When you get a tougher deal done for a customer you’ve had to fight for, it’s a pretty great thing. You’ve helped a client that needed someone to dig deeper than some ugly history and really help them when they need it most. And more than likely you made a really nice little pop on that deal too! But far too often, you might pass on tougher deals just because it feels like far too much work for far too little reward.
That’s just silly.
One of your best competitive advantages is that you are not aligned to any single lender’s “credit box”. So when a tougher credit with a story and some assets walks into the office, you are in a unique position compared to the competition. Here are 5 recommendations for success working tougher deals:
- Why is the credit challenged? So there’s a tax lien, a recent BK, a divorce. Whatever the issue, they are often ways to get around it as long as you know what the “it” is. From there, make sure there is good equipment (and plenty of it) and a little bit of cash to help out.
- The sun will come out…. After you are behind the issues and understand the assets you can work with, develop a really clear explanation how the new equipment purchase or refinance can help the company out of a tough spot by adding to working capital or revenues
- Imagine you are investing in the business and the ownership. If they are stuttering and stammering when you ask them questions about their future or the opportunity in front of the business or the plan looks really amateurish and thrown together, that’s not great. If you wouldn’t consider investing in their future, how can you ask a lender to do the same?
- Get the lender to jump in. A good asset-based challenged credit lender should be in the game with you. If you’re sweatin’ the work load…stop. Find a partner that will work the deal with you.
Is it more work for you than the average “flow” deal. Yup. But the increased earning power usually follow and the recognition you get from the customer will raise your profile for more “flow” deals down the road.
We make the challenged-credit deal…not-so-challenging. In fact, we give you direct access to our experts as an extension of your team to help work with the customer, dig deep for the story/assets and create a solution. If you ever want to talk about a deal with strong assets and weak “everything else”, give us a call.