How to Become a Business Loan Officer

Business Loan Officers Make Loans and Money

Experienced business loan officers enjoy very attractive compensation levels with banks, credit unions and dedicated commercial lenders. However, few financial institutions or other commercial lenders will risk giving out this title to an untested "rookie." Here is a blueprint one could use to achieve the title--and the lucrative compensation that it brings.

Instructions

Become a Business Loan Officer

1. Learn the real nature of commercial lending and business loan officers. All businesses need money to operate. There are two primary options to get the funds companies need: loans and investment. Unlike consumer lending, commercial loans need more than a simple credit report. Business loan officers need to analyze financial statements, company operations and prospects for future success.

2. Become familiar with common financial statements and learn how to analyze them. Although it is impossible for you to become an immediate expert on the full menu of financial statements produced by typical companies, you should learn how to read and evaluate at least three important ones. Cash flow statements, balance sheets and income statements are the most important major business reports. Learn what they mean and how to evaluate them.

3. Learn all you can about the U.S. Small Business Administration (SBA). Among the many services offered by the SBA to small businesses, guaranteeing up to 85 percent of smaller commercial loans is one of their best. As a new business loan officer it is unlikely you will get the opportunity to work on million dollar loans. Your first experience will be with married couples or partners who need financing for bakeries, convenience stores and other small businesses. Most of their financing will involve the SBA in some fashion.

4. Consider getting a job as a business loan processor with a bank or credit union. You will learn the documentation necessary to make commercial loans and how the SBA requirements complement bank loan necessities. Building your commercial lending knowledge base and performing well should give you the opportunity to be selected for a junior business loan officer position with your current bank or another in your area.

5. Treat each exposure to commercial loans as a final exam. Be thorough, ask questions of senior officers and honestly evaluate the risks involved in each loan request. The conditions and evaluations for a $25,000 loan for working capital for a small pizza restaurant are identical to those when considering a $25 million loan for an aircraft company. Being conservative and knowledgeable with smaller commercial loans should help you generate the confidence of management to allow you to handle ever larger business loan requests.

Tips & Warnings

• • Understand that, in the world of business, the bigger the potential rewards, the greater the potential risks. Analyze financial statements and business operations dispassionately. • Be patient. Business loan officers can make a lot of money, but it takes some experience and a conservative willingness to risk.

• • Don't get personal. Most smaller-business owners believe they have the next "Microsoft in waiting." Resist the temptation to look favorably on a business loan request solely because of the enthusiasm of its owner. • Don't assume that, just because a business has been successful in the past, it will succeed in the future. Stay current on regional and national economics as well as the industries in which your business loan customers operate.

Resources

• Learn More About Becoming a Loan Officer