The Going Rate
Now that the Fed has started aggressively cutting interest rates, it may be the perfect time to see if your bank is prepared to put its money where its mouth is. No bank wants to lose a long-standing customer, and once you present your bank with a competing offer, it may be more than willing to make a deal. Robert Tonino, CEO of Breda LLC, a consulting firm that acts as a virtual CFO for emerging companies, says the best way to get a lower rate is to contact a competing bank that has just opened a branch in your area or a lender that advertises heavily in your local paper or through direct mail. A bank like this is probably hungrier for your business than the bank you're doing business with now. Once you've made contact, get a quote from the new bank on a loan exactly like yours in terms of size, duration and collateral. Then bring the quote to your current bank and see what it's prepared to do. Say that while you're happy with your current relationship, you have a duty to your investors to obtain the lowest cost of capital, suggests Tonino. Use your business model to show how the relationship will result in more business for the bank. If your bank turns you down, there's always Plan B--the new bank on the block.
Rosalind Resnick, founder and CEO of Axxess Business Consulting, a New York City consulting firm that advises startups and small businesses, is author of Getting Rich Without Going Broke: How to Use Luck, Logic and Leverage to Build Your Own Successful Business. Reach her at email@example.com or abcbizhelp.com.