Vail Daily column: We should all be talking
I have been sitting on the loan origination side of the desk for a while, and as my responsibilities have shifted over the past decade from lending to the general public, to more affluent segment lending, and now to commercial lending, I’ve realized that many people are still confused about what happens after you fill out a loan application.
Mostly due to a lack of communication from their bankers, folks often feel that a loan application is filed into some black hole of underwriting to emerge after some strange (and often stressful) journey with a stamp of approval or decline. With this in mind, I wanted to put together a few thoughts to business owners and to my fellow bankers. It might just start a conversation or two.
In the good old days (the old timers say), a banker sat in his or her office and waited for the customers to come to them. This was partly due to the presence of such well-thought-out ideas like stated income and handshake (signature) deals. Very little planning was required to receive financing, and as a result, many financial institutions became highly transactional in the way they originated lending to businesses and individuals alike. Your banker didn’t have to know you or your business well because everything seemed to be going right, and if it didn’t, then the next good deal was right around the corner. During this period, however, good bankers still made an effort to get to know their customers, understand their financials, and look ahead with caution to the possibility of darker times.
While handshakes are still worth a great deal to me now, we live in financial times in which both business owners and bankers must prepare to explain and manage the presence of financial risk more proactively, whether driven by market conditions or the business itself. It is for this reason that a working relationship of trust with your banker should be a top priority.
Bankers are often required to be emotionally invested in a customer to feel comfortable with a loan request. I have to know you, understand where the money goes and where your business is going. I don’t necessarily need to be invited to your son’s bar mitzvah, but I do need to want to do business with you. For this reason, transparency, respect and an understanding of long-term goals are paramount on both sides of the desk. I’m never going to shy away from having a conversation if I just met you, but you should know that I’m trying to work with you for the next decade — not just today.
You should also know that you can talk to your banker far in advance about your financing needs. It’s allowed. In fact, if you were my customer, I would expect to be involved in the financial planning process long before you ever actually request the funds. I can tell you what your financials need to look like to help you achieve your financing goals, but I can also likely lend a few pieces of advice on increasing your internal efficiency.
Many lending institutions, including mine, still make many of their decisions locally. When you give your commercial banker a lending request, you should expect communication in regard to the process on a consistent basis. Surprises, in the presence of good prior communication, should be kept to a minimum. While I have an army of assistants and analysts who may help me prep the work, and oversight to make sure I’m not a crazy banker, you should know that the final decision on your request will fall to me. It is for this reason you should expect your banker to be able to articulate his or her feelings in regard to your request, and do so in a timely fashion.
To sum it up, I guess what I’m saying is that we should all be talking. A financial need is not necessarily a financial weakness. While finance may not be the most exciting or comfortable topic to a small business owner, the truth is, your business is likely one of the most interesting topics to your banker.
Ben Gochberg is a commercial lender and business finance consultant. He plays, lives, works and is trying to do a little good in Eagle County. He can be reached for business inquiries or free consultation at 970-471-3546.
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