There is a question that is asked of every credit union after they have realized the importance of business lending to their membership. Business lending is one of the best ways to serve your membership and your communities. It truly makes a difference with establishing relationships that create employment, increase wealth, and fulfill the dreams of owners. In many ways, it helps the credit union take its rightful seat at the table of economic progress in the community, when new companies are discussed with local economic growth officials.
Once that decision is made on what you want your credit union to look like in relation to your area that you serve, the question comes up. It also is asked in shops that have seasoned commercial or agricultural credit departments at times as well. The question is, “Where do we find our next commercial relationship?”
You will note that I said, “where do WE find…” This begins with the recognition that commercial is much different than the consumer and mortgage lending credit unions do so well. It is common to utilize mass marketing, rate specials, Realtor days, or auto shows to generate quick, transactional loans. But commercial lending is much different. Mass advertising of anything other than to raise awareness that we offer this service, often has the result of bringing in the rate shopper or the relationship that has already been turned down with several other banks before it lands on your door.
Commercial prospecting is that in and of itself. It requires work to seek and develop good business relationships. At times, it will seem as though you need the patience of Job! One of my largest clients was a construction company that I called on for five years before we landed substantial business. Quitting along the way, which was very tempting, would have not yielded the desired results. Persistence in relationship developing is a good topic for another blog.
So, asking, “where do WE find…” is the first step in realizing that the journey into business lending is much different that the transactional nature of consumer.
Since business lending is based upon relationships, the starting point must be with your own membership base! Undoubtedly, you will have small business owners, landlords, and entrepreneurs as members to your credit union. This often can be the low hanging fruit as these people already know and like you. You also know them and may understand more about what companies may be a good credit fit for your institution. You understand the character of the owners.
This may seem a simple and obvious place to start. You may believe that all your members know that you are work with commercial and agricultural lending. But I continue to be amazed at how many long-time members of credit unions with seasoned MBL departments, fail to realize that their credit union does business lending.
Start with going through your membership list and identifying the successful farmers, business and property owners that are already working with you on the consumer side. Perhaps, some may already use you for business deposits. Now it is time to deepen that relationship with introducing them to your business department. It is also important, now, to not let the size or complexity of the deal intimidate you. Now is the time to listen and learn what the member’s need is. We also are a resource to help you.
With all other things being equal, people enjoy doing business with their friends. You may have already established deeper friendships than some of these businesses have with their local banks. It is time to deepen that friendship. It is also time to seek out new friends with successful business owners in your community that to not yet use your credit union.
We stand by to help and support you. Our mission is to facilitate your success in the commercial and agricultural lending markets.