News from The Globe and Mail
Banks roll out the red carpet
Thursday, May 22, 2003
François Bouchard was overjoyed this spring when his bank took just six days to approve a loan of more than $100,000 to help pay for renovations to his Ottawa supermarket.
He was equally elated when his banker recently advised him how to finance a new cash register system for his 10,000-square-foot store, which employs 30 people and rings up annual sales of about $4-million.
During the eight years he's operated his grocery business, Mr. Bouchard can't remember ever receiving such red carpet treatment from a bank. In the past, loan approvals often took up to four weeks and never did he receive the kind of advice he gets today.
"Bank fees and loan interest rates are important but, for me, it's all about the level of service I receive," says Mr. Bouchard, who banks with TD Canada Trust.
The need to provide speedy service and expertise to entrepreneurs such as Mr. Bouchard has moved to the forefront for Canada's big banks, which rely on the country's 2.2 million small businesses for a huge chunk of business.
Recognizing that small-business operators need advice as much as capital to build their businesses, financial institutions these days are offering larger than ever dollops of expert counsel, in addition to quicker loan approvals, competitive interest rates and a range of services that cover the whole gamut of their customers' personal and business needs.
"Clients are not coming to us strictly for service and products. They view banks as having a lot of knowledge and they want the banks to transfer that advice," says Rod Hunt, national manager of small business markets for Royal Bank of Canada, who defines small businesses as those with annual sales of less than $5-million.
Nick Stitt, vice-president of small business banking for TD Canada Trust, says his institution's dealings with small businesses focus on "expertise versus loan rates. It's not just the price and products your bank can provide; it' s the service you can offer and the knowledge you can offer."
With an increasing number of clients hungry for financial and business intelligence, most banks have beefed up their staff with specialists trained to help smaller entrepreneurs make decisions on everything from expansion and equipment purchases to lining up mortgages on their homes and investing surplus cash.
Two years ago, Canadian Imperial Bank of Commerce launched its business advisory service for small business with 50 three-person teams of advisers.
Since then, the number of advisory teams, each covering four or five branches, has expanded to 278, says Carol Gray, executive vice-president of small-business banking at CIBC, which caters to 480,000 small-business customers.
"These are very qualified people who give small-business operators advice on investing, lending, personal finance, how to start a home office, help with receivables and taking the next step from a small business to a larger business."
In a bid to understand the challenges faced by small business, Bank of Montreal has set up a series of programs that offer advice customized for 10 select groups of entrepreneurs, including insurance brokers, financial planners, chartered accountants, doctors, dentists, franchisees and dairy farmers. In April, a program to advise poultry farmers was added.
"Our goal is to understand the world of small business and to tailor products and services to meet the needs of our clients," says Kathleen O'Neill, executive vice-president of business banking.
"A financial planner, for instance, has no hard assets, like other businesses, only a book of business. But he still may need financing, so he will sit down with a banker who will look at his business plan and viability and decide on a loan," Ms. O'Neill says.
"Because our advisers have an in-depth understanding of the needs of businesses in each sector, it is more likely loan approvals will be granted and these decisions will often happen faster," says Ms. O'Neill, whose bank's 967 branches cater to about 450,000 small-business customers.
Bank of Nova Scotia has account managers in 600 of its 1,000 branches who are specially trained to help small-business operators, says Susan Kennedy-Loewen, vice-president of small-business banking.
"The challenge for small businesses is never having enough time or money. When they come into Scotiabank, our specialists act as facilitators who navigate them through the branch. One point of contact makes it easy and simple to get the financial solutions they need."
Royal Bank's 450,000 small-business clients can get advice through a series of guidebooks that offer well-documented and timely information dealing with topics such as e-commerce, cash management and understanding business cycles.
New in the past year are guidebooks dealing with marketing and retiring from a small business, says Mr. Hunt. Three more titles are to be added this year, including one aimed at financing small businesses.
Royal Bank has set up teams of specialists with expertise in areas such as agriculture, real estate, franchising and knowledge-based industries; a new team is to be set up this year to help smaller manufacturers.
In the past year, 25 business advisers have been put in place to enable small-business operators to conduct most of their banking over the phone during and after regular business hours. They're on hand from 7 a.m. until 10 p.m. Monday to Friday and from 8:30 a.m. until 5 p.m. on Saturdays.
TD Canada Trust's 530,000 small-business clients can call on 75 specialists who will drop into branches or meet customers at their places of business to dole out advice on a range of issues, including loans, cash management and foreign exchange, says Mr. Stitt. And by year-end, about 50 per cent of TD Canada Trust branches -- up from 40 per cent now -- will be staffed by specially trained tellers at wickets set aside exclusively for small-business operators.
"Our small-business customers come in once or twice a week. They want to get in and out quickly with no mistakes made. We're ensuring that by giving them dedicated attention and professional service," says Mr. Stitt.
Adds Ms. O'Neill: "We are trying to show our customers that we understand the world they live and work in and that we will be there for them in good times and bad."
New services simplify business and personal banking
In addition to advice, Canada's banks provide a range of day-to-day services designed to simplify small-business operators' business and personal banking. Here's a sampling of some of the more recent offerings from Canada's big banks:
In early April, Canadian Imperial Bank of Commerce launched two new mortgage products to help small-business owners face less scrutiny when they apply for financing for residences or commercial properties.
The Self-Employed Recognition Mortgage enables qualified customers who have been in business for two years or more to get a residential mortgage without proof of self-employment income or financial statements. CIBC's Commercial Choice Mortgage for between $250,000 and $1-million can save customers up to $4,000 in legal costs for mortgage documentation registration and up to $3,000 in appraisal costs; a streamlined process significantly speeds up approvals.
In May, Bank of Nova Scotia upgraded its eight-year-old on-line business planning tool so that entrepreneurs drawing up a business plan can integrate their personal finances into the process, says Susan Kennedy-Loewen, vice-president of small-business banking.
She says that up to 300 customers a month download the tool, which includes retirement and mortgage planners. Most use it to draft business plans to attract investors, seek bank financing or to simply stay focused on their business and personal financial goals, she says.
Since last fall, Royal Bank of Canada's Business Essentials Account has provided entrepreneurs with volume discounts on transaction fees, based on the number of transactions. As a result, customers no longer need to visit their branch to renegotiate their service packages in search of lower fees as their volume of banking increases.
"The more people use the account, the lower the fees," says Rod Hunt, Royal's national manager of small-business markets, who notes that customers who make 120 transactions per month will save $120 a year. The account includes free on-line banking and a free bank card.
Late last year, TD Canada Trust relaunched its no-fee business savings account which, depending on the balance, pays interest at an annual rate of up to 2.25 per cent, versus a maximum of 0.075 per cent paid on its business chequing account. The account is designed for businesses with surplus operating cash earning a minimal rate of interest in a chequing account, says Nick Stitt, vice-president of small business banking.
Bank of Montreal has consistently developed programs to help small businesses blindsided by crises. Its most recent program was unveiled to defer loan payments and waive some bank fees for businesses affected by the SARS scare in the Greater Toronto Area.
Last summer, the bank implemented a drought assistance program to help its farmer customers on the Prairies improve their cash flow, and a similar program was put in place to assist small-business clients in the wake of the Sept. 11, 2001, terrorist attacks.
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