Most of us would like to view our banker as one of the family, and
for most small business owners, the idea of "when to fire your banker" has probably never occurred to them. The
average business owner is happy to have one less decision to make, so thoughts of firing their banker rarely become
a top priority in the realm of working capital financing and SBA loans.
Banks are just not what they used to be (as most of us have by now
realized). It seems like almost overnight banks have lost most of our confidence in a way that is similar to many
automobile manufacturers that are now a shriveled and tarnished version of what they once were. In this shifting
reality, business owners are now forced to adapt quickly to a changing environment for small business loans.
Candidly speaking, even if their commercial banker is their best friend, small business owners are increasingly
realizing that they must look out for their own best interests because it is unlikely that their business banker is
up to the task anymore.
While this assessment might seem cold and harsh, it is
nevertheless a candid and practical evaluation of current circumstances. Unwinding a long-term relationship with a
particular bank or banker is likely to produce some of the same trauma that occurs when any positive relationship
suddenly goes sour. In the end, we should try to do the best that we can and then move forward. As in any
change-related decision, the decision-maker (in this case, the business owner agonizing over the firing of their
banker) should openly evaluate the probable consequences of not changing at all. If they are being truthful to
themselves, most business owners will conclude that they should seek a new banker if keeping the old banker is
holding the business back, either by bad advice or inadequate small business loans.
This discussion is in no way meant to suggest that all banks are
now bad or that all bankers are now bad. In today's complex economy, there are still good banks as well as bad
banks. Of course there are similarly both bad bankers and good bankers. When their current banking relationship
involves a bad banker working for a bad bank, this is probably the worst-case scenario to confront for most
We will leave the discussion of good banks and bad banks to
another report. Business owners should consider the following remarks when determining if it might be time to find
a new banker.
Overall we would conclude that if the current situation involves a
bad bank and a not so bad banker, the most prudent outcome for a business owner is likely to be firing both the
bank and the banker. Simply by working for a bad bank, a good banker can often be transformed into a bad banker.
Many banks have suddenly stopped making normal business loans and working capital loans, often without even
explaining why. This can force an otherwise good banker to rationalize the actions of the bank in a way meant to
keep the business owner as a customer while at the same time asking them to accept sub-par business financing. Just
One of the most predictive signs of a bad banker is an increasing
frequency of situations in which they are unable to achieve the results which were promised or suggested. This
could include lowering a business line of credit after suggesting that it would either be increased or held at the
same level. Another common illustration is based on circumstances in which the banker reports that they recommended
a commercial loan for approval but the bank loan committee turned it down. Business owners should not be reluctant
to hold their banker accountable for producing inadequate results, since results are what count for any business.
For prudent commercial borrowers, firing your banker and your bank has become both a more acceptable and necessary
solution when your business is not able to obtain sufficient business finance and working capital help.