How does the bank view your relationship?
If you are like most dealers, you feel you have a good working relationship with your bank. You’ve done business with them for years and periodically get together with your banker over dinner or beers to talk things over. Having a good working relationship with your banker is helpful, but banks are complex organizations with other considerations.
How does the economy and growth impact your bank’s lending approach?
A bank plays a role in virtually every dealer success story. However, bank incentives for lending are not always perfectly aligned with what dealers need. Consider the following scenarios:
• Strong economy: At these times the perceived lending risk is low and banks seek to lend more – whether you need more line or not.
• Weak economy: Banks will seek to reduce risk and tighten lending standards – just when your cash flow needs are likely more acute.
• Rapid company growth: Rapid growth may present new uncertainty, and banks often view uncertainty as higher risk, making them less likely to expand your line of credit to support growth.
Learn how to answer these two questions, as well as how to make sure your bank line is there for you when you need it by reading the full article.
About the AuthorMore Content by Scott Simpson