Be Better at Business Lending in 2024

Knowledge is key to success in business lending, according to Jim Devine, co-founder, CEO and chairman of Hipereon, a financial training company based in Washington state, and lead faculty member for CUES’ School of Business Lending, which starts April 1.

In this latest episode of the CUES Podcast, Devine says his aim with the school each year is to “make sure ... that everybody going out the back door has the foundational skills that give them confidence that they can take a set of financial statements from a prospective borrower, do a diagnostic assessment of the performance of that business, link it to their debt service coverage policies and guidelines, and determine whether” they’re willing, as a fiduciary, to let their members’ money fund the credit request.

In this show, Devine demonstrates that his own knowledge of business lending runs deep—both in terms of the structures and procedures credit unions need to have in place to do it well and the impacts that the economy and other factors have on credit unions’ success with it.

The show opens with a discussion of the business lending environment and what to look out for in 2024, including interest rates and the repricing of loans. The show also gets into the importance of using analytics well to best determine if credit should be granted to a particular applicant.

“You’re not trying to figure out a way to say, ‘yes,’” Devine says in the show. “You're trying to figure out whether yes is the right answer. And again, in order to do that, you have to have the analytical skills to do it.” 

Devine also makes the case that credit unions need to consider how to broaden their business lending portfolios to also include loans for business operations.

“People are going to have to start looking at the feasibility of figuring out how to make more operating loans to operating businesses and not have such a huge concentration risk in a loan portfolio linked to commercial real estate,” he says.

The show also gets into:

• Key fundamentals of business lending, such as “If the cash don’t flow, the loan don’t go” and also the importance of researching whether a business has more than one source of possible repayment.
• More details about what’s covered in the School of Business Lending
• How Devine plans to personalize this year’s school more than ever

Links for this show:

• Transcript
• School of Business Lending
• Goldman Sachs article about business lending at smaller financial institutions