Yes, relationships do matter. But not in the way you are thinking about.
The banks of today are highly data-driven. They rely less on qualitative parameters (e.g. trust and familiarity), which are more subjective, and have adopted quantitative parameters (e.g. revenue, numbers and figures) to measure risk and justify the lending decision.
So how important are relationships?
Between you and your bank, only your financials matter to your bank.
But between you and your relationship manager (RM), a strong existing relationship can make the difference between a business loan approval or rejection.
This is because your RM helps you to bridge cold hard numbers.
A typical loan approval process at the bank involves an in-depth reporting and analysis of your company, and approval by a senior bank staff.
A good relationship with your RM will usually mean that he or she will be more motivated to present the best image of your company to the approving authorities.
Short answer:
No.
Long answer:
No, because this might create negative consequences instead. Our stand is that you should do it only if you are absolutely confident that you can make the loan repayments promptly.
If there are any irregularities, late payments or detection of negative cash flow, it may affect your future loan applications.
However, to establish a useful relationship with relationship managers, simply treat them with respect while being honest and upfront about your business needs.
That will improve your loan approval chances tremendously.
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Lendingpot.sg operates a Business Loan Marketplace that allows an SME to connect to multiple lenders with just one application, allowing the SME to know who its prospective lenders are and the rates that they offer, in a very short time.
Eric Koh is passionate about helping SMEs grow and has spent years interacting with business owners at OCBC and IFS Capital. He is interested in 70s rock ‘n roll, the odd novel and copious amounts of historical trivia.
