Finding a good, local, small bank for business?

17 Replies

I've recently formalized my business by creating a corporation.  I opened a business checking account with my local credit union, but I don't think they're going to offer as many solutions to real estate and business lending in general as some of the other banks in the region can.

So, I want to establish a relationship with another local bank now, to build on that for a while to help when I'm ready for more lending.  I will not do business with a Wells Fargo, BofA, or similar.

Does anyone have any good advice for finding a good bank(er) in a local market?  Good questions to ask, or things that should eliminate them from further consideration?

I'm in Asheville, NC, but I don't expect recommendations so specific (althought they are welcome), I'm just looking for advice on narrowing down/choosing a partner.

thanks.

I’m also still looking for good banks in the area. I’ve used Hometrust so far but only for conventional financing. TD Bank might be a good option. I’ve had a good conversation with one of their loan officers and they seem to be more flexible.

Look for small community banks . Don’t waste your time calling a big conglomerate lender . Get out the phone book and call every little bank in your town till you find the right one willing to do business with reasonable conditions and terms . It is not uncommon to have to call a dozen banks before you find a decent one. Don’t be discouraged about this . It is normal expect it to be a bit of a hassle . think of it as just a normal part of doing business in real estate

Mike Morgan at UFCU has been awesome for me for cash-out refinances- not limited to 6 like other banks, rates are decent to good, and their appraisers are not afraid to appraise for full value, so you get a true 75% LTV. They're not fast, so be ready for that- but otherwise awesome to work with. I'm not sure about their business side, but I'd assume they're great as well. Haven't needed them though since the mortgage side has so far been able to finance everything I've needed.

@Ryan Howell Thanks for the input.  Both TD and HomeTrust qualify as "Big banks" to me, which rules them out.  They will probably offer "more" lending options, but will be very specific in their 'box' they underwrite with, and will probably charge higher fees, and generally don't care about small businesses.  I do hope they work well for you, I just won't do business with a huge bank.

@Dennis M. Thanks for that, I completely agree about big banks.  I was more asking about what kinds of things to ask them to help qualify they as a future lender/good partner, vs. should I go big or small bank.

@Chris Harjes Thanks, that's very useful and specific information.  I love the personal experience.  I'll reach out to them today, along with Champions and Telco.  First Bank sounded good, but I see they are owned by First BankCorp, with is a large regional bank, so they are probably out.  Several other smaller banks seem to have been bought out during the crisis, so I'm struggling to find any others to even reach out to.

@Caleb Heimsoth Thanks for the advice but that is exactly the thing I'm trying to avoid, working hard.  I posted here to try to work smart, and cut that list down to a few good options.  I don't have a good list of questions to even ask 30 banks, to know exactly what I'm looking for, 2-3 years down the road.

The search continues :)

Don't forget about credit unions! They were a full .5% better on their loan offer for a 7-unit building I financed than all the other small banks. They are technically non-profits, which is why they can offer better rates. You're doing the right thing by putting all this work in to find the right bank. That can make or break a deal over time. Good luck!

@Eric Gunderson Thanks, but I LOVE credit unions.  The only "banks" I work with are ones which I have a credit card with.  I don't have personal checking or savings with any banks.

I opened my current business checking with my local Credit Union, but as I stated in the OP, I don't think they will have a full range of lending options when I get to that point.  (They recently shut down their commercial lending dept).

I'm willing to do business with a small local bank, with my business, but the preference is still a Credit Union.  I only wish my CU from Texas could lend in North Carolina.

I'm now leaning towards Champion, a small Credit Union in town that was founded in the 30's and has a good range of business lending options, and low fees.

I've still got calls out to a few others.

@Chris Baber That's too bad your CU shut down their commercial lending dept. I think that's a missed opportunity for them. The CU's in Minnesota have good rates if your eyes ever shift to this part of the country. Or there are some great investor friendly banks as well. Good luck with your search.

Chris, I am going to go upstream on this one and frankly 45 days ago would have agreed with this thread. However, I am in the process of obtaining financing on a significant project and have found smaller community banks do not have the funding or the vision for larger projects. I have networked on here and within my sphere of influence and have found that U S Bank is very competitive and very hungry for real estate opportunities. I stress to you large opportunities so here is a thought - check with a local LO with USBank and determine if they have an appetite for your situation. In theory if it's a fit then you can grow with them. Sounds like you have some options.

@Chris Youssi   thanks for the input.  

Did US Bank tell you, or intimate that your current/new deal with them would have been easier, cheaper or faster if you'd had a 2-3 year relationship with them already, or are they doing the deal without a relationship about the same as if you'd had one?

In other words, do you think having a banking relationship with them would make your current situation better?

If I have to go to them in 2-3 years, or more, due to the size of a deal, that's fine, but if I can avoid having to deal with them in the meantime, I'll probably be happy to pay a bit more then to not deal with them until then, if that makes sense.

Thanks for sharing your feedback either way.

Complete cold call on my part and theirs. I have a name in the community but this is outside of my normal market. They were a referral from another Developer friend of mine and they reached out to me for a meeting. However, they have told me they have an interest in growing their portfolios in all markets as I may monetize my project in other communities. Short answer yes if you are starting out good to establish a relationship - my case is unique to the marketplace. I have a standard that is like most - " if you don't ask you don't get" . In other words worth IMHO to at least meet with them and share your needs/concerns.

thanks Chris.  It sounds like they would have worked with you about the same way, with or without the history.  I've had particularly bad luck with US Bank in the past, they had terrible customer service and too many nickle and dime things that just irritated me.  I just can't put up with that kind of behavior in the hopes it may help me in the future.

In this case, it seems you get their help now, but didn't have to deal with that in the past, so a perfect situation, and not reason to not avoid them today.

Good luck with your project, and please let me know if I can help in any way in my part of the world with your expansion.

@Chris Baber Try a google map search for "Community bank". It should show the small, local banks that have fewer branches. Check out their websites, and go from there. I am meeting with a local banker Friday to discuss commercial lending. 

Local credit unions are very good option. Coastal federal credit union is one with a lot of good benefits and it’s available for the general public as well.

You are right to go local. I have used USAA for 38 years and they are wonderful for personal banking.  Not so much for commercial. Absolutely avoid the big national banks.  I found Uwharrie Bank in Concord, NC and love a bank where they actually know my name and care about my little business. 

I am with @Eric Gunderson , I like using credit unions or small community banks. Why? Because they don't always have the set policies and are able to make business decisions. One I work with will offer business loans on properties which otherwise would need HML financing. The problem you will have is that many will only offer products in their region so out of state can be a problem. If you CU doesn't offer business loans that may be a reason by itself to move to a different bank.

if looking to purchase out of state your best bet is a large national bank or to search for a community bank in that location.  Some may not require you to setup an account or you can do it an deposit $5.  I have a very small amount in my inactive CU account and do my banking at a national bank.

Originally posted by @Chris Baber :

thanks Chris.  It sounds like they would have worked with you about the same way, with or without the history.  I've had particularly bad luck with US Bank in the past, they had terrible customer service and too many nickle and dime things that just irritated me.  I just can't put up with that kind of behavior in the hopes it may help me in the future.

In this case, it seems you get their help now, but didn't have to deal with that in the past, so a perfect situation, and not reason to not avoid them today.

Good luck with your project, and please let me know if I can help in any way in my part of the world with your expansion.

Sorry for the delay was unplugged for a few days. Check in with me on Thursday as I have another meeting on Wed. Sounds like others have given you ample opportunities within your market to reach your financing objectives . Talk again

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