Emira and I both enjoy the financial side of our business: the spreadsheets, the budgeting, the financial statements, the arrival of sizable cheques in the mail… But anytime we need to do anything more complicated than a deposit at the bank, it’s a colossal pain.
We’ve come to the point where we simply expect it to suck (because without exception, it does), and that makes it easier to take. But what galls us most is that our bank (well, credit union, actually), like many others, claims to be a friend of small business — nay, of the small business owner — and to hold our loyalty, our time, and our financial well-being nothing short of sacred. What a load of crap.
It all started when we decided our lives would be easier if we had a small line of credit, with which to navigate the stormy seas of cashflow. We weren’t looking for much: just a $15,000 credit line that would allow us to, say, buy a computer if one or both of ours died unexpectedly — or more likely, get over a cashflow crunch caused by clients taking too long to pay their bills. We ignorantly believed that, given our stellar credit histories as individuals (we were a partnership back then, so the business’s finances were our finances), the consistently (and comfortably) five-figure bank balance we held with the bank in question, and the ease with which we had always been able to land new credit cards, this would be a cinch.
Alas, it was not. Reams of paperwork and several in-person meetings later, we landed a smaller-than-we-asked-for credit line and we were told it was simply too risky for them to gamble on an eighteen month-old company like ours.
I would still love to know what idiot thought that was a gamble. And what genius thought up their marketing campaign featuring shiny, happy small business owners they’d supposedly helped along the road to expansion.
Over the years, we’ve confronted one hurdle after another — and met an army of dingbat employees. There was the guy who spent twenty minutes with us, filling out some application or other, before asking us what line of work we were actually in. Uh, might that not be somehow relevant to what you’re doing? That was followed by another bizarre moment wherein he started to ask a question, then blurted, “Oh, sorry, I’m actually not going to ask you that… at least, not—” (cut to a whisper) “in front of each other.” When we insisted he spit it out, it turned out he wanted to know our credit histories. Lordisa! On what planet do business partners hide each other’s credit histories from one another — and get away with it? I’d like to think that would be some type of salient factor in choosing a partner, and working with one. (When we said we felt comfortable discussing that in person, he seemed surprised.)
All of this has left us with a feeling of being undervalued clients — but we’re skeptical about changing banks because it seems doubtful we’ll do any better elsewhere. But I can’t help but wonder: if we’ve had such a hard time getting our bank to give us the service we deserve, what must it be like to run a business that depends on a great banking relationship — like a retail shop?
And here’s another question to ponder… Women are less likely than men to rely on bank credit to finance their businesses. My first thought is that women have less capital than men (we earn less, and own less), so perhaps bank financing is harder to come by. But could it also be that women, who value relationships highly, are so fed up with the response they get from bankers that they’d rather find another source of money than tear their hair out waiting for their bank to get with the program?
5 responses so far ↓
1 Stv. // Jul 26, 2006 at 8:45 pm
So, as you probably know, I bank personally, and used to bank business(-ally) at the same “friendly” bank, and I have to say, they’re not at all helpful. Not in the least. And even as an incorporated company, they keep telling us “1 more year in business, then we can use the company’s credit, not your personal credit” They’ve told us this after years 1,2,3. The last time we chatted about a Line of Credit, we showed them the letter they wrote us after time #2, saying come back in year 3. And the person just looked at us like we were idiots for believing their co-worker a year previous. We’ve since moved to a bank, and within 3 months, they, of their own volition, offered us a spiffy line of credit, with far better rates and amounts than we had any right to expect. So there is something to the axiom that big banks can treat the small guy better because they can afford to take bigger risks…
Bleh. I hate everything to do with money in business. Which is silly, being a business owner, I suppose.
2 Lauren // Jul 27, 2006 at 6:00 am
Stv.: Interesting. It’s just so frustrating to give our money to the big banks when we feel so strongly about supporting the local economy & community! But when it gets to a point where they’re basically impeding one’s ability to do business, one has to wonder how much support they really offer.
Of course I also know tons of people who work for this credit union (none of them branch staff, sadly!), so I feel a kind of personal loyalty in terms of wanting to support their work. Oy vey.
3 Darian // Jul 28, 2006 at 6:04 am
I work for a huge bank as a business banker. Most banks will not give loans to companies that have not yet been in business for two years. There are SBA loans that are especially made for small businesses through the Small Business Association. That could be something you may want to consider if you want a larger amount.
4 Darian // Jul 28, 2006 at 6:28 am
If you want information on the SBA line/loan I would be glad to give you that. Not all big banks are that bad. :)
5 Emira // Jul 30, 2006 at 10:46 am
Darian, I’d love it if you would post some info about the SBA here for other folks to use.
I think it’s also worth saying that we’ve had similar problems with the very big banks in terms of an unproductive attitude. We recently tried to switch our company credit card from being tied to Lauren’s personal credit history to our Inc. business and it was the same waste of time. We called ahead for an appointment, asked what we needed to bring, went to said appointment paperwork in hand and were told that we were actually not talking to the right person, that no, no one there could help us and that we’d need to make a new appointment. Beyond the obvious financial ramifications of these scenarios, the thing that really galls me is the wasting of my time. I don’t know that we’ve ever done a business banking transaction (aside from the everyday deposit etc) in an efficient way, and any lack thereof has had nothing to do with us. Typically we go out of our way to make sure we have every last bit of paper and info required before we even sit down with anyone and every last time the person whose job it is to manage all this for us forgets to have us sign something, or has us fill out a two year old form then has to have us back to fill out a new one, or fails to understand what we’re even asking for. As business people, who are frankly most of the time really freakin’ busy, wasting my time with useless apointments that often create more problems than they solve eventually becomes really insulting. And clearly: frustrating.
I’d also like to say that this whole post and discussion of ours is not an attack at credit unions per se. As a personal banker I’ve had great experiences with this same institution. And for the record, the best major banking experience I have ever had was when my partner and I got our mortgage. We used another local credit union and I have honestly never felt so good about going hundreds of thousands of dollars into debt. I’m not really sure that they did anything for us that anyone else wouldn’t have done, but it was the attitude. Never once did they make us feel like what we were asking for was unreasonable, and given that even trying to buy a home in this town is kind of by its nature a bit unreasonable with the price of real estate here that is really saying something. They were helpful, collaborative and this will sound lame but “problem solvers.” It was really excellent, which was good because everything else about buying a home was kind of terrifying.