What Happens When Banks Diddle? Why is Your Loan Taking So Long?

I know this is probably going to “ruffle some feathers,” but I believe it is a question that needs to be asked… Now, I know that all banks are being subjected to a massive increase in the number of “eyes” who are reviewing their loans, but give me a break. Just because they are being reviewed more often does not mean that it is a “bad loan…” The last time I checked, I don’t think the auditors are running the banks! They are only evaluating them.

I also want to clarify that I am not talking about loan situations where the Loan Officer is waiting on the arrival of a new financial statement. That makes a lot of sense. In fact, it is clearly logical. I’m talking about scenarios where, in spite of the difficulty of a borrower’s industry, they are still able to attain profitability. Nonetheless, their bank still keeps its finger on the “Hold” button. Why?

Often, it is explained that we need more “clarity…” Really? It looks fairly clear that these are the times when borrowers need the ongoing support of their lenders, not a bureaucrat who cannot make a decision. I spent a number of years on the line, making loan decisions. No one said it was easy, but that is why bankers get paid, isn’t it?

If they are worried, they should exit the credit. Why leave it hanging around, hoping for a financial resurrection? Give the borrower a deadline to improve or move out of the bank, i.e. find another lender. You owe it to your shareholders. If it’s workable, then move forward and give the borrower a greater chance to succeed. Here’s why.

For a borrower who is being delayed, they are caught in a conundrum. First, they don’t know if or when the loan is going to be approved, so they wait, instead of finding another alternative solution to their challenge. This hurts their results. Additionally, they get frustrated and start to lose their focus. Frankly, this can lead to poor management decisions on the part of a borrower.

You know the old saying, “When you are up to your eyeballs in alligators, it’s hard to remember that the original objective was to drain the swamp.” As a result, they start to think short term only, instead of focusing on the benefits of not just surviving, but also thriving and hitting their long term objectives. That, my friends, is no way to run a successful business.

Overall, nobody wins in these messy scenarios. Borrowers stress needlessly and tend to make poor business decisions or, worse yet, not make any decisions at all, choosing instead to operate by default. Lenders then can get strung out financially, too. Ultimately, getting the right information needed and then moving forward with a proactive plan is what I consider Next Level Thinking! I welcome your thoughts and comments.

If you would like to learn more about similar topics and the tactics our Clients have used to improve their outcomes, as well as what applications of these lessons you can make in your business, please join us for our next Success Strategies Mastermind Group series of quarterly workshops in July 2019. They are designed to teach more people the Finance & Strategy Concepts that I offer business people. Signups have begun, giving you the opportunity to learn these same concepts and meet with other producers who have overcome some of the same challenges you may be facing. Check them out at:

https://success-strategies.com/mastermind-group-for-dairy-farmers/

If you need assistance, please e-mail me at john@success-strategies.com or check out our website for many useful tools for your ongoing business evaluation at www.success-strategies.com. I’m always available for a follow-up call and wish you the best of success!