With the recent bank failures many business owners are reexamining their banking relationship. Having a supportive bank on your team is always important. Even more so now in light of a slowing economy and the worry of some banks getting caught in an interest rate squeeze.
Bigger is not always Better
It may be tempting to move your banking to one of the large banks, figuring that they are too big to fail. But keep in mind that at the end of 2022 the 25 biggest banks held 63% of all deposits, but only made 28% of all small business loans and only 13% of SBA loans. If you’re planning on borrowing money from a bank you will want to carefully consider the lending environment at the bank, not only the safety of your deposits.
Deposit Swaps
If your business routinely carries deposit balances above the FDIC guaranteed amount you may want to talk with your banker about ICS – Insured Cash Sweep. This program allows you to maintain your one deposit account and your bank takes the funds in excess of the FDIC guaranteed amount and distributes them into a network of banks.
Trusted Advisor
It’s important to develop your relationship with your banker. Even if you are not planning on taking out a loan now you need to start laying the groundwork in case you decide to borrow money. Make sure your banker understands your business. Business growth never goes in straight line. So, take time to review your business plan and financial performance with your banker regularly. This will help you keep your expectations of what kind of line of credit your company qualifies for.
Interview
Remember, more often than not, before a bank will issue you a line of credit they will want all your deposit accounts. So, before you open an account at a bank because it is convenient, make sure they are familiar with your industry and will be willing to provide you with a line of credit.
Factor with American Receivable
In today’s economic environment banks have become stricter in their lending standards, resulting in more companies looking for an alternative to bank lending. For 44 years American Receivable has provided the working capital need for our clients to flourish. Our flexible factoring program keeps our clients in control of how much they factor. Use our Free Streamlined Application to turn your open invoices into CASH in just 2 to 3 days.
Jack Stieber jack@americanreceivable.com 972-404-4726
Sarah Fisher sarah@americanreceivable.com 972-404-4726
Brad Gurney brad@americanreceivable.com 800-297-6652
Julie Adams julie@americanreceivable.com 512-339-5112
Dakota Stieber dakota@americanreceivable.com 512-339-5112
