Professional Relationships Important to Construction Firms The Value of Small Business Bankers © Copyright 2016 NASBP

A Construction Firm’s Important Advisors Among the most important advisors to a construction firm are: Professional surety bond producer Knowledgeable construction/surety attorney Construction-oriented certified public accountant Small business banker This presentation will focus on small business bankers for construction firms. 2

Who Are Small Business Bankers for Construction Firms? Bankers who specialize in developing relationships with small construction firms Bankers who know and have banked the construction industry can provide invaluable business and financial advice to contractors, subcontractors, and suppliers. They understand the working capital, accounting needs, and prevailing business practices of small construction firms. The best ones are eager to spend their time getting to know you and your firm. They help their clients manage their finances in the most successful way possible and help them navigate numerous services and products, including loans, online banking, lines of credit, credit cards, and more. 3

Small Business Banking Requires Certain Education and Experience May require a college degree and five or more years of related experience OR a master’s degree with several years of relevant work experience Business bankers often have degrees in finance, business administration, or management. Small business bankers often have expertise in a particular industry, such as construction. You should find a small business banker who has expertise in lending to small construction firms. 4

What is the Role of a Small Business Banker? Form and develop relationships with small business clients and become a valuable resource to clients A face-to-face relationship between the banker and the client makes a difference in the lending and problem-solving process. Help clients determine their financial needs and goals and manage their finances in the most successful way Assist clients with services and products, such as loans, cash management, bank accounts, lines of credit, and others 5

What is the Role of a Small Business Banker? (cont.) Have a specific industry expertise—such as in the construction industry Help to manage the construction firm’s cash flow and to maximize the return on saving and investments. Assist small construction firms to improve their credit position in order to successfully apply for loans and qualify for surety credit. 6

Keys to a Successful Relationship with Your Small Business Banker Mutual commitment Respect and trust Clear communication Candor Teamwork Say what you mean and do what you say 7

Questions to Ask in Selecting a Small Business Banker Remember that banking is a relationship business. Each bank is different; although they are heavily regulated, they make individual decisions that shape the way they operate. Not all banks desire to do business with small construction firms; seek the ones that do. Consider the banking needs of your business and ask questions that focus on its needs. What is the bank’s policies on loan qualification criteria, account minimums, interest rates, and service charges? What are the bank’s fees for various services? 8

Questions to Ask in Selecting a Small Business Banker (cont.) Does the local banker have lending authority? Does the banker understand the construction industry and the needs of small construction firms? Does he/she have knowledge of surety markets? Is the bank a U.S. Small Business Administration (SBA) certified lender ? Is the banker comfortable with the SBA small business loan programs? Is he/she actively involved in local, regional and national construction associations? Is the banker committed to customer service and periodic one-on-one meetings? 9

How to Find a Small Business Banker in Your Area Your professional surety bond producer can be a valuable resource in recommending a small business banker who would be a good fit for your small construction business. Ask other small construction firm owners about their experiences with bankers. Search the internet for banks and other financial institutions that cater to the needs of small construction businesses. 10

Banking Tips to Remember Before issuing a bond, a surety company wants to know that the construction firm has an established bank relationship and line of credit. The SBA offers lending options to businesses that might not otherwise qualify for a conventional loan or line of credit; your banker must know these programs. Establish a good relationship with your banker before your need a loan. 11

Banking Tips to Remember (cont.) Small banks may be more willing than large institutions to issue loans to small construction businesses in their community. Personal compatibility and customer service are critical aspects of bankers; make sure you feel comfortable. Choosing the right banker can have a big impact on the success of your small construction firm. 11

suretylearn.org provides valuable resources and information on growing your small construction business and on positioning your business to qualify for surety credit.