See Also:
External Sources of Cash
Other People’s Money
Due Diligence on Lenders
Don’t Tell Your Lender Everything
Finding The Right Lender

Is It Time To Find A New Lender?

I was meeting with a business adviser last week named John and he asked me “When do you think it is in the best interest for a company to find a new lender?”

Determine Location On Lender’s Food Chain

I told John the first thing a company must determine is where they are located on the food chain of the lender. It may be hard to believe, but some lenders may not want their business. If the company does not realize the lender’s feelings and chooses to stay, the lender will take their business (money) until they realize they are being over charged and leave.
John then said “What you are saying is the lenders may not value some business.” I said that is right, and as you know, companies normally deal with a lender that makes the process faster and or easier. I then asked John “How many of your clients have done any due diligences to determine if the lender is going to help them meet their personal or business goals?” He looked a little funny and said “None that I know of.”
I said that is normally the case. When your client is talking to the lender, they need to determine if the lender is really listening. In some, if not in most situations, the lender is listening, but not about your needs. The lender may be listening for selling signals to seize upon the opportunity to offer you some product or service you really don’t need or want.

Fee Income

Lenders have diversified their services and are very interested in fee income. Fee income is defined as the income a lender receives without taking any risk. Checking account maintenance fees, loan closing fees, ATM fees, etc., meet this definition. Your client’s business may need some, if not all of the services offered, but is the lender asking questions about the company’s needs, or just selling their services?
Your clients should realize that lenders do not have their best interest in mind. Lenders are in business to make money, just like your clients. I have had lenders tell me they do not want to offer solutions that would reduce costs to their customers because they would loose their fee income and reduce their profits.
Your clients must remember to make sure the lender is listening and understanding their needs. Additionally, your clients should understand, the best lender may not be the fastest and easiest to deal with.