What are the criteria for a good career in the lending business?
Career is something which a person makes through which he/she can earn a living. In other words, the person uses all opportunities to progress in achieving his desire and at the same time receive some remuneration for the services rendered. You must have seen many professionals progressing in life in various subjects, but has anyone ever thought of a career in lending finance? Well even though it is risky, the subject is fascinating and challenging one. Lending finance is giving the funds to the borrower. The borrower may be either an entrepreneur or an individual. There is a belief that one can lend the funds only if he has sufficient funds with him. Well, it is a fact, but when you are working in some company dealing with funding activities, I feel having the capability of dealing with the borrower is the most important one.
Typically, an entrepreneur borrows finance to meet his operating expenses that they have on a regular basis. So, therefore the relationship between the lender and the borrower will remain as long as the company exists in case the borrower is an entrepreneur. But this is not the case of an individual borrower. The individual may borrow funds to meet some significant expenses which come once in a while like the construction of a house, purchase of a vehicle, educational costs of the children which include sending children abroad, medical expenses like major surgeries, etc. Any borrower gets relief when he/she returns the finance taken from a lender. It becomes entirely accurate in the case of an individual. But for an entrepreneur, he/she will always require funding. So, the take and give process continues till the necessity ends.
The whole business of funding is exciting and challenging. So, to meet the standards of a good career in lending business, try to consider the following criteria.
- Financial institutions: Even though the primary objective of any financial institution is earning some profits by funding activities, the policies followed by an institution say banks are a little bit different from other financial institutions. Banks typically have certain limitations up to which they can take the risk. Above that level, they don’t take any chances. But financial institutions other than banks (even though governed by the Government policies) always take a risk and to some extent are beneficial to the borrower. So while opting for funding as a career, one has to decide which line he/she wants to go- whether it is banks or other financial institutions. Keep one point in mind: If you are working under the control of a financial institution, you are eligible only to recommend the borrower’s case for funding activities. The first decision on whether to fund or not depends on the management of the financial institution. The same applies in the case of banks also. In case you are doing lending business then you are the boss and can take all necessary decisions.
- Educational qualifications: The candidate should be highly qualified in the field of finance. He should be in a position to analyze the borrower’s situation before recommending the borrower’s case for funding.
- Liquidity: Whatever loans you are lending, you should be in a position to get the amount back. So, always try to lend the loans for a shorter period, because the cash you get back can be given to some other borrowers, and the rotation business goes on smoothly. In case you lend the amount for an extended period, even though you charge a high rate of interest, getting the amount back is a little bit risky. Always ensure that the situation is within your control.
- Security: When some borrowers approach you for a loan, always lend the loan amount only after he pledges some asset as security. That will help you in minimizing your risk factor of giving the loan to the borrower.
- Encourage local people: Always support the local people when they approach you for funding. When you lend to a local person, in case of any default in payment, you can go and contact him for demanding repayment. If he resides in a place far away from you, it will be difficult to question the borrower.
- Lend within the limit: The amount received as interest temps you to risk in lending huge amounts. But be very careful. Lend only that amount which you can handle. Anything done above the limit is always risky.
- Interact with the borrower: When the borrower approaches you (an employee) for a loan amount, interact with him/her nicely and make a note of their requirement and why they require it. Based on the information, you can judge whether or not to give the loan amount to them. Always try to guide the borrower in choosing the right loan schemes. By making the lending process quick and smooth, you not only impress the borrower but also improve the financial institution’s reputation. Financial institutions like Liberty Lending have experienced and talented professionals who interact with their customer very nicely. That makes the customer approach the financial institution repeatedly by increasing its lending business.
- Be aware: When you choose lending business as your career, be aware that the more successful you are, the more enemies you will have. So always be polite in your communication, but when required be tactful in recovering your amount back. Too much of goodness also won’t work in this field of lending. At times, you have to sound harsh.
- Update yourself: You should always update yourself with the latest Government policies so that you can make use of them in your activities.
- Coordinate with an advocate: An advocate’s coordination will help you in dealing the legal issues arising out of lending business.
Even though there is no value for any emotions in the lending business (because it is purely a business dealing with monetary transactions), it is always advisable that the lender sometimes considers the situation of the borrower on humanitarian grounds at least once when he is trying to get his money back.