From the course: Foundations of Business Banking
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Value of a positive relationship with your banker
From the course: Foundations of Business Banking
Value of a positive relationship with your banker
- A small businessperson gains a plethora of benefits from establishing a relationship of trust with her banker. - Imagine the first time a small businessperson goes to her local bank to get a short-term loan. - [Instructor 2] How does that businessperson convince the banker that she is going to be able to repay the loan in just a few months after the current cash crunch is over? - [Instructor 1] That's tough. Detailed cash budgets, sales forecasts supported by expensive marketing surveys, offering inventory and accounts receivable as loan collateral. - And maybe even signing a personal guarantee so if the business loan is not repaid the bank can claim the business person's own family home, family bank account, or other personal assets. - In short, it is stressful and expensive to negotiate a loan with a banker with whom you have no relationship of trust. - Okay, now, let's say that this small businessperson has five years…
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