As a kid I have a very vivid memory of walking into the local bank with one of my parents who have been small business owners since the 70’s. The smell of Foldger’s coffee and the tasteless shortbread cookies remind me of a time when the local banks governed the smaller world we lived in. Working with a successful developer/businessman/entrepreneur in my college years I quickly realized the importance of creating a relationship with a local bank and ideally a locally owned bank.
In this market the major lending institutions have their guidelines and criteria that you either fit into or you don’t. They offer their products and don’t have very much latitude to accommodate your specific needs in general. When money is accessible in the economy for everyone they often can have the best rates and offer incentives and perks for keeping all your business transactions under their roof, but when the market shifted the availability of funds and support changed.
I recently heard the following from a local, smaller bank “if it makes sense, we can do it”, where the larger lenders said it is not possible and you will not find a place for that loan. Local banks can and do still work on handshake principles and really do offer locals the opportunities big named counterparts do not.
I was amazed by the range of responses as I searched for a bank to place a refi on a rehab project. The old fashion businessman in me was thrilled to think some things have not changed. Trust and relationships can still get you somewhere in business. The small local banks that have been funding businesses like my folks’ really can be a lifeline in the good times and the bad. If you have given up on finding help in the local branch of a big bank, try the stale coffee smell and not so savory cookies at the smaller local bank and you will be surprised what they can offer.