To Understand and Make Peace With Your Banker

I previously outlined how a borrowing relationship is like a marriage and adapted keys from Dr. Emerson Eggerichs’ book, Love & Respect: The Love She Most Desires; The Respect He Desperately Needs.  Let’s look at cultivating understanding and brokering peace.

  1. Cultivate Mutual Understanding: The borrower can enhance the relationship by understanding the perspective of the lender during negotiation.  For example, your loan might require higher reserves due to bank regulatory requirements.  The higher reserves cut into the bank’s profit margin.  To compensate for a lower profit margin, the bank may ask for a higher interest rate or fee structure.  A borrower’s demand for market pricing on a non-standard loan could frustrate the negotiation and create unrealistic expectations.  Your body language can also influence mutual understanding during the loan negotiation as explained in this excellent article in Forbes.
  2. Broker Peace: Be careful about drawing battle lines too quickly.  My experience is that the borrowing and lending relationship thrives on diplomacy and tact.  If positions get hardened too quickly, the possibility of reaching a mutually agreeable solution is diminished.  Remember, a good agreement is one in which neither side gets everything they want and feels they left something on the table.  If one side believes they got an unfair deal, the chances for an escalating dispute or deal fracture later are greatly increased.

Cultivating understanding and brokering peace are essential for a productive borrowing relationship.  Next post we’ll take a closer look at loyalty and promoting your banker.


About Michael Shelton

Your Business Coach Facilitating Delegation and Work Group Engagement Michael Shelton has over twenty-five years of business and military accomplishments, including extensive experience with one of the largest, publicly traded real estate investment trusts (REIT). He is a qualified business coach with assignments in cross-functional work group management, strategic planning, unit leadership, joint venture acquisitions, executive education, mentoring, training and merger integration. Michael has accumulated best practices for building committed work groups from more than $4 billion of capital markets transactions and commercial property development. He served as a commissioned officer and helicopter pilot in the U.S. Army, and earned his MBA from The University of Arizona. Michael has served as a major conference panelist and is the author of Cash Flow Rich, Winning Ways to Evaluate and Finance Real Estate. Today, he helps business owners get more work group engagement as President and CEO of Shelton Business Services, LLC in Scottsdale, Arizona. Disclaimer: I don't offer investment, legal or tax advice. Talk to your broker, accountant or lawyer for investment, tax and legal help. I might own stock in the companies I mention on-line. My posts, tweets and other on-line activity are my personal thoughts and don't represent my employer or company.
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