Don’t you wish you knew what happened behind the scenes at a bank
after you fill out your loan application? While you a wait for a response, who
are the players that process, evaluate and,
hopefully, approve your request for funding?
Whether you require a loan for real estate
or new equipment, understanding how the
process works at a bank can help you
determine whether a particular financial
institution is the right partner to manage
your request.
“Not all financial institutions handle the
lending process the same way,” says Jeff
Skocik, vice president and manager of
Commercial Lending, Brentwood Bank in
Bethel Park, Pa. “Business owners must
decide what type of relationship they want
to have with their lender. Are they looking
for a bank to handle a transaction? Or, are
they looking to establish a relationship
with a full-service lender?”
Smart Business asked Skocik to discuss
the relationship advantages a lender can
offer and why flexibility in lending can
open doors to other valuable services an
owner may not know about.
As a lender, what misconceptions do clients
have about your profession, and how do you
address those?
One misconception is that all banks handle the loan process in the same manner.
When choosing a lender, borrowers need
to be cognizant that different lenders take
different approaches to the lending
process. At some financial institutions,
lending is segmented. The size and type of
project may determine how your project is
handled in terms of negotiation, underwriting, approval, closing and servicing. Your
project may need to be processed through
several groups before it is completed.
Other institutions may take a more
hands-on approach to lending. Commercial loan officers work one on one with
their clients. They make sure that nothing
falls through the cracks and are involved in
every aspect of the loan process: consultation with the investor, negotiating terms
and conditions, financial statement analysis, underwriting and presentation, decision-making, closing the transaction, and
servicing the client after the closing.
Why is it beneficial for business owners to
work with lenders who focus on building relationships?
By opting for the hands-on approach, you
will have the opportunity to work with a
relationship manager who will take the
time to understand your business and
financial needs. Relationship managers are
involved with a project through the entire
process. They represent a business to the
bank for purposes of loan approval and
other matters. Also, they will retain loans
in their portfolios rather than handing
them off to another associate. This means
you can rely on the same person who originated your loan to answer questions or
address concerns later.
Does this type of relationship allow the
lender to be more flexible?
Because of segmentation, the loan process at some financial institutions tends to
be more transaction-oriented with defined
processes and parameters for decision-making. The overall situation is not always
evaluated. The client either meets the qualifications designated by the bank or does
not. Also, the lender/originator does not
have any significant involvement in the
underwriting and decision-making process. He or she is there to help collect information and prepare the required paperwork, but then (like the borrower) the
lender/originator has to wait for the loan to
be processed through the system and for a
decision to be made.
However, a lender who serves as a relationship manager really gets to know you
and your business. The lender is involved
and drives the process, so it is more personal. Your loan application is more than
numbers — it is a ‘case’ that the lender follows until a solution is provided — which
is the loan. Additionally, this type of lender
has more flexibility and is positioned to
assist you if the situation changes and
some of the original terms and conditions
of your request need to be revisited.
Besides flexibility, what are other ways a
bank relationship benefits the borrower?
A relationship-driven lender is looking at
your overall financial picture. Besides providing more customized lending solutions,
a relationship manager can help you meet
financial goals by offering suggestions on
other products and services that meet your
needs. Because the lender is in tune with
the dynamics of your operation, he or she
can also serve as a trusted adviser.
What is your advice for business owners
seeking a lender?
Consider how you want to handle your
project. Are you looking for a relationship,
or do you want to simply complete a transaction? Do you want to consult with a professional before applying for a loan? If so,
choose a bank that will align you with a
relationship manager who can serve as a
resource and advocate during the process.
Finally, think about the future. This probably is not the last loan, financial product
or service you will need. Is it important for
you to work with the same lender? Consistency is the key to building a strong
banking relationship. The familiarity of
working with someone you trust — and
who will be there to anticipate your business needs — can be invaluable.
JEFF SKOCIK is vice president and manager of Commercial Lending for Brentwood Bank in Bethel Park, Pa. Reach him at [email protected] or (412) 409-9000.
