ABCDs for a Beginning Lender

Last week, we held our first small class at the Pactola mothership.  Our topic was “Beginning Business Lending”.  We had the honor of spending a day and a half with ten fine lending professionals.  We plan on holding more of these classes in 2019 and are interested in hearing from you regarding any topics that would be of an interest to you.

As we worked through the class, we had a question pole where any question that may be not related directly to the subject matter at hand was placed.  We would spend time answering some of these questions throughout the class.  One question made me ponder for a long time after folks were on their way back to their respective homes.  It was, “What advice would you give to a beginning commercial lender?”

I thought back to one of my first training sessions I sat in after I left the retail and mortgage sides of the bank.  I took copious notes as I learned concepts like debt service, cap rates, and margin.  If older me, were to travel back and sit down with younger me, what would I say? 

I think I would keep it rather simple, like learning your ABCDs.

Always be learning.  Commercial and agricultural lending is something that you will never be able to reach the apex of knowledge.  That is one of the most wonderful things about this industry.  There are also so many sources to learn from each day.  Industry resources, peers, others in your institutions, and your customers can all be great teachers if you listen and read.  I remember the first time I learned how to calculate a property value using the discounted cash flow model.  Another time, I learned from a lender to the furniture industry, features to determine a good quality chair from a bad one.  Another example was when I finally understood what basis is in commodity prices.  Each of these are small samples that can add up to a lifetime of knowledge you can gain if you humbly commit to learn.  Ask great questions and then be prepared to listen. 

Believe you can do it.  Doubt is a powerful killer of dreams.  You must believe that your customer knows he is better because he is working with you.  This starts with a quiet confidence in your skills and knowledge.  I contend this also goes beyond yourself and requires faith because no matter how much you know, you will never have a full command of all the answers. 

Commit to the right things.  Sometimes, success comes from what we can say no to, in order to select something that is best.  Learn to stick to your core values and principles.  Then commit to going to the correct circles where your skills as a person and a lender can make a difference.  And while you are at it, don’t forget to commit to excellence each day.

Don’t give up.  This is perhaps the most important lesson.  Success is a walk it is not a flight.  It requires putting taking one step at a time, putting one foot in front of the other.  At times, the temptation of discouragement will be great.  You may find it easy to give up.  It is during those times that continuing to move forward is necessary if you want to enjoy future successes as a lender.

One of my favorite quotes on persistence was taught to me in my freshman year in college. Calvin Coolidge was a member of the same fraternity I was a part of.  Coolidge stated this about persistence.  “Nothing in this world can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not: the world is full of educated derelicts. Persistence and determination alone are omnipotent.”

Sometimes the best pieces of advice are simple.Mastering these simple concepts can lead to great rewards in lending.