buying a new boat don’t have to be mutually exclusive uses of cash.  Does the business owner have personal financial goals that will be funded by the profits? Start by establishing a mutual understanding of profitability verses cash flow. Then, appraise the business’s ability to satisfy all required expenses and accruals.  If there is cash left over, then a plan can be established to save for those personal goals. If not, then it is time to back up and address other issues first. There are working capital lending solutions that make this work a lot easier. Consider BusinessManager® or other products that employ a lockbox and reserve account. These two features alone account for material improvements to disciplined debt service coverage and building piles of cash for strategic uses.

Make Sure Businesses are in the Appropriate Lending Products

As businesses grow, it’s important to help them understand their options. In time, a well-structured loan package may transition to another lending solution. Consider the two-year-old startup that has working capital funding “hiding” in a real estate note. It may be time to carve out the receivables and inventory and provide a proper working capital facility in addition to the CRE loan. Recognize products and services that are available outside of your bank’s product mix. For example, a business that is funding purchase orders out of a permanent working capital note “hidden” in a CRE loan can be helped in two ways: introduce them to a LendingNetwork® partner to supply purchase order financing, and refinance the CRE note to obtain the proper matching of short term debt with short term assets and long term debt with long term assets.

As a commercial lender, you have the unique responsibility and privilege of not only financing the growth of your clients, but also helping them identify how to effectively manage and continue to run their business profitably. It is a beautiful thing to help them achieve the goals they set when launching the business that is vitally important to them and get paid back at the same time.

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