One of my best friends loves to give me grief about being a banker. And sometimes we bankers deserve all the grief my friend can dish out. His favorite tease is the old one about the umbrella which never gets loaned out except on sunny days. Sometimes lending can feel like that, but my friend really needs a better analogy to describe the complicated interplay between borrower and lender.
Rather than seeing bankers as stingy umbrella vendors, my experience suggests we are more like tool rental companies. We offer an essential tool to enable our borrowers to accomplish tasks, we want our tools returned without damage and we need to make a profit to keep our rental company healthy in the long-run.
The “money tool rental” is different for each user. For an individual, our rental tools might purchase a home, buy transportation or unlock the door to higher education. For a business, our rental “tools” enable and increase business production capacity. Short-term production capacity is boosted by funding inventory and labor costs until accounts receivable are collected. Longer-term production capacity is boosted by funding necessary equipment or sometimes the business’s warehouse, manufacturing or office space.
Tools are a funny thing. They can be invaluable at best, and a dangerous, dysfunctional contraption at their worst. Most tools require experience or at least a good user’s manual and the willingness to learn. Tools can also be broken by misuse or sloppy work. Sometimes conditions change and the wrong tool can be useless or even damaging. And the wrong tool in the wrong hands can be a recipe for disaster. As “money tool” renters, we bankers need to do our part. We need to understand our customers’ needs and match them to the right tools. We need to make sure our renters understand how our tools work, how our rental agreement works and what the rental costs are. If we ignore any of those responsibilities, we will create problems for our renters and for ourselves. Just ask the home lending industry.
As a “tool renter” to the small-medium sized business market, my goal is to find clients in need of “money tools”, to understand their needs and to offer the proper match to those needs. When I do that, and when I communicate everything they need to know about using and properly returning the tools I have done a good job. Now if you will excuse me, it’s raining again in Seattle and I need to grab my umbrella.