Why ‘we’ve always banked with them’ is becoming a risky funding strategy

Familiarity no longer equals security

For many Irish SMEs, funding decisions still begin and end with the same question: which bank have we always used? Long-standing relationships feel reassuring, particularly where a business has traded through multiple cycles. However, relying on a single bank relationship is becoming an increasingly fragile approach to funding.

Relationship history carries less weight than expected

Modern lending decisions are far less relationship-driven than many owners assume. Credit assessment is now largely centralised, with decisions shaped by policy, sector exposure and internal risk limits rather than familiarity. A business may have banked with the same institution for decades and still find that a sensible request sits outside current appetite. In these cases, historical loyalty offers limited protection.

Single-bank reliance reduces negotiating power

Depending on one lender weakens a business’s position when it comes to pricing, structure, security and repayment terms. All decisions are filtered through a single credit view. If that view shifts due to internal strategy changes rather than business performance, options narrow quickly. This is often only discovered when funding becomes time-sensitive and alternatives have not been explored.

Funding needs are more nuanced than before

Modern funding requirements are rarely one-size-fits-all. Working capital cycles, phased investment, asset-heavy growth and property-backed funding all behave differently. A structure that works well for day-to-day banking may be poorly suited to expansion or refinancing. Forcing every requirement through one lender can result in compromises that create pressure later.

Sector appetite can change without warning

Banks review sector exposure more frequently than many SMEs realise. A business operating in a sector that is temporarily out of favour may encounter resistance, even with stable cashflow and a strong track record. This reflects how lender risk is managed, not the quality of the business itself.

Building a more resilient funding strategy

A stronger approach starts with the funding requirement, not the relationship. Understanding what is being funded, how it will be repaid and what risks need to be managed allows SMEs to assess whether their existing bank is the right fit or whether additional options should be considered. This is about reducing dependence, not abandoning relationships.

As lending models continue to evolve, familiarity alone is no longer enough to rely on.