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Recession? The 3 ‘B’s of handling problem loans… Part 2

In Gerald Dent‘s April 2008 RMA letter (he is the RMA chair and EVP of Credit Administration of Zions Bancorporation) he continued with his lesson on ‘Fundamentals’.

See this post about the first ‘B’, Be timely.

Be proactive.
Time is both your friend, and your enemy. He suggests you weigh your alternatives and move forward.

If you are newer to lending, or to business lending, get some help with this. I remember clearly when I was new in public accounting and one of my clients was struggling. One of the partners of the CPA firm asked me,

“Do you think they can pull out of this?”

I have to tell you, I had no idea. But since he asked and I did not want him to think I did not have a clue, I did not say what I should have said…”I don’t know how to evaluate that.”

So if you are at all concerned, admit you are over your head and get some advice from a more experienced lender. Here is what I’d ask:

  • What should I be looking for?
  • How should I have a proactive and helpful conversation with my borrower?
  • What are the options here at the bank if and when a business borrower I am responsible for gets into difficulty?
  • With the economy weakening in some sectors and geographic areas, are there additional services we are providing to our business customers that can help them make good business decisions? …and help me strengthen the relationship?

If you are a ‘junior’ lender, what questions would you ask?

If you are a ‘senior’ lender, what questions do you wish your newer lenders would ask?

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at, she speaks at banking associations on risk management, lending and director finance topics.