By Charles H. Green
How many times does your answer to a client loan request begin with the words…”we don’t…” or “we can’t…” I know I got tired of those words, which, given the qualification needed to screen potential borrowers, meant that I was already into considerable time and effort spent just to get to the point where I could reply at all.
But even when the application reply was going to be positive, those words still permeated the conversation, doubling down on the several conditions, limitations and restrictions that would often accompany a loan transaction. And to be sure, many times this was in response to either cunning or unknowing queries from the borrower, such as “can you waive a personal guarantee?” or “do I have to provide collateral?” Those don’t count.
These latter situations didn’t bother me, but where I really cringed was when someone asked me whether they could get approved and funded in 2-3 weeks. In most businesses such a time request would be considered a reasonable request. For a small business owner seeking funding, this request was often tied to a critical time frame, given their business need or opportunity. But I was often compelled to say “we can’t.”
Why? We can both list a dozen barriers to a quick loan closing: internal pipeline, loan committee, due diligence, yadda yadda ya… And to be sure, much of that time involves third parties that we have little control over. But in reality, we could do better.
Have you ever thought about deal turnaround time as a competitive edge? It would require a culture change, to be sure, but instead of mulling over all the reasons why you can’t give the applicant an answer–and when’s its an approval, get them funded–in something less than four weeks.
It would require confronting a lot of people who have grown accustomed to saying “we can’t.” It would require infusing a large dose of “make it happen,” into what may presently be a more laid back shop. It would require getting your due diligence vendors–present or future recruits–to commit to a service level beyond what is generally offered today. But it could be done.
Once I took an application for an SBA loan for the purchase of a day care business on December 15th, and because the client was motivated to close, we did–on December 30th. Yes, we had to get the loan approved ($565,000), and a survey, environmental review, appraisal, SBA guarantee, title search, documentation….the works. And yes, it was over the Christmas, when people were coming and going for the holiday. The client even had to register a new corporation in this period.
But we made it happen.
Try it at your bank sometime. You might just find out how good you can be when you get the financing approved–and funded–when they need it, instead of however long you allow it to take today.
What do you think? Comment on this page or write me at Director@SBFI.org.