Featured in Gifts and Dec: Three Signs Your Lending Relationship May Not Be Working For You


Three Signs Your Lending Relationship May Not Be Working For You

By Cassie Rosenthal, Senior Vice President, Rosenthal & Rosenthal

When it comes to your company, nothing is more important than its financial health and stability. It’s critical to have the right financial partner at your side as you aim to grow your business or are forced to weather challenges that may threaten your bottom line. But how do you know if your lending relationship is one that will truly serve your business interests for the long term? Here are some important questions you should ask yourself:

  • Is your relationship with your bank flexible enough to allow you to take advantage of growth opportunities when you see them?

  • Is your lender tolerant of unforeseen obstacles or shifts in your business model?

  • Will your bank line grow as you scale your business or will an unforeseen large order max out your line of credit?

  • When you experience disruptions to your cash flow, are you faced with sky-high fees and penalties – or worse, does your bank threaten to pull your funding altogether?

  • Does your lender understand your business?

  • Do you ever feel like just another client in a crowded portfolio?

If any of these scenarios sounds familiar, then you must ask yourself if your lending relationship is really right for you and your business.

Three red flags it’s time to explore a new lending relationship:

#1 The Dead Giveaway

Your lender claims they understand the natural ebb and flow of your business, but when it comes to the issues that consistently crop up for you, it’s clear they don’t appreciate how those challenges can affect the overall financial health of your company. Do they understand how seasonality can affect your cash flow or how the unpredictability of a large, unexpected order can put a strain on your company’s finances, not to mention your own sanity? Many gift and home businesses struggle with complex supply chains that require deposits or other cash outlays not necessarily factored into their financial plans. To overcome these challenges, you should have a financial partner who knows what you need, even before you know you need it.

#2 Regulatory Pushback is Not Your Friend

Traditional banks rely on formulas and balance sheets, but your business doesn’t always fit perfectly into a tidy box. The life of an entrepreneur – and your business – will have its ups and downs. You should have a financial partner that is nimble, with the ability to adapt quickly to find solutions that meet your needs. Large public banks and lenders are often slow to react – and lend – when you need over advances for the seasonal lows and for the build-up of inventory for moments like Christmas or Chinese New Year. Independent, privately held lenders that are not restricted by stringent banking regulations or lengthy committee reviews are often more flexible and able to help you ride out rough patches without a hit to your bottom line.

#3 Your Banker is a Nameless Face

As an entrepreneur, you know that everything in business is personal. It’s built on relationships, hard work, determination – and in many cases – a dream. You would never trust your child with a stranger, so why would you hand over your entire business to just anyone? An effective financial partner should always look out for your best interests, flag bad debt so you can avoid it and help you navigate complex financial situations. They should be a true partner in every sense of the word – a sounding board for new ideas and a reliable cohort to support your business goals, whatever they may be. Anything less than that and you’re selling yourself – and your business – short.

To learn more about how your business can benefit from alternative lending solutions like factoring, asset based lending and purchase order financing, please visit www.rosenthalinc.com or contact Cassie Rosenthal at crosenthal@rosenthalinc.com or 212-356-1475.

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