Your borrowers are your stock in trade; however, shopping around is a way of life for many Americans. Even a borrower who is content with your services could seek a better lending deal at any time. To prevent this, you need to develop your borrower relationships with strategies that will ensure they stay with you, rather than shop around.
Do Not Wait
Do not wait for borrowers to ask you about refinancing options or more borrowing opportunities. Interest rates are still low but may rise over the coming months depending on the economic outlook. And there is ample credit supply for borrowers with strong credit scores. Restless borrowers may try to seek greener pastures to lock in lower rates now in anticipation that they may rise more significantly in the future.
You also should not let a competitor beat you to the punch. Review your borrowers’ financial statements and look for those with high-growth, strong credit and high interest rates. These are your best prospects for refinancing or add-ons. Such borrowers might not even bother looking into what your competitors are offering – if you contact them first, maintain a long-term relationship, and make a fair offer.
Keep in Touch
Keep in touch with your borrowers regularly. Visit them in person, take them to lunch, or ask for a tour. Above all, return their calls and process paperwork promptly. Among the top frustrations borrowers experience when refinancing or applying for credit line increases is the excessive time it takes for lenders to process their paperwork.
In one instance, a borrower switched banks because the application with their existing lender was delayed for a month over a missing tax return. A simple phone call could have remedied the omission and possibly retained the borrower. Instead, the application sat in a junior lender’s inbox, and another bank got the borrower’s business.
Seek honest feedback from your borrowers and be sure to talk with all the decision makers in the business. Sometimes, the chief financial officer will be your best contact rather than the owner. Survey what they like and dislike about your bank.
Be a Referral Source
Sometimes it is not what you know but whom you know that counts. The best way for any professional services provider to beget customer loyalty is to become a referral source for value-added services. Strive to be the go-to person in your business community and encourage borrowers to come to you for legal, accounting, or even advertising referrals. Also consider forwarding relevant trade journal articles or emails to borrowers.
Networking evolves lenders from pesky outsiders to members of the borrower’s team. This keeps you in the loop when they face key changes and makes you irreplaceable. Plus, happy, loyal borrowers are more likely to return the favor and refer business back to you.
Streamline the Application Process
Do not make the mistake of treating new and old applicants the same, requiring them to jump through identical hoops. A long-standing business relationship and a handshake mean something in today’s business world.
If a borrower has a proven track record of timely debt service and a strong credit score, streamline the refinance and application processes as much as possible.
Give Them Reasons to Stay
Remember, generating strategies that help your borrowers feel they can rely on your level of service gives them much less incentive to look elsewhere. This way, you can retain your customers and maintain profitability, and they can keep an excellent loan officer — a win-win.