Article by Roger Schlueter, MBA
There is a Difference Between the Bank Branch Manager and a Commercial Loan Officer! Lots of Banks are having their Branch Managers do smaller Commercial Loans. This does not mean they are trained in Credit Analysis, Accounting, or Loan Structuring. They are just at the bank branch every day and they sometimes know their customers. They will be told what documents to ask the customer to provide and usually pass this information on to some other Officer or to “The Underwriter”, to hopefully get an answer in a month or two. They will usually say, “I need the underwriter to approve this loan”. I advise my clients to ask for a Commercial Loan Officer to talk about their loan. This will usually be a young, new loan officer but a loan officer just the same. The loan officer should have some lending experience, if only by seeing what other more experienced officers are bringing to the weekly loan meeting. They will also have access to other more senior officers that will sometimes give good advice.
I had many borrowers that come to my office looking for loans, grants or lower interest. Sometimes they are working with a Bank Manager on their loan request and do not want to look for another bank because their Bank Manage told them the bank will do the loan, they just need more time. After about three months or more, they are decimated to find out that their loan request has been Declined by the bank. That is when they give up or contact someone like me to help them put together a Bank Proposal that can be presented to the bank. An experienced Commercial Loan Officer can usually tell a borrower whether their bank will approve a loan. The trouble is that the bank is suppose to log in the request and then, if they want to decline the loan, they need to have supporting information like Credit Reports or all the information for a loan request. I worked for a bank that one of the senior loan officers told me, “if you want to decline the loan, run the credit first and see if you can decline because of credit”. This is fine for the bank that may not want to do small loan requests but the borrower does not get a fair shake in the analysis of their loan request.
What usually happens when the Bank Manager looks at a Commercial Loan is they end up passing this information on to a commercial loan officer who has no real interest in the borrower or the loan. The “Underwriter” is a fictitious person that the bank uses to put the decision out of the hands of the Manager or Officer. They usually do not exist in Commercial Lending unless you are dealing with a very large bank that is sending the loan off to another office to be approved. The “Underwriter”, came from the housing market. The Mortgage Company or bank needs to sell the home loan off to Fanny Mae or Freddy Mac and needs the approval of the “underwriter” of these organizations.
In Summary, always try to talk to a Commercial Loan Officer to finance a Business Loan. Have the Personal Banker or Bank Manager finance the Vehicle loan, boat, or home improvement but always talk to a Commercial Loan Officer for any Business Loan.
Please address any questions or comments to this blog or email me at roger@rogerschlueter.com I also have a website at schlueterfinancial.com with more contact information.