Three Conversations Successful Small Business Lenders Have
Smart small business lenders know that in order to be successful, they must have the skills to build long-term relationships with clients, and effectively communicate with underwriters to develop appropriate solutions that leave all parties satisfied.
By breaking the lending process down into a series of three targeted conversations, your small business lenders can bridge the gap between the client and the underwriter.
Here are the three most important conversations that your lenders need to have when they are working with a small business owner.
1. Qualify the Business; Clarify Needs
Understanding a business’s operating cycle and capital investment cycle is key to fully understanding a client’s needs and challenges. When equipped with financial analysis skills and knowledge of the client’s industry, a small business specialist is poised to conduct a focused conversation that will build credibility with the client. When conducted skillfully, the conversation will also build enough trust that the client will feel comfortable providing detailed financial information.
2. Share Financial Insights
Every business is unique. Discovering a business’s unique strengths and weaknesses is at the heart of successful small business lending. Having had an opportunity to analyze a client’s financials, lenders should be prepared to have a client-focused discussion during which they ask questions about what they observed in the financial statements so that they can fully evaluate the borrowing cause and the business’s ability to repay.
By shifting from a lender-focused interrogation to a client-focused conversation, the lender is able to provide value to the client through insightful analysis of the business, while giving the underwriters what they need to make an informed decision.
3. Present Financial Solutions
Financial solutions can be difficult to understand, even for the most sophisticated small business owners. Presenting solutions is often complicated by a mismatch between what the business owner has requested and what the lender is willing to offer.
The lender must present the solution in a straightforward manner that highlights the benefits to the client. It is important to be able to present solutions in a benefit-focused manner to prevent objections.
Even when you have to communicate bad news, such as a decline, there is an opportunity to build trust and set the stage for a future relationship. Make sure your lenders know how to position a decline as an opportunity to share business insights that will help the owner improve the business’s financial position so that it can qualify in the future.
Knowing how to have these three conversations will position your small business lenders as consultants and elevate the status of your financial institution. We’ve recently launched a brand new course that teaches these conversation skills. Learn more about Effective Credit Conversations.