There are two all-news radio stations that I listen to frequently, WCBS-AM and WINS-AM, both in New York City. It seems that many of their advertisements are directed at people who own or run small businesses. Not being such a person, I often have difficulty understanding the product being promoted, or the style of the advertisement.
But there’s one sort of ad which I’m particularly curious about. I’ve heard this sort of thing from at least two different banks. The narrator of the ad will say something like
I don’t get it. If my bank called me I’d either feel annoyed that they’re bothering me, or I’d be afraid that they have some sort of bad news for me.
What is the point of such an ad? Are they saying that every once in a while, the bank calls up to offer some free money, or a great loan, right out of the blue?
(Sometimes these ads even give a phone number to call, and I am tempted to call them and ask these very questions, but the odds are too high that the person I reach won’t have any idea what I’m talking about.)
Feh. I own a small business, two actually. Chase just called me up to offer me an expanded line of credit with a better rate and no security. Out of the blue. Quite the shocker, I admit.
I live in a small town. I use two different banks, one for personal, one for business. I want them to know who I am, my business, and keep me apprised of any changes. It’s nice to know that if some sort of emergency came up, they’d expedite the transaction. It’s nice not having to have two forms of ID. It’s nice knowing that I can get in to see the VP unannounced, and not have to go through 15 minutes of menu options on the phone to talk to a customer representative in India, who asks me for my account number 6 times.
I work for a small business. Our bank knows me, calls me when the account is overdrawn or if they have any questions about cashing a check. We’ve never had much trouble getting a loan from them either.
Over the years, I’ve been aware that bank fees are higher for busineses than for people. Now I see what you get for that. Calls when you’re overdrawn, huh? I suppose that is to give you an opportunity to make a quick deposit so they’ll pay the checks? Wow, I haven’t heard of that since I was 17 years old and accidentally overdrew, and the lady at the bank was a friend of my parents.
I understand everything else in your post, but what sort of “changes” are you worried about? That they might suddenly call in a loan, or raise the interest rate?
Fee schedule changing.
Your banker is leaving the bank and they want to introduce you to your new banker.
The online banking interface is changing and they want to come down and show you how the new one works.
New products and/or services.
In commercial banking, the banker is the bank, as far as the customer is concerned. A lot of products offered require more attention than just a standard loan. In addition, new products, different terms, etc. are always happening.
For example - Untill a couple of years ago, if a business took checks, they would have to have those taken to a branch to be deposited. Now, customers can set up a simple piece of hardware, and easy to use software and deposit them directly from their office.
Or maybe you run a construction company. The banker wants to keep in contact with you so that if you say, “I’m thinking of getting a new dumptruck”, they can start the underwriting process so that when you’re ready, it’ll be a quick turnaround.
They also want to make sure you don’t leave. Keeping in contact, building that relationship is one of the best ways to do that. Honestly, when we have a good relationship manager leave, one of the first things that happens is their manager calls up each customer to try to keep them. Many have been working with their banker for so long, they’ll follow them wherever they go. A bank is a bank, you can get the same product almost anywhere… but that personal touch? That’s what they’re selling.
Both of these are great examples of why I don’t understand the differences between personal accounts and business accounts.
Re the check scanner: The only difference between personal and business here is that individuals process so few checks that the expense of the hardware and software won’t be cost-effective. There’s no logical reason why I can’t get one of those scanners for my home, but it will take a long time until I will have saved so much time and money that it will have been worth the investment. And even for the businesses: There are plenty of advertisements for these scanners; do you really enjoy it when a salesman from the bank calls you up to suggest that you get one?
Re a loan for a new dumptruck: Again, what’s the difference between individuals and businesses? If you have decent credit, then you either already have some kind of credit line to tap into, or getting a new loan is not that big of a deal. And if you don’t have decent credit, the bank has no reason to make the loan easy. I do see one small difference, in that this dumptruck might make the difference between a business which was in trouble before but will be profitable in the future, but are banks really that eager to lend?
Actually, it would NEVER be worth it. The scanner is (most likely, but I don’t remember) rented, probably around $10/mo. Second, you most likely have to have a business account to have one. Where most personal accounts have a fee (if any) of around, what, $3/mo, a small very modest small business account will be $100-$200/mo.
This is part of what your missing. Although VERY VERY similar, a banker does not equal a salesman. They don’t hassle you and force products and services down your throat, they simply let you know what’s available. Most will have a feel for what things are even worth while for you. For example, when the check scanners came out, our banker noticed by looking at our account that we only depost one or two checks a day, didn’t bother to call us. However, being a small business he called us up one day to let us know that he had been authorized to do loans up to $50,000 without needing approval.
::scratches head: What do you mean “Are banks really that eager to lend?” That’s how they make their money. You earn interest by putting your money in the bank, they earn interest by putting that money into the customer. That’s how banks work.
Does it bother you when a telemarketer interrupts you from what you were doing, to simply let you know what’s available?
What I meant was “Are banks really that eager to lend money to businesses that are in trouble?” As I wrote before, if my credit was good, it wouldn’t be a hassle to just apply for the loan. Your banker’s news about his up-to-50K loans would only be good news for someone who had bad credit. Isn’t it the goal of a fiscally healthy entity (either business or individual) not to need any loans? Why would I like to be constantly offered the opportunity to be in debt?
No, it’s good news for any business owner who doesn’t want to spend a month shopping around and getting approved for a dump truck loan. Just because you have good credit doesn’t mean you can borrow from anyone at the drop of a hat – unless you have a good pre-existing relationship with them already.
I think you’re missing it. These people arn’t telemarketers. They’re more like business partners. They really do want what’s best for you. The better they can help you help your business the better it is for everyone. It really honestly is a win-win situation. If you’re annoyed by your banker, you need to find a new one.
As for the loans. Yes, they really are eager to loan you money, even if you’re in trouble.
Again, these arn’t telemarketers, they arn’t salesmen (well they are, but not really), they’re more like friends who truly have your best interest in mind (most of the time). Also, it’s not that they call every day in the middle of dinner, it’s much more casual then that.
I guess I’m not being very clear on this. These bankers aren’t just bankers. They don’t just take a loan application and approve it or deny it. They look at financials for the past, projections for the future, business plans, the industry of the customer, the current financial situation for the customer and are very knowledgable on all of it. They also need to stay up to date on every loan, line of credit, and every other type of facility that the business may have. They can suggest different things that the customer may not be aware of.
Remember, every large business started out as a small one. The guy running it may know everything there is to know about making widgets, but nothing about the financial industry and the stuff that’s out there.
As was said above, they are almost business partners in that they NEED the business to be successfull. It’s how they make a living. They usually meet every 1-2 months for discussions on the current state of everything.
I guess I’m too cynical to believe that. And I say that with sadness, because I really wish that I was less of a cynic. I do know many wonderful people in this world, but from what I’ve seen businesses have very little altruism. I’m particularly miffed at the fees my bank charges me for overdrafts, and the fact that they pay the largest checks first to insure even more overdraft fees.
Yeah, I do understand this. I just wish they had more sympathy for the little guy. I also understand that they’ll make a much smaller profit on the loan to help me out than on the load to help a business out, and that’s why they can’t afford to spend the time talking to me about how their loan to me will be good for them. Oh well…
There is no altruism required. Which would you rather have, a rich customer or a poor customer? A bank has a significant interest in helping its clients’ businesses grow and stay afloat.
Well, Keeve I came up with a couple of replies to what you said in the last few posts, but I think you’ll shoot them all down as well. You mentioned that you were a cynic and, frankly, I think that’s the problem here. We have a few business owners here and I’m sure they can atest to this as well…In the business world, the banker really is on your side. If you don’t do well, he doesn’t eat either. If you do great and grow your business, you can both by a bigger house. It truly is a win/win (or lose/lose) situation. They’re always eager to give you a loan or line of credit, but they won’t do it if they don’t think you can pay it down. It’s one of those facts that you can accept if you want to, but you certainly don’t have to.
BTW the reason your banker (as a non-business owner) doesn’t spend they kind of time they do with you as they do with us isn’t the size of the loan. First off, most bankers know that as soon as a business has a loan paid down (or close to it) they’ll take another right away. Second, you deposit a paycheck a week/month/etc, where as businesses deposits their days sales everyday. Oh, and your montly fee for your bank account, if any, might be $3.00 where as mine is $150ish. It’s a whole different atmosphere. A LOT more money is moved around in the business world then in the personal world. And with all that money moving around, it really does demand someone you can trust at the bank. These phone calls they make (that you mentioned at the beginning) are about devolping that trust. If you resent them becuase of it, that will be an issue.
If you read you agreement with the bank, it will specifically state the order in which they’ll pay items.
Now, you’re probably a bit of a cynic, as you say, because of the OD fees. I know you know this, but if you don’t OD, you don’t pay those fees.
In addition, you probably don’t see the same person everytime you go to the bank right? You just go to the teller, deposit or withdraw and go on your way! That’s the way I do it, if I even go in the bank. However, any bank with any focus on customer service will have someone in the branch who can make an appointment to talk to you. They can look at your financial situation, your history, and tell you some products that might fit you etc. Create a personal relationship with an employee there. (note that this may not work at large national banks but makes a huge difference in a smaller community bank)
I apologize, Joey P, I did not mean to accuse you or any of the other businesspeople here of lying, though I certainly did use words to that effect. What I really meant was that my experiences are so different from yours that it is difficult for me to relate to your situation.
This surprises me very much. Wouldn’t a business try to accumulate enough profit that loans would not be needed?
