How many times have you seen this – you present a proposal to one of your bank’s potential customers and you go back and forth on a particular term or set of terms. For loans, the discussion is often over amount, rate, term, amortization or guarantees. For deposits, it is often over fees, services or rates. More than 60% of the cases that we have observed, the seasoned business development officer bargains when they should be negotiating. Worse yet, they don’t even know the difference, and as a result, they lack a major tool in relationship development.
Tag: Lender Training
In two previous articles on the utilization of scale when it comes to lending, we analyzed certain variables on all commercial mortgages originated in 2017 by all bank lenders. We looked at (HERE) the relationship between the size of a commercial loan and the loan’s profitability.
In Part 1, we discussed how the Tax Cut and Jobs Act of 2017 is the perfect medium to allow bankers to carry on a high quality, “Trusted Advisor” conversation with commercial clients. We covered how pricing will impact credit quality and loan pricing while highlighting the importance and method to have a conversation around deposits, balance timing, earnings and cash flow.
This is a great time for you to pick up our new book – The Successful Lender’s Field Guide. This 170-page book, in both paperback and Kindle format, is the essential commercial lending practitioner's roadmap to running circles around your lending competition. The commercial lending environment is more competitive than ever, and the margin for error has never been smaller. While lenders are formally taught credit fundamentals, little information is provided that quantifies the structural drivers of loan performance – until now.
One difference between a great commercial lender and an average commercial lender is the understanding of loan documents and insightful knowledge of key terms found in loan documents. In this first part, of two, we will consider the structure of common commercial loan documentation and some finer points about working with these agreements and terms.
Borrower’s and Lender’s Objectives
The future in banking looks like fewer, but more experienced bankers. Consolidation of banks will continue, but more digital-based alternative lenders will appear. The banker that can deliver solid financial advice to their client will always be in demand and will be able to garner a premium price for his or her services.