Enlisting Branch Staff to Build Commercial Business: Virtual CUBG Conference

After working in the banking industry for 28 years, where he ultimately focused on commercial services, Mike Mucilli joined CU Business Group and noticed a common mistake being made among credit unions – confining their business services program to their main office and not expanding it into their branches.

Speaking to attendees of the virtual conference hosted by the Portland, Ore.-based business services CUSO Thursday, Mucilli said it makes sense to bring branch staff up to speed on commercial lending because first, a credit union’s branches hold its best salespeople, and second, business owners have been groomed by banks, which have been in commercial services much longer than credit unions, to visit local financial institution offices for their banking needs.

“What I’ll hear from credit unions is, ‘We’ve hit a plateau. We need to expand our volumes. What do we do?’ So I have them get the branches involved. It’s the best way to grow volumes and reach more members,” he said.

Here are some of Mucilli’s tips for credit unions that want to turn their branches into mini business services hubs:

1. Recognize the similarities and differences between consumer and commercial. In some ways, assisting a business member is a lot like assisting a non-business member – you must listen carefully to the member’s needs and match them with the product or service that fits best. But commercial products bring more complexities. For instance, unlike with a typical consumer loan, a commercial loan’s terms can be negotiated, so they should only be discussed loosely up front. Also, an auto or residential mortgage loan can be closed quickly, but it’s not uncommon for a commercial loan to take months to complete. The staff member should keep detailed notes on a business member to refer to throughout their journey, Mucilli said. He also recommended staff members create their own pipelines for business loans to pair with notes on each.

2. Focus on building relationships. The branch staff member should be the main point of contact for a business member, not a credit analyst at the institution’s headquarters. They should be proactive about staying in touch with the member and keeping the lines of communication open. If appropriate, the staff member should attend the business owner’s loan closing (if it’s for a new commercial property, for example).

3. Master the interview. While prospective business loan borrowers must submit number-heavy paperwork as part of the application process, the most important aspect of vetting a new member is conducting an effective interview. Mucilli recommended asking open-ended questions like, “Tell me about your business,” and covering how long they’ve been in business, what the loan is for and the amount they’re seeking, if they have existing debt and if so what its terms are, if the business has other owners and – venturing into cross-selling – what their business checking account is like. “The interview is where you’ll uncover whether you really feel comfortable lending that money or not,” he said.

4. Don’t waste their time. Find out what kinds of terms they’re looking for, and if your credit union can’t match those, allow them to move on. Also, some business owners seeking credit are under a time crunch, so ensure that your turnaround time works for them before moving forward. Dragging out a deal that doesn’t meet the business owner’s needs has the potential to damage your credit union’s reputation, Mucilli noted.

5. Learn how to create an LOI. A letter of intent, which is not binding, expresses an institution’s interest in making a loan to a business owner if they meet certain requirements, and can be used as a negotiating tool by the owner at other institutions as they shop around.

6. Adjust your communication style based on the business owner’s personality. “If they’re really particular on rates and numbers, they’re probably the analytical type, so you need to talk in their language and be specific, leading with dollars and cents,” Mucilli said. “If you can read personalities, you’ll close a lot more deals.”

7. Stay in touch and cross-sell. After a loan closes, business owners are much more likely to need additional financial products than, say, a consumer who just obtained a residential mortgage loan. It’s important to stay in contact with them and offer other products and services that may meet their needs, including personal banking products and services.