CFO-on-Call: Financial Consulting in Central Ohio

Focused and Affordable Financial Solutions

HOME | COMPANY | SOLUTIONS | PUBLICATIONS

Letter from the Editor
By Jerry Griffin
Making the Numbers Work
"Informing and Empowering Your Workforce"
An idea whose time has come
By Gavin Freytag
Getting the Money
"Managing Your Loan Officer"
Advice from a successful lender
By Richard Eckels
E-Commerce: The Revolution
"Changing Business Models in Mid-Stream"
An issue you will face
By Eric Anderson
Exit Strategy
"Finding the Best Buyer for Your Company"
Leaving successfully
By Bob Shortle
Reflections
"Are You Ready"
Are you ready?
By Jerry Griffin

Getting the Money

In a time when banks rotate their loan officers through accounts faster than George Steinbrenner used to change Yankees’ managers, you need to know how to pick the right loan officer and how to manage your relationship. Here are some thoughts on the subject from a successful young loan officer in central Ohio. — Jerry Griffin

Managing Your Loan Officer
By Richard Eckels

Executive Summary: Learn everything you can about the loan process, choose your loan officer with care and share all significant information about your business and industry trends. Invite key members of the loan committee out to your business for a first-hand look.

Banks reward loan officers’ credibility and perceived competence

What does your loan officer actually do, besides invite you to play golf, ask for quarterly statements, and bother you with questions in spite of your stellar payment history? The answer is - he or she deals with the loan committee.

A loan officer’s relationship with the bank’s loan committee is a key dynamic in his or her career. The committee is generally comprised of experienced senior lenders who as commercial lenders, based their decisions on meeting their customers and visiting their operations. Now, they must approve loans based on financial statements and the perceived competence of the presenting loan officer.

Consequently, loan officers understand that their credibility with the loan committee is their strongest asset. Credibility is easy to lose and nearly impossible to regain. The most knowledgeable and credible loan officers tend to be the most successful in getting deals approved.

You can educate your loan officer and the loan committee

I encourage you to educate your loan officer by discussing your business’s strengths and weaknesses. The more information he or she has, the easier it is to get your deal approved. Lend your loan officer your trade journals. Nothing destroys a loan officer’s credibility like unexpected bad news. How much of the downside risk in your business can you afford to reveal? Loan committees know that every deal has elements of risk. The best loan officers explain both the strengths and the weaknesses of a deal to the loan committee. It is entirely in your interest to know as soon as possible if the loan committee is not completely comfortable with your business.

I strongly recommend getting your loan officer’s boss (if he or she is on the loan committee) or the boss’s boss out to visit your business. This allows the committee member to see, touch and smell the deal. This could provide you with a valuable ally on the loan committee.

Understand the loan officer’s drill

Make sure that you know the lending authority of your loan officer, his boss, the loan committee, and the Board of Directors. Then:

Find out when the loan committee and the Board meet. How many days prior does your loan officer need information? Hold your loan officer to these guidelines.
Find out what financial statements and other documentation are required.
Expect a call back with questions.

You choose your own loan officer

OK, so how do you choose a loan officer? Yes, it’s your choice and you can even ask to work with a different loan officer in the same bank.

If your loan officer and his boss have high lending limits, you will save time and eliminate the "committee" excuse for delays.
Look for a loan officer who is a permanent member of the loan committee.
Select a loan officer who is open regarding the bank’s lending guidelines. Be wary of those who overpromise or imply the deal is "pre-approved." It rarely is.
Find a loan officer who puts everything in writing, especially the closing costs. There are ways to reduce closing costs—force your loan officer to find them.
Select a proactive loan officer who makes the banking relationship easy for you and fixes mistakes quickly. All banks preach customer service—make them "walk the walk."
Choose a loan officer who regardless of handicap, can play 18 holes in four hours or less.

Much of this is difficult to determine up front. Ask people you know who they like to deal with. Your banking relationship will be much easier if your loan officer realizes you understand the process.

Deal with more than one bank

For this last piece of advice, I’ll probably burn in banker’s hell but—always keep more than one bank involved. If you can use two lending institutions, do so. Do not let loan officers pressure you into putting all your eggs in one bank. If you cannot borrow from two banks, allow a second bank to see your financials and make that bank believe there is the possibility of doing business with you.

PRIVACY | CONTACT US

HOME \| COMPANY \| SOLUTIONS \| PUBLICATIONS

Letter from the Editor By Jerry Griffin Making the Numbers Work "Informing and Empowering Your Workforce" An idea whose time has come By Gavin Freytag Getting the Money "Managing Your Loan Officer" Advice from a successful lender By Richard Eckels E-Commerce: The Revolution "Changing Business Models in Mid-Stream" An issue you will face By Eric Anderson Exit Strategy "Finding the Best Buyer for Your Company" Leaving successfully By Bob Shortle Reflections "Are You Ready" Are you ready? By Jerry Griffin	Getting the Money In a time when banks rotate their loan officers through accounts faster than George Steinbrenner used to change Yankees’ managers, you need to know how to pick the right loan officer and how to manage your relationship. Here are some thoughts on the subject from a successful young loan officer in central Ohio. — Jerry Griffin Managing Your Loan Officer By Richard Eckels Executive Summary: Learn everything you can about the loan process, choose your loan officer with care and share all significant information about your business and industry trends. Invite key members of the loan committee out to your business for a first-hand look. Banks reward loan officers’ credibility and perceived competence What does your loan officer actually do, besides invite you to play golf, ask for quarterly statements, and bother you with questions in spite of your stellar payment history? The answer is - he or she deals with the loan committee. A loan officer’s relationship with the bank’s loan committee is a key dynamic in his or her career. The committee is generally comprised of experienced senior lenders who as commercial lenders, based their decisions on meeting their customers and visiting their operations. Now, they must approve loans based on financial statements and the perceived competence of the presenting loan officer. Consequently, loan officers understand that their credibility with the loan committee is their strongest asset. Credibility is easy to lose and nearly impossible to regain. The most knowledgeable and credible loan officers tend to be the most successful in getting deals approved. You can educate your loan officer and the loan committee I encourage you to educate your loan officer by discussing your business’s strengths and weaknesses. The more information he or she has, the easier it is to get your deal approved. Lend your loan officer your trade journals. Nothing destroys a loan officer’s credibility like unexpected bad news. How much of the downside risk in your business can you afford to reveal? Loan committees know that every deal has elements of risk. The best loan officers explain both the strengths and the weaknesses of a deal to the loan committee. It is entirely in your interest to know as soon as possible if the loan committee is not completely comfortable with your business. I strongly recommend getting your loan officer’s boss (if he or she is on the loan committee) or the boss’s boss out to visit your business. This allows the committee member to see, touch and smell the deal. This could provide you with a valuable ally on the loan committee. Understand the loan officer’s drill Make sure that you know the lending authority of your loan officer, his boss, the loan committee, and the Board of Directors. Then: Find out when the loan committee and the Board meet. How many days prior does your loan officer need information? Hold your loan officer to these guidelines. Find out what financial statements and other documentation are required. Expect a call back with questions. You choose your own loan officer OK, so how do you choose a loan officer? Yes, it’s your choice and you can even ask to work with a different loan officer in the same bank. If your loan officer and his boss have high lending limits, you will save time and eliminate the "committee" excuse for delays. Look for a loan officer who is a permanent member of the loan committee. Select a loan officer who is open regarding the bank’s lending guidelines. Be wary of those who overpromise or imply the deal is "pre-approved." It rarely is. Find a loan officer who puts everything in writing, especially the closing costs. There are ways to reduce closing costs—force your loan officer to find them. Select a proactive loan officer who makes the banking relationship easy for you and fixes mistakes quickly. All banks preach customer service—make them "walk the walk." Choose a loan officer who regardless of handicap, can play 18 holes in four hours or less. Much of this is difficult to determine up front. Ask people you know who they like to deal with. Your banking relationship will be much easier if your loan officer realizes you understand the process. Deal with more than one bank For this last piece of advice, I’ll probably burn in banker’s hell but—always keep more than one bank involved. If you can use two lending institutions, do so. Do not let loan officers pressure you into putting all your eggs in one bank. If you cannot borrow from two banks, allow a second bank to see your financials and make that bank believe there is the possibility of doing business with you.
PRIVACY \| CONTACT US