To a large degree, being a banker is about building and nurturing relationships with people who are seeking your assistance. With that responsibility comes the desire to tell your customers what they want to hear. That means that you will make every effort to get them approved for a loan with your bank. Even though ensuring customer satisfaction is important, in some cases it is in their best interest (and yours) to simply and swiftly let them know that they do not qualify. Saying “no” can be an uncomfortable experience for you and the customer. However, turning a customer down and offering them a viable alternative at the same time can make the experience better for both of you.
Helping Borrowers Achieve Their Goals
What is most important in helping small businesses is to do everything you can to help them achieve their goals. When the road to those goals is narrowed to only include a couple of lending options, a business owner’s ability to be successful decreases immensely. For that reason, it is better to inform them as soon as possible that they are not a good candidate for the loans your bank provides.
Your relationship should not end there. Once you have informed a borrower that they do not qualify with your bank, you have the ability to guide them toward alternatives that make more sense for their specific situation and that fit their borrowing needs. The sooner you are able to arrive at this point (by saying no), the sooner they will be able to proceed with other financial solutions.
Guiding Customers To The Best Financial Solutions
It may seem difficult to say “no” because it limits your ability to help your client and can be detrimental to the relationship. Your options are limited as to what you can say; raise more equity and thus give up part of the company, go to friends and family for personal loans, or worst case, shut the business doors. The good news is, there may be another solution. If a customer does not qualify for a loan and the potential to raise capital is unfavorable, it may be time to point them in the direction of a working capital lender.
Working capital lenders will approach the lending process differently than traditional banks. Instead of being primarily concerned with the business’ cash flow and historical results, a working capital lender will focus on the short assets of the company, such as accounts receivable and inventory. Because of how dynamic and quick-moving these short asset collateral pools are, a working capital lender performs ongoing monitoring to ensure the performance of the collateral. This approach allows many companies to borrow money through a more flexible solution when they may be unable to secure traditional financing.
Options from working capital lenders may include the following:
When you team up with a working capital lender like Virginia Commercial Finance, the potential for clients to achieve their goals is increased. In turn, you are able to keep more customers happy and maintain more long-term relationships.
To learn more about managing turndowns and alternative financing solutions, contact Virginia Commercial Finance at 804-897-1200.