Some say it's nothing new: banks have long stressed "relationship banking," where the loan is just one piece of a partnership that includes the client's basic deposit accounts business checking, payroll, cash management - and can extend to a suite of financial services, from insurance to wealth management. Ralph Evangelista, a CPA and partner in Frazer, Evangelista & Co., in East Brunswick, said one of his small-business clients recently had his loan canceled by his bank because he refused to open a business checking account.
Finance Banks put heavier emphasis on building relationships Several insist customers seeking Banking out the second loan, Specht said. ing increases safety and soundness.” While loans have deposit accounts, too But if a business needs cash, “you do Wachovia doesn’t make deposit accounts a said one of his small-business clients recently what you have to do to keep the business afloat hard-and-fast loan condition, “the bread- By BEtH FItzGERAlD had his loan canceled by his bank because he and get the line of credit, and hope business and-butter operating account of the business WITH BANK CREDIT scarce during this reces- refused to open a business checking account. turns around and you can start to have some would be very often a condition” of offering sion, businesses are under pressure to move The loan payments were being made in full and leverage and develop relationships with other credit, Cole said. their deposit accounts to the bank that agrees on time, he said. banks,” said Specht, a partner in Costantino, Jim Kocsi, New Jersey district director of to give them a loan. “I’ve never seen this Specht, Templeton & Co., in Secaucus. the Small Business Administration, said bor- Some say it’s nothing new: banks have before in 25 years” as a CPA, At Wachovia, which was acquired by Wells rowers aren’t required to move their accounts long stressed “relationship banking,” where Evangelista said. “Today, Fargo last year, “the idea of a full banking rela- to an SBA bank in order to get an SBA loan. the loan is just one piece of a partnership that it’s not uncommon for the tionship is not a new concept, but has been Kocsi said it’s generally a good idea for a includes the client’s basic deposit accounts — bank to ask for everything.” our philosophy for many years,” said John Cole, small business to have more than one bank- business checking, payroll, cash management CPA Carl Specht said senior vice president of business banking. “It ing relationship, as “you don’t want to have all — and can extend to a suite of financial ser- one of his small-business would be an exception to make a loan without your eggs in one basket.” But he’s not surprised vices, from insurance to wealth management. clients already has a loan John Cole having the full relationship that comes with it. We banks try to capture all the deposit accounts But the credit crunch is also giving banks with one bank, and applied for a credit line don’t believe we can offer a full solution that is when they make a commercial loan. “In the increased leverage to insist that business lend- from another bank. Specht said the second credit only.” He said the borrower benefits from common-sense world of banking, the bank’s ing clients bring their deposit accounts along bank “came back and said, ‘We’ll extend you a having access to more financial tools, while the point of view is, ‘Look, I’m taking care of you, with them, according to experts. line of credit, but we want all your accounts.’” bank enjoys an increased deposit base. and the other bank isn’t — so why do you keep Ralph Evangelista, a CPA and partner in The client walked away “because they are in Cole said deposits “are a source of your money there?” u Frazer, Evangelista & Co., in East Brunswick, good financial shape” and could manage with- liquidity for the bank, and deposit-gather- E-mail to firstname.lastname@example.org NEW
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