A bank for all seasons.

It takes a bit of homework to pick the bank that's right for you, but it's well worth the effort

It's enough to make even the most optimistic business owner cry. You have a dynamic business plan. You have solid evidence of your company's financial growth. You're predicting strong future earnings for the company. Yet when you approach a banker about a loan for capital expenses or expansion, you're turned down flat.

Welcome to the real world of business banking.

Small business owners sometimes find it quite difficult to find a bank willing to work with them. After all, their financial needs are generally modest. They probably don't have as much money to invest nor require as much capital as the multinational corporation down the street. They also usually don't have the same track record as the big boys in their field. As a result, they may find themselves out of luck when it comes to finding banking services that closely meet their needs.

But all is not lost. Small businesses can get the financing or rate of return you need by doing a little research to identify the bank that would be most receptive to working with you.

"Small business owners usually do better by selecting a bank with a community banking philosophy," says Robert Sisson, vice president and commercial business manager of Citizens Bank in Sturgis, Mich., and author of "Show Me the Money" (Adams Media Corp., 2000). "These are the banks that support their communities and function almost as much as a consultant as a bank."

There are a number of ways to go about finding such a bank. First, examine the bank's annual report (which is readily available at branch offices) for clues about its financial focus and business outlook. An institution that describes itself as a strong supporter of minority- and women-owned businesses as well as small businesses is likely to be a prime candidate to help your business. Next, look for information concerning the number of loans the bank makes to small companies as an indicator of its community commitment. Finally, study its overall business mix and the industries it serves to determine whether your business fits into the bank's grand scheme.

"If mortgage lending, corporate banking or international finance absorb the lion's share of discussion in the annual report, it's likely the bank does not emphasize small business lending," Sisson says. "That should be a clear sign to look somewhere else."

All this research might sound pretty easy, if time-consuming. But the reality is, the process can be somewhat arduous and frustrating.

"We're still looking for someone who will pay attention to us and who wants to grow with us," laments Mark Winter, co-owner of Identity Marketing & Publications, a two-year-old public relations firm in Bingham Farms. "It can be difficult to find a banker who will spend time trying to understand your business and getting to know who you are and what you do."

One way around this problem is to target smaller banks, which often offer a higher level of personal attention and service.

"Small banks traditionally are better for small businesses because they're always looking for ways to accommodate these customers," says Wendy Thomas, senior business consultant at the Michigan Small Business Development Center (SBDC) at the One Stop Capital Shop in Detroit. "Small banks may be more willing to deal with small business concerns, and are more sensitive to issues like the need for longer accounts receivable periods."

But don't overlook the big guys entirely. Rhett Bartley Rowe, division vice president and manager of the business banking department of First Federal of Michigan, says his bank is currently rolling out a new business banking initiative meant to accommodate businesses in need of loans as small as $10,000. Citizens Bank, an $8-billion Midwest banking corporation with regional offices in Royal Oak and Ypsilanti, is funding more start-ups than ever before.

"The competition for customers is so strong that we have to look at businesses of all sizes, including one-person businesses that need as little as $1,000," Sisson says.

That, of course, sets up a favorable situation for the small business owner, provided he or she can approach the banker with a sound business plan, reasonable growth expectations and a solid personal track record.

Once you've identified several prospective financial sources, you need to consider additional issues like convenience and choice of services. For example, you'll probably want to select a bank that's near your place of business and is easily accessible, either through its branch offices or ATMs. If you're technology-oriented, you'll probably favor a bank that offers on-line banking. Finally, you'll want to find a bank that has hours that are compatible with your schedule.

On the financial side, you should examine the bank's menu of services to find the ones that most closely match your business requirements. Most owners need standard banking instruments like term loans, lines of credit, merchant services, interest-bearing business accounts, commercial mortgages and equipment leasing. But before you attempt to borrow money, you'll also need to investigate the bank's policies concerning collateral, equity, cash flow, personal credit history and so on.

While all of these techniques work for existing businesses and start-ups alike, the latter are more likely to encounter more difficulties when it comes to establishing credit or borrowing funds. That's because without a proven track record, banks are often much more reluctant to part with their cash.

That's where the SBDC can help. This organization offers small business owners a number of free services, ranging from counseling to seminars on topics like business plan or marketing plan development, and ways to conduct a market survey. The idea is to help the owner understand what the bank will want from him or her before ever setting foot inside the front door.

"A lot of banks tell prospective business owners that if they're not in business already, they should talk to the SBDC first," Thomas says. "We can help owners know what they're getting into right up front, then suggest up to three banks that might be willing to work with them."

Regardless of which strategy you choose to use, the bottom line is that the ultimate responsibility for forming a successful banking relationship lies with you.

"No matter how hard they try, banks can't be everything to every customer, Sisson says. "It's up to the owner to determine which bank will serve his or her needs best and will work the hardest to help the business succeed."

Picking a bank: Three key steps

1. Examine the bank's annual report for clues about its financial focus and business outlook.

2. Look for information on the number of loans the bank makes to small companies.

3. Study its overall business mix and the industries it serves.

When the bank says no

Sometimes, despite your best efforts, your bank may decline to extend credit to your business. Robert Sisson, vice president and commercial business manager of Citizens Bank in Sturgis, Mich., offers these suggestions for turning a turndown into an acceptance:

* Use any bank turndown as an opportunity to fine-tune your loan proposal.

* Try the bank again after amending your loan proposal.

* Speak up. The squeaky wheel gets money more often than the meek mouse.

* Go outside the box for advice.

Source: "Show Me the Money"