Tip of the Week

 Know Your Customer – the lost art of the site visit

These days, it seems you can’t have a conversation with someone in our industry without the focus turning to something like “you won’t believe what happened this week!”  Inevitably you get a story about a borrower who the lender thought was “just fine” and suddenly they want to turn in the keys to the business.  As we’ve said before, these are interesting times.  In fact, they are not only interesting times, but they are challenging times in many respects – for everyone.  And let’s not forget our customers.  They’re not just a “servicing stream”, a number on the 1502 monthly report, or an ends to a means.

Customers are our lifeblood!  Without them, we don’t have a purpose.  We don’t have a job, we’re irrelevant.  Do we treat them with respect?  Do we check in with them from time to time (more often than annually or only when there is a slow payment?)  Do we really understand the art and science of effective site visits?  Hopefully, these aren’t just rhetorical questions but the kinds of questions you ask yourself and your team regularly.

Prudent lending prescribes site visits both on the front end and from time to time during the life of the loan.  Why?  Because common sense tells us that in order to have a healthy credit relationship between the lender and the borrower, you must know each other.  How can you really know them if you haven’t met them?  How can you anticipate future needs or problems if you don’t know their business?   The better you know your customer, the better the chances you’ll be the first to know if there is a problem.

SBA now requires site visits at time of origination on business acquisition transactions.  Apparently, too many deals have been done in the past where the lender didn’t even do a “drive by” to inspect what they expect, much less meet and get to know their prospect well.  Most prudent lending policies and procedures prescribe a site visit at origination AND ongoing, periodic visits to check in with the borrower.  We certainly coach our clients to build routine (at least annually) site visits into your protocols for relationship clients (defined as it makes sense for your culture).

In recent conversations with some of our valued clients, we’ve learned some interesting things worth sharing.   Apparently many loan officers are unfamiliar and uncomfortable with the notion of a regular site visit – a check in call with a borrower.  They say they feel like they’re intruding and feel the customers don’t understand the purpose of a visit from their banker, unsolicited.  The customer actually becomes wary of the “banker looking over their shoulder”. 

To us, this is a challenge that can be overcome with effective coaching.   We believe that lenders can take this challenge and turn it into an opportunity.  Consider the site visit a cross sales opportunity AND a prudent borrower maintenance process.  Teach your lenders how to have a conversation with the borrower so that it’s natural and understood up front, that ongoing communication is just part of the deal, and it’s in their mutual best interest.

At sbaAccess, we help our clients with many of these kinds of challenges day in and day out.  We can help customize an approach to address possible gaps in your process that will lead to more effective communication and comprehensive servicing of your SBA loan portfolio.  We can help you develop an approach to mentoring your colleagues so that worrisome customer meetings can become your “secret weapon”.  Besides being proactive and ahead of the curve when it comes to difficult news, you might just find some healthy referrals and cross sale opportunities with your valued clients.

Take the right approach

Brian Burke and Karen McHugh