How to Create a Rock Solid Bonding and Banking Relationship

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In an industry where having solid financial backing and trust is crucial, getting these relationships right is not just a bonus, it’s a necessity. This week, let’s discuss how to build relationships that will last and support your business over the years.

Topics we cover in this episode include:

  • How to find the right partners for your business
  • Build the relationship before you need the help of a bonding agent or banker
  • Make your banker and bond agent feel valued
  • Introduce your banker and bond agent to your team
  • Be honest about your situation with your financial board of directors

Join the conversation on our LinkedIn page:

Wade Carpenter, CPA, CGMA |
Stephen Brown, Bonding Expert |


[00:00:05] Wade Carpenter: Have you ever wondered how the strength of your banking or bonding relationship directly affects your construction business’s ability to secure projects and grow? In an industry where having solid financial backing and trust is crucial, getting these relationships right is not just a bonus, it’s a necessity.

Come on in, let’s talk about it. This is the Contractor Success Forum. If you’re new here, I’m Wade Carpenter with Carpenter & Company CPAs. With me, my co host, Stephen Brown, with McDaniel Whitley Bonding and Insurance. Stephen, in a world where ups and downs in our financial situations can dictate what opportunities we have in the next few months, how do we build and maintain these rock solid relationships that not only last, but also help our businesses thrive?

[00:00:50] Stephen Brown: Yeah, that’s your introduction. I think it was fantastic. 

You think maybe this would be a good thing to have these kind of relationships, but in the commercial construction business, especially, it’s essential. It’s also essential in residential construction, more the banking end of it than the bonding end of it.

But I just was hoping we could talk a little bit about, how to set up a relationship, how to develop a relationship, how to feed the relationship, how to use the relationship, how to make sure that relationship is rock solid, in good times and bad times. So you heard that expression, fair weather friends. 

What does that mean to you, Wade? What is a fair weather friend?

[00:01:29] Wade Carpenter: I see it as somebody that they need me when they need me and they are not really there for me if I needed them. And I’ve definitely seen that in construction over the last 30 something years.

[00:01:39] Stephen Brown: Sure.

[00:01:40] Wade Carpenter: When you have a great relationship, it can go a long way to getting you where you want to go.

[00:01:45] Stephen Brown: That’s right. A fair weather friend is only there for you when the weather is fair. It’s sunny. Everything’s going fine. You’re not demanding really anything. You don’t need help. It’s an easy way for a fair weather friend to make money off of you. You just simply call and place an order or something.

But a real friend is someone that knows that you value them and their advice, and you take their advice. And you pay their bills on time, and they’re an important part of the success of your team. 

How to find the right partners for your business

[00:02:18] Stephen Brown: First of all, I wanted to talk about how to get the right team members in place. 

How do you find the best banker? You don’t look it up online and put best construction banker in town. Then you’ll have 20 different things pop up.

But you want to look for a bank that is a specialist in construction and they’re very hard to find. They don’t necessarily have to be in your hometown, but it certainly helps if you’re doing local projects to do business with a local banker. 

But a banker is someone that you want to make sure that you are dealing with the highest possible level that will give you time and advice and care to help you. Because you want that person to be high up on, on their loan committee when you need a loan. You need them to be connected to management when there’s a problem that they can solve.

So you want your banker to not be a fair weather friend. You want them to be a rock solid friend that’s there during hard times. When you’re having a cash crunch. You’re having a cash flow crisis. When you’re losing your shirt on a job and you’re looking for a bag to breathe into. That banking relationship is everything. 

[00:03:33] Wade Carpenter: The banking or the bonding agent can go a long way to making sure that you get what you need and, I’ve seen it as a basically three way street that, you know, the contractor is trying to get something done and they need the cash flow or whatever, and sometimes it’s a year end planning situation where you’re trying to loop the banker in as well as the bond agent and get their feedback on what it needs to look like so that they can accomplish their goals of getting bonding or, renewing that line of credit or whatever the idea is, but yeah, absolutely.

[00:04:05] Stephen Brown: Yeah, you want to know from them what they need to do their job properly. What would make you happy? I can tell you universally that it’s accurate and timely financial information about your company. Okay, so if you want someone’s advice, your financial numbers don’t have to look perfect to get good advice.

But you need someone who’s willing to help you, who’s willing to talk to you about, okay, this is what I’m seeing. Is this accurate? All right. What are you doing about it? Uh-huh, what do you think you should do? What do I think? I’m not in your position, but if I was in your situation, I’d certainly consider this and this.

Build the relationship before you need the help of a bonding agent or banker

[00:04:42] Stephen Brown: So you need this kind of advice. You need these kind of people giving you advice. So a banker lends you money when you need it for cash flow purposes to make ends meet during a crisis situation. Your CPA helps you budget for the future and communicate what it is exactly you need to borrow and why, and when the funds will come in and copies of the contracts. And all this needs to be done with a banker that you have a relationship with before you need their help. 

So I would say put a little bit of effort into that relationship ahead of time. Ask your bond agent. What bank they would recommend. Find out some of your competitors that you respect greatly, that do business in the range that you want to do business in, find out who they use and see if you can get an introduction. Same goes with surety bonding agents. You want to find the best out there. 

So surety, like banking, it really comes a little bit easier with age and experience. I’m not saying that just because I’m old. I’m saying it because I’ve been doing it a long time. And a good banker that, that is willing to help you and mentor you might be older.

I don’t know. It may be a young friend that wants to grow with you. It might be. But whoever it is, it’s someone who has, the ability and the relationships to get you what you need.

[00:06:15] Wade Carpenter: Absolutely, and there’s a lot of things you just said in that, that I’ve seen relationships with me and contractors and their bond agents and their bankers. What you said a while ago about finding a good construction banker, they are few and far between. And when you can pair up a good bond agent with a good banker, that can go a long way.

And regarding the advice, most financial professionals, especially if they know what they’re talking about, if they’re giving you some advice, you should take it. Because they don’t mean to do you harm. They’re not trying to steer you.

And that’s sometimes a two way street on building that trust. So exactly what you said about finding somebody that is trusted, that can refer you into somebody, a relationship with a banker or bond agent can go a long way. Talking to people at your trade associations.

That’s a great way to also get in and figure out who are the key players and knows what they’re doing.

[00:07:16] Stephen Brown: And meet with them. If you can take them to lunch or meet them for breakfast or coffee or meet them at their office and tell them about who you are and ask them pointed questions about their experience. And show an interest in that. Most folks don’t have a problem telling you about themselves, but you have to ask.

So that is a relationship that you have to make, and it is an intentional relationship if you want it to be rock solid. Does that make sense?

[00:07:46] Wade Carpenter: Absolutely. 

And, the other thing I’ve said many times, and I’m sure you would appreciate is somebody needs a bond and they’ve never really talked to a bond agent. They wait until they’re desperate and, hey, we’ve already bid this job and now we’ve got to bond it somehow, so they’re calling Stephen at the last minute, or, you get in this cash flow crunch and, oh, hey, I just met you as a banker, but can you help me out this one time?

The time to figure it out is before you need somebody like that.

[00:08:15] Stephen Brown: That’s a fact.

[00:08:17] Wade Carpenter: The age usually does have something to do with the experience. Most of the people that are really around the business that you see all the time, they’re really good.

 Years ago, I did have a young banker. I don’t know, she was in late twenties, but she was exceptional. She had a MBA and she was incredibly smart. As well as she knew exactly what you were talking about. She had the relationships with the higher ups and she could get things done for my contractors.

And I paired that with a wonderful bond agent. And unfortunately it wasn’t you. I didn’t know you at the time, it worked really well because we could say at the end of the year what do we need cash to look like? What do we see is coming up? We’re going to have some big spikes in growth and we’re going to need some cashflow to grow through that. That goes a long way to smoothing that over and having somebody in your corner when you need them.

[00:09:09] Stephen Brown: That’s right. And your construction oriented CPA is just a great source for leads in that regard.

And so there are a lot of good bankers out there, all different ages. There’s a lot of good surety underwriters out there and agents, all different ages. And all I was saying is you might want to think if there’s someone that you want to be on your unofficial board of directors and act as a mentor to you, whatever their age is, they are teaching you and bringing you along in that relationship. If they buy into you and what you’re doing, they want to help. You’ve got to recognize that and help them help you. 

Make your banker and bond agent feel valued

[00:09:47] Stephen Brown: I can tell you when I was very young, one of my contractors would go out of his way to introduce me to his employees, out on a job site, anywhere. This is Stephen Brown. He is a key member of our team. And a lot of our success can be attributed to him and what he does for us. And he would have his arm around me. Of course, I just gushed and I was young and I appreciated it more than you can possibly say. And I would have killed for the guy. 

So he was sincere. He was great. He was a real dynamo. And I’ll never forget him. But that’s the kind of way you need to make your bond agent, insurance agent, and your banker feel about them. So you find the people and then you have to feed the relationship. This contractor was feeding our relationship by making sure that I was appreciated in front of his entire organization. And that’s one thing. 

Another thing is you want to meet with them regularly and let them know what’s going on. Take them to lunch and tell them what’s going on. They’ll tell you about something new they might be doing at their bank or different options for bonding.

But it’s amazing. You just don’t have to talk about business all during lunch. You just get to know each other. And there’s always time for communicating the business that you need. So you’ve got to feed that relationship. Another great way to feed the relationship is take them and some of their coworkers out to a job site and show them what you’re doing.

And it’s a great time for you to show owners, reps, and other key employees that these are important parts of my team. Back when I was a bond underwriter, we had to wear our suits everywhere. 

So when the banker and the bond underwriter showed up at job site we stood out like sore thumbs. We were the only ones with suits on and ties.

[00:11:43] Wade Carpenter: Sometimes the CPA auditors were out there trekking through with dress shoes and in their suits too, so.

[00:11:49] Stephen Brown: Yeah. You had your loafer stuck in the mud like I have, yeah.

You feed that relationship, Wade. You feed it like you would a friendship. And, you also, when you meet with them for business, then it’s about business, and you have the financials. You keep them up to date of what’s going on.

Everything. And, with the good banker or bond agent, you’d be surprised at the advice you get only if you ask for it. If you don’t ask, you don’t get it, generally.

[00:12:21] Wade Carpenter: Can I go back to what you were saying about, introducing you to the team?

Introduce your banker and bond agent to your team

[00:12:25] Wade Carpenter: I think that was actually very smart on that contractors part, because number one, my team, I’ve got a wonderful team behind me, and that’s one of the first things I do is start working with a contractor.

It’s hey, we’ve got somebody that specializes in this or that, and, from your perspective, if they’re saying, hey, we’ve got these people, and they do good work, and they’ve been here for X number of years, and that’s probably going to give you a little more comfort level of, hey, they’ve got somebody in place that does this.

And, as you said, it’s probably a two way street that kind of nice to know that, who the other players are and, getting this done. And it’s not all on one person’s shoulders.

[00:13:05] Stephen Brown: Yeah, that’s a great point. 

And, that recognition of who you respect, when they respect you, goes a long way for a contractor’s mindset of who do I need to stay in touch with? Who are the best in the business that I need to be in front of all the time? And who works the hardest for me to help me succeed?

And also, have I communicated to this banker and this bonding agent what my goals are? All these are important.

And you might say, okay, Stephen, back to feeding the relationship. I’m not really, I’m not a golfer. I’m not really into golf. Golf was invented as a businessman’s tool, as a perfect tool. You spend three or four hours on a golf course, you really know somebody. You know them pretty well. You know, If they cheat, if they break the rules. But no, whether you enjoy their company or not. And so if you don’t golf, you and your banker or bonding agent may might like to hunt together or fish together, but it’s just sharing something in interest in doing something with them.

Developing that friendship like you would any friendship is the key for a rock solid relationship. I had a contractor, and I’ll end things on this, but he was asked to be on the board of directors of his local bank and very honored to do that. And, I said to him, I said your bank letter of credit is not a actual letter of credit. It’s just a a friendly letter we know and like him letter. 

So how well is that letter going to serve you when you need to borrow? They say that they’ve got to set it up as a real loan and I said, fine, let them set it up as a real loan. If they’re not willing to work with you in that regard, you don’t need to be on their board of directors.

That really didn’t resonate with him. So when he had some trouble and he really need to borrow some cash to get him through a cash flow crunch, they were fair weather friends. They were like, hey man, we’d love to help you. But, we’re really not, doing that right now, but hey, you’re a great guy.

Anyway, he ended up resigning from the board and they were like, oh, fine. He’s having financial trouble. I’m glad he’s off the board. 

So I’m saying these guys he associated with made him feel good to be invited on the board, but that meant nothing.

[00:15:14] Wade Carpenter: That’s sad.

Be honest about your situation with your financial board of directors

[00:15:15] Wade Carpenter: But I guess going back to what you said, too, about, asking for advice, I do see that this is a common problem, especially when you’re dealing with finances. A contractor, they want the world to believe that they’re doing very well. And, obviously in front of your bond agent or your banker, you want to put the best foot forward. But there’s also becoming humble and asking for advice.

And, I think you would probably agree with me. It’s if something’s starting to go wrong, I’d prefer to talk to my bond agent about it. before it becomes a disaster. Maybe they can give you a little bit of advice on what to do.

The same thing with the bankers. Things have not been great. Maybe they can smooth it over on the loan covenants or something like that, if you have to. But to just wait until here’s the tax return and they get completely blindsided, there’s nothing they can do to defend you. 

It’s number one, being humble. Number two, I would say, so many people think everybody else is doing so much better than they are. And I’m here to tell you, some of them are, but the vast majority of them are in the same boat you are. They struggle every week to find the cash flow. They struggle every week to make sure there’s food on the table for everybody they deal with.

And, sometimes you just got to look out for yourself and not forget about, hey, this is what I just want to put my best foot forward. You really need to find that relationship where you can trust that person and say, hey, this is what’s going on. What can you do to help?

[00:16:44] Stephen Brown: That’s right. That’s a really good point. 

And also another thing that I wanted to end the podcast on a little bit, if it’s okay, is respect for the person that you find. Respect for their time, respect for their advice.

So how do you show respect for their time? When you have an appointment, you’re there. Not crazy early, but five minutes ahead of the appointment, you are there. You are present and you are focused, and you’re ready to go. That shows that you respect the person that you’re meeting with. So you want to tick someone off? Just like you said, just drop in with an attitude and an emergency and expect immediate results, and you will get nothing. Nothing.

Like you said, Wade, about the humility part of it. If we as a surety industry and bankers only worked with the cream of the crop, we wouldn’t have a lot of business. Our jobs are to provide services that you need and advice that you need. That’s our job. And if we like you on top of that, and we bought into what you’re doing, and you’re providing us accurate and timely financial information that we need, then you’re going to be our best customer.

And our best customer gets our best attention. And when things get tough and your bonding agent has to go to the mat for you on a difficult job, instead of saying, I really don’t have any options with what you’ve presented me. They’ve got three or four options for you to consider, get the job done. And they have gone to the mat and they’ve used their own reputation for you to help you get what you need. That’s all I had to say about that.

[00:18:27] Wade Carpenter: We will go ahead and put this one to bed. Thank you all for listening to the Contractor Success Forum. Check out the show notes at, or on the Carpenter CPA’s YouTube channel for more information.

We would appreciate it if you consider subscribing and follow us every week as we post a new episode, and we will look forward to seeing you on the next show. 

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