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Business columnist: 4 ways the Banker Can Help Protect Your Business

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Business columnist: 4 ways the Banker Can Help Protect Your Business
  • 6 months ago

When preparing your company for the future, it’s normal to worry about the economy’s slowdown. Businesses are planning for the possibility of a recession. However, they don’t know when it will happen and how serious it could be. According to a recent study by CNBC, 8 of 10 small-business owners believe the economy will be in a recession by the end of this year.

While it’s not possible to know when recessions will start or how long they’ll last, it’s essential to concentrate on what you can influence. The banker you work with can aid your business in establishing resiliency through difficult economic times.

Here are four ways having a banking professional could assist in the fight against recessions for your business.

1. Utilize the tools of scenario scheduling and budgeting to prepare for a variety of possible scenarios.


Partner with your banker to identify possible scenarios and evaluate your company’s ability to adapt and develop measures to limit potential risks. Scenario-planning aims to create an evolving plan that can be swiftly applied in various scenarios.

If you expect different scenarios, you should create a cash flow plan to define how the company’s cash flows in and out of the company during an exact time. You should have enough money to cover three to six months ‘ operating expenses.

2. Get financing for your company before you require it.

When you’ve forecasted your cash requirements and requirements, it’s a good idea to set the financing before you need it. It’s much harder to be able to obtain finance if your company is experiencing problems with cash flow during an economic recession.

According to a Federal Reserve survey, lines of credit are among the most popular kinds of finance used by small-sized firms. After approval, you can get credit up to the credit limit and pay interest on the remaining balance.

It is also possible to consider applying for the U.S. Small Business Administration (SBA) loan with lower collateral requirements, affordable interest rates, and more timeframes. The well-known SBA 7(a) loan could be used to finance expenses that require working capital, such as the purchase of inventory, payroll, and overhead costs. SBA loan approval is subject to credit approval and SBA approval, so being creditworthy increases the likelihood that the credit will get approved.

3. Request your banker to advise on your business’s strategy.

In addition to their expertise in finance, bankers also provide an outsider’s viewpoint. It is easy for internal teams to create tunnel vision. However, a knowledgeable banker can provide an objective opinion that could identify financial issues or gaps which need to be resolved. Certain bankers have access to tools that can assist the company in determining how it is doing compared to its competition and the market. Zions Bank’s Economic and Public Policy team ensures that our bankers are up-to-date regarding market trends and potential.

You might consider inviting your banker for a meeting with your company’s executive team. You’ll build your relationship while gaining fresh perspectives.

4. Keep in contact regularly and openly and regularly with the banker you trust.

While sharing negative news is not easy, it’s crucial to be transparent about your finances with your banker and to check in frequently. However, bankers who are knowledgeable of business cycles cannot provide assistance or guidance when they don’t have all the data.

Suppose you’re upfront about your outlook for business and transparent about your approach to tackling issues. In that case, your banker will guide you and assist you in creating the financial structure that best meets your company’s requirements.

Remember that your banker needs to be among your most powerful advocates. The banker is the representative of your company and is an advocate, but it’s impossible without a complete picture of your financial position. A solid relationship with your banker will assist in positioning your company for success during good and bad times.

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