Author Archives: Charles Green

The Client’s Experience Is Important to Your Success

By Charles H. Green

Around my household, we have a phrase that’s pulled out to describe everything from bad drivers to finicky consumers ahead of us in line. It uses an invented adjective, “peoply” (pronounced ‘pee-pul-ee’) to describe the frustrating way some people just are, and is interchangable to explain away a long list of complaints. Anyone causing you heartburn, they’re just being ‘peoply.’

One funny thing about clients is that they can be very ‘peoply.’ For example, just because You Promisedyou tell them how easy their loan is to get approved, or how fast it will close and be funded, they get all upset if it doesn’t really work out that way. What do they expect, particularly since you knew better all along?

Of course one problem is lenders who can’t complete with good service, intuitive analysis of a prospective deal, or effective relationship building, and instead resort to saying anything to win the business, like “we can fund this loan in 2 days,” knowing that it’s not true. That often blows up in their face, but worse, it rains reputation damage down on a lot of peers who don’t deserve it.

Lenders would do better to honestly try to understand the customer’s journey and think about how your engagement with them can actually help them along the way. For you, originating loans is a job, and some of you take it more seriously than others. For the small business client, getting third party funding may be the difference between making good on their own investment, or being stuck in a dead end corner of the economy for years. It’s very serious business.

So what can you do better? Spend a few minutes in every client sales process to take note of what’s happening to the client and try to understand–and respect–their side of the process. Learn what steps your customer has to go through to respond to your requests and try to recognize their pain points. Grasping how difficult it is to comply with your bank’s requirements is the first step to valuable insight into their experience–and perhaps ways to improve it.

Develop a checklist for the application process that can serve as a client road map for how things generally unfold , the potential roadblacks that can appear, and a realistic timeframe that spells out how long approving, completing due diligence, and funding the loan will actually take.

While the client may not be happy with your reality, at least you’ve established expectations that you can meet and they won’t be disappointed over. It may be one of the best experiences they’ve had in a long time.

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THE Worst Mistake Made During Sales Process

By Charles H. Green

Nobody’s perfect and we all have had moments in a sales situation where we either said something we wished later we hadn’t, or didn’t say what needed to be said, both of which could have turned the tide into a more successful outcome. But since we don’t live life looking back, we learn those lessons and move on to another day to try again.

These pages have chronicled many ‘to-do’s’ and ‘not to do’s’ but this week I’m going to Oops!jump the track and describe what I believe is the absolute worst mistake anyone can make in the sales cycle with a prospective buyer.

That pronouncement automatically puts me out there in a defensive posture, since there are plenty of things that can go wrong. Given the right circumstances, there are a number of interchangeable mistakes that can sink a prospective deal, any one of which might feel like the worst, given how the process goes with a particular prospect.

But I believe one mistake stands head and shoulders above all as the worst. And I’ll acknowledge here and now that lots of folks make this mistake, yet still win deals, despite the fact they’ve clearly been lucky or are dealing an unconcerned or impatient prospect.

The mistake? Failing to present a clear value proposition.

Let’s face it: all money is green. In the eye of the buying public, bank one equals bank two. Your company spends a lot of money trying to distinguish itself in the marketplace that’s already full of “friendly, hometown, community bank folks,” et al but the most successful banks are obviously doing a much better job of it.

But distinguishing the company is not enough. Every lender must also be able to articulate clearly and succinctly exactly why the lending prospect should be borrowing your company’s funds, and not the competition’s. What’s makes doing business with you decidedly better than that other Bozo calling on the same client? How can you get the job done visibly better?

If you can’t quickly create a clear picture of the enormous value of getting the deal down with you in the eyes of your prospect, let’s hope that your competition is soft. Finishing second is not very rewarding and will quickly get old.

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Statistics Be Damned: Women-Owned Businesses Defy Conventional Wisdom

By Charles H. Green

A common theme in business and finance circles is that women are underrepresented, less capitalized, and face an uphill battle when it comes to building and financing their small businesses.  While the statistics may bear this out to some degree, the women-owned business horizon is markedly better than the picture painted by this conventional data.

I recently had the opportunity to speak with Kristi Norton, Marketing Manager at Women EntrepreneursDealstruck, an online small business lender, to learn more about how women are bucking the trend of negative perceptions in lending to women business owners.

“It is true that though women represent slightly over half of the U.S. population but they only own 30% of the businesses,” Norton stated, “It is also true that they employ approximately 6% of American workers[1] and that their sales are 25% of those of their male-owned counterparts.[2]  However, it is also true that women owned businesses are growing at a rate of 1,200 per day, far outpacing the growth rate of those owned by men, and one and a half times the national average.[3] Four out of ten new businesses are now owned by women.”[4]

Since women own a greater share of enterprises that are in high growth service industries, like education and health care, they have a great deal of opportunity for continued expansion.

Women-owned enterprises do tend to be smaller than those owned by men, but small is mighty.  Businesses owned by women had revenues of nearly $1.5 trillion last year, up nearly 80% since 1997.[5]  In addition, women-owned businesses added more than a half million jobs to the economy between 1997 and 2007, a time when the overall job rates plummeted.[6]  Clearly, the economic impact of businesses owned by women is more significant than common statistics would indicate.

Small business lenders see similar trends in their borrowers–women tend to seek smaller loans than men.  Norton explained that Dealstruck sees the same thing among its borrower base.  “After controlling for a variety of factors including industry, revenue size and FICO score, we find that our male borrowers, on average, request $10,000 to $20,000 more than our female borrowers.  So, while women-owned businesses are performing as well as their male-owned counterparts, they are taking on less risk.”

But these smaller loan amounts are in no way inhibiting motivated women with the drive to build successful enterprises.  If you tell these women that the statistics are against them, they will show another perspective.  Just ask Winter Taylor and Leanne Abraham, two of Dealstruck’s borrowers who are living proof that, while woman-owned businesses may take less risk, they are flourishing.

Following a lucrative career in retail,  Winter Taylor left the workforce when 12 hour days began to take their toll during her pregnancy.  She soon launched  Mommy Makes the Money, LLC, an eCommerce reseller of consumer goods. After initially self funding, Taylor secured business financing from an online lender, enabling growth of nearly 30% that year, with 2014 revenue surpassing $500,000.  Taylor feels that the potential for her business is even more significant.   “The one thing that makes me optimistic about my eCommerce future is that I’ve been very willing to try new things … I really feel like I’ve just hit the tip of the iceberg.”

Another Dealstruck customer, Leanne Abraham, owner of Premierhire Executive Search and Staffing has gone gangbusters with her business, with 300% revenue growth in 2013 alone.  Her staffing agency continued to expand and Leanne realized she needed capital to weather the ebbs and flows inherent in her industry and sustain continued growth. “Since we started with Dealstruck, we’ve almost doubled our business again, and we’re able to continue to grow with them as our lending partner.”

“Many of the companies owned by women are smaller, making business financing a challenge,” Norton explained, “When a company is too young or too small to qualify for an SBA or traditional bank loan, small business owners have historically had few options.”

Since the economic downturn in 2008, traditional banks have shifted focus to small business loans in excess of $1 million.  But the majority of small businesses seeking capital are looking for less than $250,000, leaving a large unserved segment.[7]    It is estimated that $550 billion of small business financing is left unaddressed by traditional banks.  A new generation of online lenders has filled that gap.

“Alternative lenders like Dealstruck fill a void by offering a variety of financing options to provide access to capital for companies that otherwise would have no means to obtain money to finance growth.  Currently, women-owned businesses make up approximately one fifth of Dealstruck’s accounts,” says Norton, “And while this is a growing number, even within the Dealstruck portfolio, we are proud to report that we are already outperforming the SBA average.”[8]

Growth in the woman-owned business sector of the economy continues, despite historic statistics that tend to be one-census too old.  But for every report stating that men own two-thirds of the country’s businesses, women business owners cheer that they control a third.  A mighty third.  And that’s growing.

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[1]  Small Business Administration, http://www.sba.gov.

[2]  “Women Owned Businesses in the 21st Century”, U.S. Department of Commerce Economics and Statistics Administration for the White House Council on Women and Girls, October 2010.

[3] “High-Achieving Women-Owned Firms Increasing Faster Than Expected”, American Express Open Forum, July 9, 2013, https://www.americanexpress.com/us/small-business/openforum/articles/high-achieving-women-owned-firms-increasing-faster-than-expected/?linknav=us-of-topics-findmore-stateofwomen-ownedbusinessesreport-article.

[4] “Women Launching 1,200 New Businesses a DAy, New Research Shows”, American Express Open Forum, August 13, 2014, https://www.americanexpress.com/us/small-business/openforum/articles/women-launching-1200-new-businesses-a-day-new-research-shows/?linknav=us-of-topics-findmore-stateofwomen-ownedbusinessesreport-article.

[5] Julie Weeks, “Women-Owned Firms Springing Up All Over”, American Express Open Forum, May 18, 2015, https://www.americanexpress.com/us/small-business/openforum/articles/women-owned-firms-springing/?linknav=us-openforum-search-article-link5.

[6] “Women Owned Businesses in the 21st Century”, U.S. Department of Commerce Economics and Statistics Administration for the White House Council on Women and Girls, October 2010.

[7] “Joint Small Business Lending Survey 2014”, Federal Reserve Bank of New York, February 17, 2015.

[8] Small Business Administration, http://www.sba.org.

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6 Ground Rules to Manage Problem Loan Applicants

By Charles H. Green

We all know there are many crazy situations with people that have to be managed during the process of originating business loans. One of my frequent vexations over the years when so frustrated, was to exclaim “what a great business commercial lending would be, if you just didn’t have to deal with clients.” Obviously, that’s a futile and pointless gripe, but all too true on many days.

Problems–specifically client problems–are part of the deal. Some of the people who Rulesapproach you are dishonest, insincere, misrepresenting something, devious, forgetful, ignorant, inattentive or otherwise can be just a pain in the @ss. As much as we want to do deals and want to help people, we also want to make the best use of our limited time.

The best way to deal with these kind of folks varies as widely as the many different kinds of problems with the people that you will encounter. But in my experience, I’ve found these six rules are useful at least as a starting point for you to confront the problem (i.e. the client) head on, and let the chips fall where they may.

Lay down the ground rules – One of the best ways to stay on the right path to success is through nice, but specific, communication from you in your first conversation with the clients about the mutual expectations of your engagement. They may want and qualify for a loan, and there may be several competitors within reach, but you are there and ready to go. Your engagement comes with expectations of their sincerity, candor, and responsiveness if you are to be able to succeed. Spell that out to up front.

Get communications in sync – You can’t be glib or abbreviated about what you need, and they need to know that you expect to only ask for something once. If you have to beg for information that helps them get a deal done, you might as well get your four year-old to handle the deal (they’d be on the same maturity level). If the client doesn’t respond in a meaningful way, give them a verbal warning once, and then move on.

Confront the lie (intentional or otherwise) – We’ve all had someone verbally represent something that we easily discovered was false, incomplete or misleading. Don’t let that go unnoticed or addressed. Let them know that you can’t do your job if they don’t provide you with good information that reflects the truth. If it happens again, fire them.

Offer to resign – Maybe you become aware of the impatience the client has with you–sometimes two people just don’t jell, and there’s really no one to blame. Recognize that impasse, if it exists, and visualize how it might affect the success of the deal. If you think it will be hard to win loan approval due to the conflicting personalities, offer to resign and refer them elsewhere.

Challenge the competition – One of the really irritating situations I recall is having someone with a truly weak deal always reminding me every ten minutes that there are plenty of other banks “who would love to do this deal.”  Regardless of the strength or weakness of the deal, I didn’t let anyone get away with that kind of pressure or negotiation. Let them know that they are free to take up this conversation with someone else at anytime, and you’ll move on to the next client.

Fire the client – I’ve offered this suggestion before, but to summarize, if you have a combative client that won’t get you the information you need, won’t respond to your calls, criticizes what you do–based on what you know–or tries to obfuscate their information, fire them. They’re not worth your time or risk to your reputation.

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Networking is About Talking, Not Crowing

The new year is here and no doubt, your calendar will soon be refilled with a stream of regular meetings, luncheons and after work events that will put you in contact with other persons who might be a new business opportunity, or at least refer you to one. While some people thrive in these events (or at least enjoy them), others break out in the hives just thinking about all that hand-shaking and chit-chat.

The larger point for me is that if you are going to do it, love it or not, you might as well Networking Groupmaximize your potential to get some good out of it. One frequent mistake by many, particularly those who are proud of how well they can carry on a conversation, is to flood the wrong people with too much information about their favorite subject: themselves. There’s a better approach I’ll suggest as to when enough grandstanding is enough.

Even the most influential people, who often lead conversations at large gatherings, leave plenty of time to show interest in what others say. By making it a two-way conversation, they allow for recognition of the mutual importance of both parties, rather than being a classic bore that dominates the conversation.

We’ve all been trapped by someone explaining in minute detail their resume, from being the high school swim team captain all the way to leading production during the last quarter. Yawn… It never occurs to them that possibly–just possibly–you aren’t in the market to buy whatever they’re selling.

People trying to impress strangers by reciting their résumé are missing the mark. You see, that other party is there trying to advance their business, not yours, and by dominating the conversation with answers to questions no one asked, they are not listening, but rather working on an escape plan.

Other folks are generally attracted to another person’s warmth, conveyed by eye contact, a warm, neutral expression and a smile, rather than to their competence. Whatever you do may either not matter to the other person, or be very important. But if you don’t establish a common bond ahead of answering that question, you’re probably wasting your time.

You’ve heard it before: people do business with people they like. Thus, if your endless braggadocio drives them to the punch bowl, they’ll leave with scorn for you, whatever you do, even if they are looking for someone with your skills.

Instead of being so anxious to talk about yourself, find out what they need first and try to help them with what they’re searching for, like recommendations, resources or introductions. You may find an opportunity to be of service on that list. That approach will win more admiration among other than making the president’s club. And its that kind of affinity that will win you leads, referrals and recommendations better than rattling on about how great you are.

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SBA FY’16 First Quarter Loan Approvals Continue Climb

By Charles H. Green

Recently SBA published its monthly “Lending Statistics for Major Programs” as of December 3st, already marking the end of a full quarter of FY 2016 loan approval volume. This report provides rolling year-over-year loan approval statistics for the 7(a) and CDC/504 loan programs broken down by the respective categories of policy-targeted penetration.

The 7(a) program continued to progress into FY 2016 with a robust showing of total loan New SBAapprovals of $5.35 billion, a nearly five percent jump over the same period at 12/31/15 ($5.1 billion). Even more stark is to compare this volume to FY 2014, which began with a 17-day federal government shutdown. This year’s volume in more than 34 percent ahead of the YTD loan totals recorded that year ($3.9 billion), although leveling off from what the first 60 days of this FY were comparatively.

The number of approved 7(a) loans was 14,752 through the first three months, almost six percent ahead of the number in YTD FY 2015, and 39 percent ahead the same period in FY 2014. And interesting that the YTD average loan size is $363,094, reflecting less than one percent dip from last year, which is already less than just 30 days ago.

A graphical illustration of all SBA monthly loan approvals is found at Capital Views.

The spiked growth in approved loans for less than $150,000 appears to be pausing over the first quarter, down to only 1.3% growth to $515 million, from $508 million approved YTD in 2015. Still a far cry from the growth over FY 2014 (+43%), but slowing now. Partially to blame is that the average loan size fell over five percent to $57,766. It’s the third consecutive year that SBA is waiving guaranty and lender fees on loans less than $150,000.

Meanwhile the total volume of approved CDC/504 loans has ticked up considerably in the first quarter over the beginning of the previous two years, approving over $1.20 billion of debentures through 12/31. That volume is more than 18 percent ahead of the program’s start to FY 2015 at $1.01 billion.

And consistent with performance over the past fifteen months with this loan program, the average debenture size continues to grow. At the end of December, the YTD average climbed to $847,100, 17% over the YTD figure in FY 2015, which averaged $725,484.

Total YTD approved SBA program dollars are $6.55 billion through 16,169loans. The average loan size overall is $405,511, which slightly higher than last year. See total program approval rates here.

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Anirudh Sarwal Disbarment Sought for Bank Fraud

By Vijay Daundkar

A disciplinary petition has been filed against lawyer Anirudh Sarwal by the Commission for Lawyer Discipline asking the Texas Board of Disciplinary Appeals to disbar Sarwal. The board has alleged that Sarwal committed a serious and intentional crime under the Texas Rules of Disciplinary Procedure. A hearing on the petition is scheduled for Jan. 29, 2016.

Sarwal was recently convicted of conspiracy to commit bank fraud. The compulsory
Anirudh Sarwaldiscipline proceeding may result in Sarwal losing his law license. The petition states that Sarwal pleaded guilty to conspiracy to commit bank fraud in the U.S. District Court in Dallas in 2012. He was sentenced to 57 months in federal prison, two years of supervised release and restitution of $13.46 million after being convicted on April 15, 2013.

According to a criminal information entered against Sarwal on June 27, 2013 which is included in the petition, Sarwal and co-defendant Fred Alden conspired to commit bank fraud during the period of August or September of 2008 and June 2010 while trying to secure a $39 million construction loan. They made false and fraudulent statements to two banks in order to obtain the loan to develop an eight-story office building in Austin.

Sarwal and Alden were required to have at least $5 million in liquid assets at their disposal to be able to avail the loan. A fabricated bank statement for an investment that didn’t exist was submitted to the banks showing that Sarwal, the principal of East Avenue Office Holdings in Austin, and Yeo, had more than $7 million.

The duo had already drawn over $33 million on the loan when the bank foreclosed on it between January 2009 and June 2010. The $39 million construction loan was approved partly based on the fake bank statement.

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Cay Clubs’ Fred “Dave” Clark Convicted of Bank Fraud

According to the feds, the now-defunct Cay Clubs Resorts and Marinas, founded by Fred “Dave” Clark, carried out a $300 million Ponzi scheme. A federal jury convicted Clark of three counts each of making a false statement to a financial institution and bank fraud and one count of lying to the U.S. Securities and Exchange Commission and obstructing its work.

Clark provided artificially inflated property values and false information Fred Dave Clarkto banks for obtaining mortgages for buyers of the condo-hotel units. He later used the mortgage payouts for the benefit of himself and his company. Cay Clubs converted existing resorts in the Clearwater, Las Vegas and Keys into luxury condo-hotels. Buyers were told that they would get the benefit of future rentals.

Over 1,400 investors and the banks lost around $300 million when the firm failed, unable to perform promised renovations and meet financial commitments. Cay Clubs had began using new investor funds to pay leaseback returns to earlier investors by April 2005. Clark used the Tavernier-based Cay Clubs as his personal bank account and extracted $22 million from it from 2005 to 2007 and used the money to buy planes, cars and waterfront homes.

As the company that once had interest in dozens of businesses went down hill, scores of employees lost their jobs. Dave Clark is facing the trial for the second time. The jurors deadlocked in the first trial and it ended in a mistrial. His wife was acquitted recently.

Kelly Jackson, special agent of the Internal Revenue Service, said that Clark stole the hard-earned money of the investors and preyed on them. Panama expelled Clark when he was arrested there in June 2014 and extradited to the U.S.  A Honduras bank account in which Clark had transferred $2 million was frozen by the government.

Cay Club executives Ricky Lee Stokes of Fort Myers and Barry Graham pleaded guilty to the charges and were sentenced to five years in prison. They were also ordered to pay $163 million back to the investors. Clark himself is facing decades in prison. He will be sentenced in federal court in Key West on Feb. 25. Federal Judge Jose Martinez will preside over the hearing.

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Happy New Year–Set Your Priorities Right (and Realistic)

By Charles H. Green

It’s 2016 already and the beginning of the new year. If you haven’t done it already, shrug off all the lamenting and regret about what didn’t happen for you last year, what you didn’t achieve, and move on. There’s too much work to be done to make 2016 your best ever, so done spend another minute whining about the past. It’s over.

My first tip for commercial loan business developers this year is to spend a few minutes My Priority-whatever my client needsthinking through and setting your priorities right. You have a life, and business development is part of it, but it’s not all of it. You need to plan to live the rest of your life and reward yourself with something else for a healthy part of the waking hours.

Another factoid it’s important to remember is that your priorities are not probably not shared with anyone else. When you’re working on achieving your goals, be sure not to let them splash onto others who rightfully have their own priorities.

What do I mean? Maybe you plan to be the top producer in your shop this year, and the tangible number you’ve set is $20 million of new loan production. That’s great! But remember that the prospective client that your company has invested plenty of dough to attract has their own priorities, and you have to respect that regardless of how it affects your own. That means you may find it necessary to do a smaller or more challenging deal than you want, but after all–it’s your job.

I’m reminded of a former insurance salesperson who was referred to me, and from whom I bought disability insurance coverage from a few years ago when I needed it. I’ll out the company–Northwest Mutual–because they apparently have a sales culture that dictates that their representatives are ‘to make the sale at any cost,’ to which I don’t subscribe.

I paid monthly premiums on this policy for probably five years, and after two face-to-face calls in the early stage of that policy, the agent resorted to an annual phone appointment to stay connected to my financial needs that he was hopeful to manage. That worked best for me, because I really tired of seeing him in person.

But on the fifth year, our annual fifteen minute telephone call ended with his telling me, “I don’t think this account is profitable enough for me to schedule an annual call.”  I was stunned at the sheer stupidity of his bedside manner, not to mention the inflated value he had of his own time.

I told him not to worry, I’d change it. I immediately called another agent friend, and transferred the coverage to another carrier at a slightly smaller cost. Whatever the NW Mutual agent earned on that annual phone call disappeared forever, along with the chance that the company would ever have a shot at the many opportunities to manage other insurance policies and investments I’ve bough/made since.

Don’t make the same kind of mistake with clients based on your own priorities at this moment, which may not exactly match the priorities of your client. Remember who’s paying who.

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Bank President Poppi Metaxas Sentenced

Poppi Metaxas, the former President and CEO of Gateway Bank, FSB (Gateway), was sentenced to 18 months in prison for conspiracy to commit bank fraud. The announcement was made by Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Christy Goldsmith Romero in Central Islip, New York. Metaxas had pleaded guilty to conspiracy to commit bank fraud for playing a role in defrauding Gateway bank of over $1.8 million following the aftermath of the financial crisis.

Metaxas was found guilty of hiding repossessed assets of the bank and Gateway Bankhigh numbers of non-performing loans during the financial crisis. Gateway Bank had to seek TARP funds as a lifeline after it faced a cease-and-desist order from a federal banking regulator because of the weight of its toxic assets. An intricate criminal scheme was devised by Metaxas and her co-conspirators to sell the repossessed assets and non–performing loans of the bank.

CEO Metaxas, however, didn’t tell the board that the 25% deposit made by the purported buyers was, in fact, bank’s own money. She also hid the fact from the bank’s books prompting one director to say that the sale was “too good to be true”. She later claimed that she didn’t want to enrich herself and that all she wanted to do was to help the bank stay in business by appeasing the regulators. She spent the next year covering up the fraud.

Metaxas sold the bank’s mortgage loans and non-performing assets to three entities in exchange for $15 million during the period when the TARP application was pending. As a result of her activities, Gateway entered into a sham loan agreement with its largest mortgage lending client, Ideal Mortgage Bankers Ltd. d/b/a Lend America.

Metaxas gave false testimony to the board of directors in October 2009 to hide the fraudulent ‘round trip’ nature of the loan funds. The Federal Bureau of Investigation, SIGTARP and the U.S. Department of Housing and Urban Development Office of Inspector General are investigating the case. Christopher L. Nasson, Assistant United States Attorney is the prosecutor in the case.

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