Main Street Monday — Credit Approval: Two Groups, One Goal

June 22, 2015

By Tom Wallace
Coomentator, Main Street Monday

The world press recently carried numerous stories of flooding in Tblisi, including photos of a group of men attempting to herd a hippopotamus back to the zoo. This struck me as a painful metaphor for the credit approval process at the worst. I am not sure who was in greater discomfort, the mud splattered sods trying to herd a hippopotamus or the hippopotamus, despite the hippo having the unfair advantage of having a tranquilizer dart stuck in him?

Why does a process in which all parties have a common end, occasionally descend into being such a slog?

The “hippo herders” only want the hippo back in the enclosure and all things being equal, the hippo is reasonably OK with that. Two groups, one goal.

Perhaps because the credit approval process involves several parties and a goal that is only conditionally in common, the process gets a bit more complex? The borrower only wants the loan if it meets their needs; the lending officer only wants to make the loan at certain pricing points; the credit officer wants adequate underwriting assurances or no loan; and the SBA only wants a loan that is consistent with the program’s legislative intent.

Part of success, or at least survival, in the SBA Trade, is acknowledging the legitimacy of both the various parties involved and their needs. “Acknowledging” implies communicating, and hopefully successful communication leads to a reasonably happy hippo, back safely in the enclosure. After all, nowhere in the SOP or the CFR is the use of tranquilizer darts contemplated.

Good Morning from Main Street Monday, and welcome to the task at hand.