Keeping Your Money Local

One of the realities of financing - which has amplified the credit/banking crisis - is that we have detoured from the days of old when we, as borrowers, knew our local banker. If you borrow money today from your local bank, is it really local? Who is making the decisions? Who holds the note? If you have a question, can you get a live person on the phone - or better yet, meet with him/her in person - and receive a reliable answer?

With all the online companies and mergers, the answer is probably no. That’s why, as a small business, it’s important to keep it local. When I was expanding the Chocolate Gecko, I already had a solid relationship with the Capital District Community Loan Fund. When I went to them with the plan, they set up a meeting for me with the Vice President of Commercial Lending at SEFCU. Once SEFCU heard the plan, they were on board and served as another advocate for me. Going into the project, I had four organizations on board - all local with local decision-making power. Why was this important? Because at no time did I feel alone. I knew that I had folks at the table with me who were my financial team and were committed to making this project work. And when we had to rework the numbers, my financial team did it.

Let’s play it out differently. Say instead, I went online and borrowed $ or borrowed $ from a merged bank with the headquarters in Ohio. They’re my partners at the ribbon cutting but what if all doesn’t go according to plan? What if the project’s costs run over? What if the construction is delayed and I need to extend the note? What if . . . what if . . . what if? The reality is that I would lose my business, and possibly my house, and my credit would be tanked. Exactly what we are seeing now. 

The reality is that the online and outside New York bankers are not committed to me or my business. They’re committed to getting their note repaid. Period.

Not that my financial team wasn’t. They all leant me money with the understanding that I could and would repay it. But they were also committed to community development. And therein lies the difference.

So, my recommendation for point 4, Surviving the Recession, is keep your money local. Build a relationship with your local credit union, community development organization, and city/county economic development office. Let them know what you are doing and what you need help with. Not only are they committed to your success, they are committed to your community’s success.

Source:  http://blogs.timesunion.com/microbusiness/archives/277/keeping-your-money-local

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