The relationship between a borrower
and bank does not end with the disbursement of a loan. After funding has been secured, a commercial banking
officer works closely with his or her back-room operating unit to make sure loans are
processed correctly.
“If the loan isn’t being handled properly,
there are all kinds of ramifications that will
carry through to the financials of a company,” says Carol Malecha, vice president of
loan servicing for MB Financial Bank in
Chicago. “They could have their loan not
accrue correctly, they could be faced with
an incorrect payment or they could be
reporting incorrectly in terms of their liabilities and assets.”
Smart Business spoke with Malecha
about what business owners should know
about the treatment of their loans, what
happens at the bank after a loan is
approved and the importance of communication among a bank’s operating units.
Beyond interest rate, what should business
owners know about the treatment of their
loans?
After everything is signed, sealed and
delivered, customers need to know that
their loan is going to be treated with the
respect that it was treated with when they
were taking out the loan. Customers
should ask what their bank does to ensure
that there is quality processing. Is the operating unit on board with the philosophy of
relationship banking? A banking relationship should be customer focused, not operationally focused. This should be evident
from the origination of the loan to the payoff of the loan.
After a loan is approved, what happens at the
bank?
After a loan is approved, the operating
unit gets the original, signed documentation. Then the loan is keyed into an operating system, called the host system. The
loan will get boarded with the proper interest rate, the proper term, the proper accrual, the proper billing instructions, etc. Once
it is in the system, the bank processes the
loan payments and disbursements through the life of the loan. This can be done in several ways: through account officer contact
or through item processing where the payment stub is sent with the payment. There
are many touch points in the bank that
have to work in harmony to provide the
quality service every customer should
expect and demand.
What role does a bank’s internal communication play in the loan process?
An operating unit communicates with
internal customers more than external customers. For businesses to run seamlessly,
there needs to be open communication
among the account officers, commercial
banking associates and consumer lenders.
For example, with complicated attorney-prepared documents, there has to be open
communication from the time the credit is
reviewed through the loan documentation
events because all of the terms of the loan
have to be clarified in order for the loan to
be put on the books correctly. A customer
should ask for examples of how his or her
bank’s operating units communicate with
each other because this is very important.
The more open the communication and straight-through the processing, the greater
the efficiency and quality of the service.
Who at the bank should business owners be
in contact with?
If it is a commercial relationship, a business owner should be in contact with his or
her relationship manager, commercial officer or commercial officer’s associate. This
makes the most sense because a relationship is already established; they know each
other and they have developed a rapport so
they understand what needs to be done. In
turn, they will communicate with operations on behalf of the customer. The goal is
to ensure that there is a common understanding of the loan on the back end,
ensuring the loan is managed in compliance with the terms of the agreement.
What problems can come from banks that
sell loans to the secondary market?
Loans to the secondary market do not
have an impact on the customer. The relationship between the selling bank and the
secondary lender — whether it be Fannie
Mae, Freddie Mac or another lender — is
between the bank and lender and does not
affect the customers at all.
What steps can a company take to fully leverage its bank’s products and services?
The best thing companies can do is develop a personal relationship with their
account officer or relationship manager.
They’re the professionals who know the
most about what the bank can and cannot
do. There is a wide variety of products out
there other than loans that can help a business, including new electronic processes
and online banking. A relationship manager should be aware of these offerings and if
his or her customer would benefit by taking advantage of additional products.
CAROL MALECHA is vice president of loan servicing for MB Financial Bank in Chicago. Reach her at (847) 653-2885 or
[email protected].
