Working with regional banks vs other banks as an operator

January 04, 2025

by a searcher from University of Virginia-Darden - Darden School of Business in New York, NY, USA

I am curious about searchers' and operators' experience working with regional banks, particularly the ones that have a strategy to support commercial and industrial companies in the lower middle market.

At the risk is generalizing, banking is a commoditized service. with sticky customer relationships. Particularly, what's the value of having relationships with those banks vs the acquisition lenders that may not be nearby? Is there a noticeable difference in their underwriting philosophy or ongoing support while operating?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I think it really depends on the type of business you are buying and your on-going need for support from your Bank. If you are going through an SBA 7A loan, whether with a Bank in market or out of market, most SBA lenders tend to be more transactional. However, if you are looking for more conventional financing, then having a strong relationship in your market is very important. Typically speaking community or community / regional banks are going to be the most supportive and provide the most flexibility. Once you get to the true regional bank, super-regionals, or national banks, specifically on the smaller to mid-sized banking market, it really becomes a commodity product again and the relationship is not the same.

Happy to have a discussion at any time to talk about the advantages of various types of lenders under different scenarios. You can reach me here or directly at redacted

Reply by a searcher
from University of California, Berkeley in Seattle Metropolitan Area, WA, USA

Well established banking relationships across your multiple needs can enable better options for whatever you are prioritizing at that point. A good personal relationship, prior professional relationships, current professional and then a banking relationship / familiarity with the business that's being acquired/ran can be a good way to bounce requests between to see if you're 'getting the best deal' (whatever it is you're prioritizing in that moment, whether rates, terms, flexibility, covenants, limitations, etc). Most would say that a deep relationship with a singular entity is most beneficial (though this is usually the case until it really isn't - say, degradation of cash flow that leads to a bridge loan, or expansion line of credit that will go towards acquisition of something similar but not directly related that is misunderstood.

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