When the Payroll Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) rolled out this spring, many small business owners who didn't have an existing relationship with a bank or other lender found themselves unable to apply for these federal loan programs.

The COVID-19 pandemic has highlighted the importance of having an established relationship with a lending institution if your business needs a quick infusion of cash.

If you don't have a current relationship with a bank or are a business that's never needed to go into debt in the first place, now is an excellent time to find a lending relationship.

Here are some tips for either establishing a banking relationship if you don't currently have one or expanding an existing relationship you do have:

1. Meet with your banker once a year.

   Similar to periodically meeting with your attorney and other advisors, make it a point to meet with your banker at least once a year to go over your financials and how your business is performing. Even if you don't need to take out a loan now, circumstances can quickly change as we see with the pandemic.

2. Research different lending institutions.

   While the banking industry is becoming commoditized, there are subtle differences between the different types of banks and lending institutions.

   • Community Banks and Credit Unions often get to know their customers' needs, serving them with more personalized attention. You can also get faster decisions because lending decisions will be made locally. 

   • National Banks have a vast ATM network-and-more-branch locations. Bigger banks may also mean more resources when you need financing because of a more extensive network, including relationships with the Small Business Administration.  As witnessed when the PPP and EIDL programs rolled out, national banks initially received preferential treatment.

3. Consider choosing several bankers.

   You don't have to do businesses exclusively with community banks, credit unions or national banks. It may be smart to develop relationships and have deposit accounts with each type of institution.