What you may not know about your Bank

Do you really know your bank? There are a lot of opportunities for entrepreneurs that banks offer in various packages. Unfortunately, there is a lack of education for the business owners sometimes. This is partly our fault as entrepreneurs-- we become too busy to pay attention. And it is partly our bankers' faults--they become too busy to educate.

So being someone who can relate ( ex-banker and entrepreneur), I thought to share some things with you regarding banks:

Equipment Leasing

I bet most of you didn't realize that your bank offers leasing opportunities for business owners. Well they do. You can get what some banks refer to as "Business QuickLease" for equipment like: medical equipment, office equipment, computers and more...

What I find interesting about the equipment leasing is that most times you can bundle different equipment types under one agreement. They also provide 100% financing-meaning you don't have to pay a deposit. Most will give you a couple months of deferred payments and will allow you flexible lease end options--meaning you can then return the property, upgrade or purchase at the end.

Most banks partner with other companies to offer this service so call your banker and inquire about their process.

Small Business Administration Loans

SBA loans is the new "hot topic" amongst entrepreneurs looking for funding. Most people hear that the SBA guarantees a certain portion of loans; so they think it's an easy ride to get one. Myth. There is a stringent process that you must go through. This is partly because your bankers have to go through a process too. After all, banks are highly regulated entities.

Here's how it works:

• First of all, keep in mind that you will need to give something in order to get something. In other words, you have to pay a deposit to get a SBA loan. Most banks ask for between 10%-20% downpayment. So if you were seeking a $100,000 loan, you will have to secure it by having $10,000-$20,000 in an account at the time of closing. Since the SBA now guarantees 90% of loans, you may see some banks only requiring 10% downpayment.
• You will need a business plan complete with projections. So for the people who think that these 5 page business plans or sample business plans from the Internet will work, think again. Bankers are detailed and so are their underwriters. They will pick apart your business plan and know a fake one when they see it. Beware.
• Three years is the magical number. Create projections for three years and you should be okay (some banks only require two). I haven't seen a banker who does not ask for balance sheets and profit & loss statements; so you may need three years projections for those. It will also be good to add cash flow statements and a break-even analysis. You will also need three years of tax statements: could be personal mixed with business statements (some bankers may ask for two years)
• Personal financial statement. Most bankers will ask for this; this shows your net worth, your debt, assets, etc. You can view a free one from the SBA's website here.
• Monthly projections. Most bankers are picky. Once you have your three-year projections, you may also need to break them down monthly for the first year. It makes it easier to read and it gives a more realistic view of your business' income and expenses.
• Credit score. The big one. I'll make this pretty simple: if your credit score is beneath 650, you probably won't be able to get a loan. My advice would be to start working on the above items listed, build your credit and then try.

Merchant Services

If you have a retail store or a company that takes in-person payments, your bank offers services that would allow your customers to pay you with a credit card. And if you have customers that want to pay you with a check, there are credit card machines that allow you to instantly withdraw the funds from their account with a simple swipe of the check. This way, you save yourself the headache of dealing with "non-sufficient funds" checks. Check with your banker to get more details.

Retail Entrepreneurs, avoid long lines at the bank:

Banks offer several opportunities to do this: 1) Check deposit: some banks now offer Remote Deposit Services for their business owners. So you can deposit a check to your account right from your desk. 2) There are also "drop box" options for business owners. For instance, I had a client who owned a restaurant. Since he had busy days, he would utilize the drop box system by placing his money from the cash register into the drop box bag, locking it with his special key given to him by his bank, and handing it over to his manager to drop off at the bank after-hours. The manager would then drop the bag into a secure bank safe on the outside of the bank. Once the bank teller received the bag, she would open with her special key.

Again, contact your banker to learn about these options that make your life easier.

Protection from bounced checks or "returned" vendor payments

If you are a business that works on receivables, this may be a topic for you. No one wants to envision a business owner with bounced checks, but it happens. And it happens to the best of us because of simple miseducation.

Let's say you pay a merchant and their credit card processor takes your payment from your account twice. Now if it was a $5000 payment, did you really have $10,000 in your checking account to spare this mistake? Probably not. What if your payment to a merchant is automatically taken out of your account but your receivables from your major client is a week overdue? Guess what? Your account just got "overdrawn."

Your business overdraft protection will protect you from this mishap. Most banks offer it in the form of a credit card or line of credit that is attached to your account. So for instance, if your overdraft protection is $500.00, and you have $100.00 in your account but someone tried to process a $125.00 transaction from your account, well--your overdraft protection will pay for the transaction by transferring the extra $25.00. Makes sense? Contact your banker because you will need to apply for this protection.

Although banks are struggling through these times as are we, some bankers still try to encourage business owners and are still interested in making life easier for you. So I encourage you to learn more about your bank because there is a lot that you don't know.

Did I miss anything? Let me know...post a comment here.

About the Author: Cheryl Isaac is the writer of this blog and a Startup Business Consultant & Owner of Isaac Business Services, the Business Startup Company.