8:08 AM, 1st August 2018, About 3 years ago 2
Did you know that commercial lenders have three main categories of manager called Hunters, Farmers and Retailers?
This is very relevant if your business is dependent upon knowing which commercial lenders are hungry for business. Before I explain, please allow me to introduce myself. My name is Cliff Verrill, I’m a commercial finance broker and previously worked with Mark Alexander (founder of Property118.com) when he ran The Money Centre. We have remained very good friends.
I’m a member of the National Association of Commercial Finance Brokers (NACFB) and my current firm are sponsors of Property118, having supported the community with over £20,000 of investment in 2013 alone. You can read more about me on my Member Profile.
Now back to my explanation ……
Retailers – these are bankers who sit behind their desks waiting for you to walk into the bank to ask about funding for your business. Like most bankers these days, they have very little discretion over lending decisions. Most “retailers” also have other jobs and double up as “farmers”
Farmers – these people generally manage existing relationships with the banks existing clients, hence being called farmers. They are generally targeted on increasing the income a bank earns from a base of clients. With experience they get to manage larger accounts and are occasionally called upon to support retailers.
Hunters – between 2008 and early 2012 this species almost became extinct. They are the bankers whose sole task is to find new clients to lend money to. Their targets are based almost entirely on the amount of money advanced to new customers of the bank. They are not tied to any branch and tend only to call upon NACFB members such as myself. They don’t manage relationships and don’t get given walk in clients. Their sole purpose is to hunt for business in the broker market, hence their title. Once the lending is completed they pass their new client to “farmers”.
The key to being a good commercial finance broker is to network with the right Hunters. I say the right ones as there no point playing golf every week with a Hunter who’s already made his targets for the year. Their credibility amongst the credit committees, which tend to sign off most lending deals these days, is also of paramount importance.
A very good example of how these relationships are so important can be explained in a recent case I’ve completed. My client had approached his existing bank with a proposal to purchase an additional business. As it happens this one was a care home but I’ve had very similar experiences with owners of HMO’s, hotels, pubs, offices, shops, pretty much every type of commercial business which needs property that you can think of. My client was geared to 70% LTV on his existing business but could raise cash to buy the additional care home by remortgaging his buy to let property portfolio. As it turned out, he didn’t need to do that. I approached one of my Hunter contacts who worked for the same bank he was already with and had recently declined to finance his proposal. That very same bank which had declined him funded 100% of the purchase price of the additional business. He didn’t even have to remortage his buy to let portfolio to raise funds. You may be wondering how this could have happened. Well it came out, after the event, that my clients existing relationship manager hadn’t presented a case to his credit committee for nearly two years. Apparently he had completely lost touch with what the banks new lending targets were! Make of that what you will, I look forward to reading your comments on that point.
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