TIPS FOR COMMERCIAL BANKERS
Ralph Abbott
I Help Real Estate Investors and Business Owners Attain Financing When Your Existing Bank Says No
This is a great article I came across that can help all bankers...
The tech bubble in 2000/2001 and the housing bubble in 2008 started those recessions. Who would have imagined that a virus could be the catalyst for the next recession; yet here we are, on the precipice. With so many rippling effects on businesses, between the coronavirus and what’s going on in the oil industry, it’s hard to imagine there won’t be a significant impact on economic growth.
As individuals, we’re told to mitigate the risk of contracting the virus by washing our hands and practicing social distancing. Businesses, too, are looking for ways to mitigate risk which is why we’ve started seeing many implementing work-from-home programs.
Lenders need to be diligent, too, and mitigate the risk to their portfolios. That’s why this is a good time to take a look at your client base to understand who is impacted now, or most likely to be impacted in the future, by current events. Tightening credit to marginal clients, planning exit strategies and implementing exit strategies will mitigate risk.
Under "normal" circumstances, bankers routinely look at the financial health of each client’s company to ensure that they still have a bankable deal. When they start to question that status, a monitoring process begins. It’s at that time, that they should also be looking at how they can exit the deal if it comes to that. And that includes looking at the collateral to see how it’s performing and if it can generate enough to pay off the loan. These steps apply under current circumstances, as well.
Ideally, bankers can work with slipping businesses to turn things around and keep the deal. But especially in these uncertain times, those who have prepared for a client’s exit and start exiting clients before circumstances prevent it will have an easier time.
At the first sign of trouble, bankers would be well-served to start looking for an exit strategy and identify their options. If an asset based lender is an option, pick up the phone and call Ralph Abbott at 614-339-4255 or email me at [email protected].