I really don’t like to answer a question with a question but in this case I did, “Do you do business with an institution or a lender?” I went ahead and answered by saying you don’t do business with an institution. You do business with people. When you get a lender who believes in you, you can accomplish things that are hard to believe. I continued by saying a good lender relationship can bring you money in the form of credit, save you money in fees, and enhance your business opportunities through taking advantage of the lender’s extensive contacts.
Relationships between lenders and entrepreneurs/business owners take on as many colors and shapes as relationships between you and your life partner. But, as you know, the most important part of any relationship is to have trust and honest communication.
The problem here is a good lender relationship can be so beneficial. But, most entrepreneurs/business owners suffer through poor ones, or cultivate none at all. In my discussions with lenders, they feel that the entrepreneurs don’t understand their restraints and needs. Lenders are not investors risking their personal money investing in your business. In addition, lenders are loaning you money that individuals or companies have deposited with the institution. That money is then paid back to the depositors. Lenders by law and temperament are not investors.
As in any relationship you need to understand the other party’s side, which in this case, is the lender. Lenders do not have the same lucrative potential as an investor. As an entrepreneur, you are normally asking a lender to take an investor risk instead of a lending risk. This is the main reason why bankers and entrepreneurs so often don’t see eye to eye.