6 secrets to getting the best deal on your commercial loan. (part 2 of 3)

Negotiating with most lenders on your loan terms is possible if you do it right. Here are some tips for doing it right.

3. Be organized & Punctual.At the risk of sounding like a Nag this is a big thing for Loan Officers. The amount of work a Loan Officer has to expend to find a good loan and do the necessary work to put a formal loan request together is immense. Borrowers who are unorganized and not delivering the needed information in the promise time can sometimes be seen as Borrowers who don’t seem really motivated to get the loan.

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With loans, like many things in life, first impressions are lasting impressions. Projecting an image that you are organized and serious will go a long way to setting yourself apart from the rest. Showing that you are organized and punctual will also put your loan request on the top of your Commercial Loans Officer’s “things I’m going to focus on today” list.

To help this process along, have at least an initial package ready to go.  This package should include the last 3 years of tax returns and a personal financial statement. If you are an existing business please also prepare a year to date P&L. If your business is a startup have a detailed business plan (please see our link on how to do your own business plan for free).

When your lender asks you for additional information give it top priority.  You want to develop the mindset that you are going to give the same commitment of time and energy as if you just started a part time job. Make requested items important. If your lender asked you for additional info at say 4PM that day try to have it waiting for them (in their e-mail) when they walk into work the next morning.

4. Make lenders aware that you are going to move your whole banking relationship. Shopping outside the area for a product or service makes sense for lots of things. Indeed Amazon.com would not be as profitable as they are if this wasn’t the case. What many business owners find surprising though is that when it comes to business financing, local banks and credit unions crush the outside competition.

Why? Local banks normally can give business customers a much better deal than out of area lenders because of all the revenue streams a new business relationship can mean to a bank. Besides loan income, local lenders can make money from business owner’s checking accounts, merchant card services, possible lock box services, and investing needs. The more aggressive lenders also targets the business owner’s employees for their bank needs. When you add all the profit streams together the pricing a local lender can offer on their business loans will be much better that an outside lender who is forced to price their loans solely on the revenue that their loans can generate.

I saw this firsthand when I worked for a bank that did a loan for a church. One of the stipulations Church Leadership agreed to was to fully support the bank and allow the bank to attend an upcoming church service. During the service Church Leadership got up and spoke to its membership of how important the bank was to the Church in helping in their time in need. Church Leadership asked its members to please move their banking relationship to this bank. The bank had employees at the Church ready to open the church members’ accounts and the end result was a slew of new and profitable banking relationships that justified the bank’s good pricing and decision to approve the Church’s loan.

When working with your lenders I recommend from the start to let each lender know of your intentions to move your banking relationship. Make copies of your deposit accounts and merchant card service statements so they can see for themselves how valuable your potential business is.

Your Loan Officer will be able to use your provided information during their weekly loan committee meetings when they explain to Senior Management the overall potential profitably of your new relationship.

For part 1 of 3 please visit us at http://tinyurl.com/ohxvd2z