For the many years I have been in banking, this period is perhaps the most difficult to be lending money to businesses and consumers. Credit officers are under pressure to protect their banks from losses. With that pressure comes tougher structures, higher pricing and tougher approval processes. The loan officer is caught in the middle, between a rock and a hard place. The loan officer is responsible for winning deals, cross-selling, and retaining the existing business. On the other side, their primary responsbility is to protect the bank from taking losses. These two forces often collide together with the bank usually winning. The win comes at a huge price, as the management team and investors of the client feel slighted and wronged. Eventually, the market will turn and the client will soon have the advantage of multiple banks with multiple bids for its business.
If you are a business seeking a loan, keep these ideas in your head when you see a proposal and what is finally approved (if your loan is approved). More thoughts to come on lending from Peter B at Happy Chappy!
