W H IT E PA P E R

Think like an Underwriter. Act like a Seller.
Speak like an Advisor.
Understanding the Relationship Manager’s Rolein Business Lending SuccessThe Back and Forth of Business Lending
It’s a scenario that’s all too familiar.
Having met with a prospective customer several times, your relationship manager has prepared andtendered a loan submission. Your underwriters have begun their review, but quickly find that it’s lacking
the information they need to complete their analysis. They reach out to the relationship manager, seeking
clarification. The relationship manager reaches back out to the customer. A back-and-forth ensues, and thesales cycle begins to drag . . . and drag . . . and drag.
The underwriter is frustrated.
The relationship manager is frustrated.
The customer is frustrated—and worse still, beginning to question the relationship manager’s abilities.
What if there were a better way? What if your relationship managers had the skills—and tools—
they needed to better collaborate with customers, so that their initial submission included all of theinformation your underwriters needed to efficiently evaluate the loan?

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

2Though the exact numbers vary by financial institution, it’s no secret that a high percentage of businessloans are initially declined. Oftentimes, these declines are the result of inadequate or incomplete loansubmissions, meaning that qualified borrowers could be slipping through the cracks. Planning for andhaving robust conversations is perhaps the most important precursor to a successful loan submission,
but it requires know-how—and the ability to tackle the job from different angles.

One Job, Many Hats
The frenetic pace of business lending requires relationship managers towear the hats of an underwriter, a salesperson, and an advisor —often all
at once—just about every day.
Consider the attributes of underwriters. They’re curious, detail- oriented,and methodical. They must possess these characteristics, along withrobust credit knowledge, in order to determine whether a loan approvalis feasible. They evaluate trends in both financial performance and theindustry, and determine the best value- added solutions based on financial
statements and other data. They are the defenders of the financial
institution’s loan portfolio.
And what are the qualities of an effective salesperson? Most managers
look for confidence, credibility, and the ability to uncover a customer’s
needs and priorities. In addition, relationship managers need to be able
to identify the best solution for the customer, and present the proposedsolution as a “win-win” for both the customer and the financial institution.
Relationship managers should think like an underwriter when preparing forand executing calls, while simultaneously using their sales skills to remain
customer-focused.
How does a lender make that happen? That’s where the role of the advisor
comes in. Most small business owners do not have the knowledge, skills,
or experience to evaluate their businesses objectively. By using their credit
analysis skills, relationship managers can provide a great deal of value totheir customers. By asking the right types of questions, they can gain theinformation needed for a successful first-time submission while providingthe business owner with valuable financial insights.

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

At Moody’s Analytics, weoften conclude our skills
application labs by asking
learners what they’ll
do differently going
forward. The response
we most often hear fromsalespeople?
“I have to think more likean underwriter.”3

Telling “The Story”
At many financial institutions, the underwriter never speaks to the customer, placing the onus of telling thebusiness’s story on the relationship manager, who must be able to describe the customer’s strategies, goals,strengths, and weaknesses (financial and otherwise). If the story is incomplete, the relationship manager
may be asked to reach back out to the customer, or the request may simply be declined altogether.
The ability to tell a business’s story is not a skill that can be learned overnight. It takes training and practice
to know how to gather the right information without “grilling” the customer.
To master this skill, relationship managers must develop boththeir sales skills and their overall business acumen, which
requires training, quality coaching, and exposure to manydifferent types of businesses. In the fast-paced world of small
business lending, where relationship managers’ activity goals
may include two or more face-to-face calls a day, the more
effective the relationship manager’s calling skills, the better
they are able to paint a complete picture for the loan approver.
Effective calling, which is key to meeting sales goals andimproving approval rates, begins with pre-call planning.

Embracing Pre-call Planning
Pre-call planning is essential. Many relationship managers skip
this step, however, because they think it takes too long, orbecause their organization doesn’t provide them with quality
planning tools. Skipping pre-call planning or using the wrong
tools can set lenders up for failure before they even speak withthe customer.

“I’ve seen pre-call planners that areso complex, relationship managers
feel that they simply don’t have thetime to complete them. The simpler,
the better.”
Laura Beaver
Business lending expert andMoody’s Analytics facilitator

The right tools will prompt relationship managers to prepare
the best open-ended questions to ask.
Planning thoughtful questions ensures that the customer knows the lender prepared for the call, and thatyour organization cares about the business. Pre-call planning should prompt the relationship manager toreflect on how a potential customer competes in the marketplace and what it needs to do to continue to besuccessful. This builds credibility and helps the lender begin to understand the story behind the financials.

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

4By preparing just a few thoughtful questions, the relationship manager encourages the customer to open
up about their goals, concerns, needs, and progress. If the relationship manager actively listens, they will beable to formulate specific follow-up questions based on the customer’s answers. Active listening is crucial tounderstanding the business’s story and relaying it to underwriters.
Financial institutions should resist developing a pre-call planning tool that is too complex andtime-consuming. The over-engineering of a pre-call plan lowers the utility of the tool, meaning
relationship managers won’t use it—and may form bad habits in its place. Pre-call planning tools must
be user-friendly and readily accessible.
“I’ve seen many pre-call planners that are so complex, relationship managers feel that they simply don’t
have the time to complete them. The simpler, the better,” said Laura Beaver, business lending expert andMoody’s Analytics facilitator.
Relationship managers need to customize just two to three questions to incorporate the industry,
economic, and business outlook and have a robust conversation with a prospect. From the customer’sperspective, the first call should feel like the beginning of a relationship, not the beginning of a
product-pushing expedition.
Encourage your relationship managers to set goals and to identify a customer-focused business purpose forevery call. Some examples of calling goals include obtaining additional information and setting a follow-up
appointment.

An effective pre-call planning tool will help the relationshipmanager gather essential information about a prospect’s:

1

History and mission

2

Short-term and long-term goals

3Strategies for differentiating itself from competitors

4Plans for the future, given the industry and economic outlooks

5F inancial results, including what’s driving them and theimplications for future performance

6

Resources needed or concerns

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

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Ask, Listen, and Follow up
To generate successful loans, relationship managers must
be able to efficiently and effectively tell the business’s story
to the underwriter, and simultaneously build credibility withthe customer.
Asking smart questions about the business and its financial
performance builds the relationship manager’s credibility,
because it positions them as an advisor. People do businesswith those they like and trust.

A skilled relationship manager
possesses an awareness of thecustomer’s level of financial
sophistication and maneuvers theconversation accordingly.

Knowing which questions to ask depends on where in the sales cycle the relationship manager is. Whenmeeting with a prospect, asking questions about the business’s operating cycle and cash flow will help
the relationship manager get to know the business and will naturally lead to more questions about what
the customer does well—and perhaps not so well. Questions should be straightforward and easy for thecustomer to answer. It is important not to use “bank speak,” which could intimidate the customer. A
skilled relationship manager recognizes the customer’s level of financial sophistication and maneuvers theconversation accordingly. Even a business owner with low financial acumen can tell you the “whys” behindthe numbers if the conversation is conducted properly.

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

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Business owners can likely speak to the trends in their sales and profits, but they may not be able to fluently
answer questions about margins. So it’s important to ask questions they can answer, such as:

1
2
3“How do you know what price to set for your products?”“How do you grow sales and also achieve the profits you’re seeking?”“How do you manage your operating expenses?”

By framing questions in a way that’s easy for the business owner to understand, the relationship manager
is able to uncover more—and better quality—information, which in turn helps them better understand thebusiness’s financial performance and explain it to the underwriter. Actively listening and asking pertinent
follow-up questions helps relationship managers assess the strengths and weaknesses of the potential
borrower. It also resonates with customers when lenders share stories of similar companies they haveworked with in the past.
Asking effective, smart questions is a critical skill that requires a disciplined approach, using repeatablestrategies and tools. It is a skill that needs to be developed and honed with time, coaching, and the desire
to improve.

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

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Providing Financial Insights
Relationship managers are the most successful when they are able to develop high-level financial insights
about a business’s ability to sustain its cash flow, so that its loans can be repaid as agreed.
They must be able to apply their technical knowledge to both their customer conversations and theirloan submissions. They must also be able to draw high-level conclusions about a business’s financial
performance and advocate for the customer in an objective and credible way.
In our experience, relationship managers’ biggest skill gap is the inability to have an informative financial
conversation with the customer and convey that information to underwriters. Relationship managers
should be able to perform simple calculations based on financial statements or tax returns and use themto develop insightful questions for the customer. A best practice is to use the operating cycle to ask about
the changes in the financial ratios. Understanding why the trends occurred will help determine if they willcontinue in the future. Past performance is often the best indicator of future performance.
The most important jobs that relationship managers can perform when handling credit requests aredemonstrating their knowledge during conversations with the customer and underwriter, and being able
to understand, defend, and help predict ability to repay. It’s also important to be able to explain thoseassumptions and beliefs to the underwriter, who will be approving the loan, and the customer.

Relationship managers must have certain credit skills, including:• A basic understanding of business and personal tax returns• The ability to determine if a business will be able to repay debt in atimely manner• The ability to assess a business’s debt level• The ability to assess how efficiently the business owner handles cash needed
for the business and for personal living expenses and debt

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

8Growing the Relationship
Relationship managers must regularly contact their customers
to maintain ongoing relationships. The most vulnerable
relationships are those that are being targeted by yourcompetitors.
Often one of the first questions a relationship manager asks aprospect is, “When was the last time your banker reached out
to you to discuss your needs?” Encourage your relationshipmanagers to protect their relationships with regular
touchpoints, so that your customers won’t be able to say,
“Actually, it’s been a long time.”
It’s also important to treat difficult conversations— and evendeclines—as opportunities to further build relationships(or, at the very least, to preserve the potential for a futurerelationship).

Sharing the decision•

Describe how the solution meets thecustomer’s specific needs•

Check for understanding•

Resolve objections•

Foster a consultative relationshipOftentimes, the approved solution is different from the one
the customer requested—perhaps it’s a smaller loan withstricter repayment terms. Because the customer may not havequalified for the loan requested, the ensuing conversation canbe difficult. The lender must know how to acknowledge thecustomer’s disappointment, acknowledge and explore thecustomer’s objections to the approved solution, and work to
overcome the objection and move forward.
Relationship managers also need to be able to share adverse
decisions without alienating the customer or closing the door
on a future relationship. When a loan is denied, relationshipmanagers must be able to recommend steps that the customer
can take to improve the odds of an approval in the future, and,if appropriate, offer other solutions. If the decline is delivered
professionally and consultatively, many customers may even be
thankful for the sound advice.

Moody’s Analytics | Think like an Underwriter. Act like a Seller. Speak like an Advisor.

9Improvement is a Continuous Process
Relationship management is a challenging role that requires training, perseverance, and experience. A
solid understanding of the ways in which credit and sales skills intersect during customer conversations
will benefit both the relationship manager and the financial institution, resulting in more efficient lending
processes and higher approval rates.
These skills take time to build, though. Continuous improvement begins with an effective, consistent
training program that includes learnable and repeatable strategies and tools. Keep in mind, however, thatthe strategies and tools required to successfully provide credit solutions aren’t taught in traditional sales
training courses, so it’s important to consider training partners that recognize the unique skills requiredof lenders.
And remember, training is just the starting point! Following training, relationship managers need practicalexperience and quality coaching to master their skills.

The Moody’s Analytics Difference
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credit, banking, and training experts to ensure that our learning solutions provide your organization
with targeted content in multiple delivery formats.

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