Lenders, like bouncers, can be strange. Even when you’re dressed correctly, you’re behaving appropriately and the nightclub is half-empty, they can still find reasons to deny you entry.
But imagine if we understood the bouncer’s quirks and knew why they had rejected certain people in the past? Chances are, we’d be able to make some subtle changes to our clothing or our demeanour that would instantly get the bouncer on side. Same product, different packaging.
Lenders can be like bouncers: sometimes, they also find reasons to decline applications that we know should be approved. That’s why smart brokers do everything they can to present their deals in a way that instantly impresses and develop a reputation for quality submissions.
Sometimes getting applications approved is less about the fundamentals and more about how they’re pitched.
Of course, the fundamentals also need to be right but the key is to tick both boxes – to gather all the necessary facts and to present them in the best possible light.
There are four rules to follow if you want to get deals over the line for your SME clients:
You can’t be effective in dealing with small business finance if you don’t know how to read financial documents. You need to be able to look at P&L statements, balance sheets, tax returns, BAS statements and sales contracts and understand the bigger picture they’re painting. Perhaps they’re highlighting a brighter outlook for your client’s industry? Or maybe they’re exposing abnormal expenses or troubling seasonal variations in their cash flow? You can’t draw lenders’ attention to the key numbers if you don’t know how to properly interpret them. So if you don’t feel confident in this area, take steps now to improve your business finance literacy.
No two businesses are the same. So take the time to understand exactly what they do and how they make their money. It is also handy to know where they’re headed and the outlook for the industry in which they work. You’ll also need to get your head around their biggest costs, the size of their profit margin, the state of their cash flow – not only how they are now but also how they’re trending. That way, you’ll be able to submit a more sophisticated loan application.
Talk to the borrower’s key business advisers to gain deeper insights – their accountant, their financial planner, their business consultant. That will allow you to get a deeper understanding of the positives and negatives of the business, what could be potential snags in the data allow you to ask better questions when you’re speaking with the client and help you pitch the deal in the best possible light.
Your broker network can offer great advice on SMEs and help brainstorm different angles and solutions to consider. They can also share valuable intelligence about the quirks of each lender and what they are most concerned about currently. All that information can help you present loan applications in a way that mitigates the negatives and confront potential objections before they emerge.
Master both style and substance
By doing this you’ll not only get the best possible understanding of your client’s business, you’ll also get a feel for what makes each lender tick. That will allow you to give them the precise information they want – and in the precise format in which they want it.
Substance is always important, but it would be foolish to overlook the importance of style. Smart brokers pitch their deals in a way that makes lenders feel comfortable. The fewer reasons you give them to say no, the more likely they’ll be to say yes.
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