In both business and banking, “No” is an ugly word. Businesses like to say “yes” to customers and close deals. Similarly, banks want to say “yes” to their clients and approve requests for financing. However, not every business meets the requirements to get approved for bank loans, and some business clients have reached the limits of allowed financing based on their size, financials, or industry. Loan turndowns are never the desired outcome for anyone involved, but there are solutions available to banks whose clients don’t fall neatly into the “approved” category.
Understanding the Needs of Business Clients
While most banks provide business clients with loans, sometimes traditional financing is not what is needed. Additionally, business clients may not even be aware that other programs exist which are more tailored to their needs. Sometimes it takes some digging, but banks need to understand their clients’ businesses, their needs, and their goals. Traditional loans don’t quite fit the bill if a client would benefit more from leasing equipment, or wants terms like 100% financing, or aged equipment. A more common issue is that the financial aspect they are trying to improve is the very thing keeping business owners from getting approved for traditional bank financing. Existing debt, outstanding receivables, little to no equity or collateral can all lead to turndowns for business clients.
Instead of loan turndowns, banks can offer their business clients solutions that offer workarounds to maintain and strengthen banker-client relationships. The key is working with other organizations that specialize in funding solutions which are relevant to your business clients who may fall outside the requirements for traditional loans. Equipment financing, asset-based lending, invoice factoring and more can be offered to clients who would otherwise experience a turndown. Even industry-specific lenders can offer solutions for those business clients who serve a very specific market, such as energy services, real estate portfolios, or manufacturing.
Building a Bigger Portfolio
Finding the right lending organization to add programs to your client offerings requires trust and ethical practices. Banks need partners who can offer solutions that fall outside of standard loans, but also work to preserve the relationships between bankers and business clients. If a business client receives a turndown, they will likely seek out new relationships with other banks. The right partner will work to help the client strengthen their credit and send them back to the bank, reinforcing the banker-client relationship.
At Derix Capital Finance, we provide a wide range of funding solutions to businesses. We also have partnerships with many banks so they can offer a wider range of programs to their business clients. If your business clients are seeking funding, but don’t quite meet the requirements for the loans you offer, contact the team at Derix Capital Finance and expand your offerings today.