How to Be Commercial Lender - Job Description, Skills, and Interview Questions

Jan 17, 2023 / 5 Minutes Read / By Albert

How to Become

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The commercial lending industry has experienced a dramatic shift in recent years. As traditional lenders such as banks have become more stringent in their lending standards, alternative lenders have emerged to provide businesses with the capital they need to grow. This has caused an increase in competition among lenders, as businesses have more options to choose from.

In turn, this has resulted in more favorable terms and rates for borrowers, allowing them to access the funds they need to expand their operations, hire new employees, and develop new products or services. Furthermore, this has enabled small businesses to become more competitive in the marketplace and has had a positive impact on the overall economy.

Steps How to Become

Obtain a Bachelors Degree. A bachelors degree in accounting, finance, economics or business administration is typically required for commercial lending positions.
Complete a Commercial Lending Program. Completing a commercial lending program or a specialized certification in commercial lending can give you an edge over the competition.
Get Hired. You will need to find a commercial lending institution that is willing to hire you as a loan officer or credit analyst.
Gather Experience. Most commercial lenders start out in entry-level positions, such as loan processing, credit analysis and underwriting. As you gain experience, you can move up to more senior positions with greater responsibility.
Upgrade Your Skills. Continue to upgrade your skills by attending industry conferences and seminars. This will help you stay up-to-date on the latest trends and regulations in the industry.
Pursue Accreditation. Consider pursuing professional accreditation through the Commercial Lending Certification Program offered by the National Association of Commercial Finance Brokers (NACFB). This program requires applicants to take a series of courses and pass an examination.

To stay ahead and capable as a commercial lender, it is important to stay abreast of the changing marketplace and economic trends. This involves regularly monitoring the latest news and financial information, understanding the underlying drivers of market volatility and anticipating potential risks. It is also essential to develop strong relationships with clients, assess their financial needs accurately, and remain knowledgeable about the various loan products and services available. Additionally, staying up-to-date on industry regulations and developing a sound legal understanding of the lending process can help commercial lenders remain capable and ahead of their competition.

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Job Description

Commercial Lending Manager: Responsible for managing the commercial lending portfolio for a financial institution. Duties include approving loan applications, monitoring loan performance, and providing guidance to lending staff.
Commercial Loan Officer: Responsible for originating and structuring commercial loan transactions. Duties include soliciting new business, analyzing creditworthiness of borrowers, and managing the loan process from origination to closing.
Credit Analyst: Responsible for analyzing creditworthiness of borrowers and providing recommendations to lending staff and management. Duties include reviewing financial statements, preparing credit reports and presenting credit analyses.
Loan Processor: Responsible for processing loan applications and ensuring accuracy of documents. Duties include verifying the accuracy of loan applications and preparing the documents needed to close the loan.
Loan Servicing Specialist: Responsible for monitoring loan performance and administering loan accounts. Duties include reviewing loan payments, responding to customer inquiries, and preparing financial reports.

Skills and Competencies to Have

Knowledge of commercial loan products and services
Understanding of banking regulations and compliance standards
Analytical and problem-solving skills
Excellent communication and interpersonal skills
Ability to work well in a team environment
Ability to prioritize tasks and meet deadlines
Proficiency in utilizing banking software and other computer applications
Knowledge of financial markets and trends
Familiarity with underwriting guidelines
Ability to assess creditworthiness of potential borrowers

An effective commercial lender must possess strong communication skills in order to effectively assess potential borrowers and determine the best course of action. Excellent negotiation and problem-solving skills are also essential to ensure mutual benefit between the lender and the borrower. Furthermore, commercial lenders must possess a thorough understanding of financial principles and concepts in order to make informed decisions about loan terms, interest rates, and other relevant factors.

A strong knowledge of industry regulations and laws is also necessary to ensure that the lender is operating in compliance with the law. Finally, a commercial lender must have excellent customer service skills to ensure that borrowers have a positive experience that encourages them to return for future services. These key skills are essential for a successful commercial lending career.

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Frequent Interview Questions

What experience do you have in lending to commercial clients?
How would you approach assessing the risk associated with a commercial loan?
How do you stay up to date on changing regulations in the commercial lending industry?
How would you decide whether or not to approve a commercial loan?
What strategies do you use to manage multiple loan requests simultaneously?
In what ways do you ensure compliance with all applicable laws and regulations when lending to a commercial client?
What is your experience in structuring and negotiating terms of a commercial loan?
What strategies do you use to assess the creditworthiness of a commercial borrower?
What experience do you have in working with commercial loan documents?
How do you stay informed about the changing trends in the commercial lending market?

Common Tools in Industry

Financial Calculators. Tools used to calculate various financial metrics such as loan payments, interest rates, and depreciation. (eg: Bankrate's Mortgage Payment Calculator)
Loan Origination Software. Programs used to manage and process loan applications, track borrower information, and monitor loan performance. (eg: Ellie Maes Encompass)
Risk Analysis Software. Platforms used to assess a borrowers risk and determine the likelihood of default. (eg: Moody's CreditEdge)
Credit Reporting Software. Systems used to obtain credit reports from credit bureaus and analyze them for commercial loan applications. (eg: Experian Connect)
Automated Valuation Models (AVMs). Tools used to quickly estimate a propertys value based on public and proprietary data. (eg: CoreLogic's Collateral360)
Underwriting Software. Programs used to streamline and automate the underwriting process for commercial loans. (eg: Fannie Mae's Desktop Underwriter)

Professional Organizations to Know

American Bankers Association (ABA)
Commercial Finance Association (CFA)
Equipment Leasing and Finance Association (ELFA)
Mortgage Bankers Association (MBA)
National Association of Commercial Finance Brokers (NACFB)
Professional Association of Small Business Accountants (PASBA)
Risk Management Association (RMA)
Small Business Financial Exchange (SBFE)
The Risk Management Association of Canada (RMA Canada)

We also have Commercial Credit Manager, Commercial Lines Producer, and Commercial Mortgage Underwriter jobs reports.

Common Important Terms

Commercial Loan. A loan provided by a lender to a business for the purpose of financing business operations, such as purchasing inventory, equipment, or real estate.
Collateral. Property or other assets that a borrower pledges to a lender as security for a loan.
Credit Score. A numerical representation of a person or businesss creditworthiness, which is used by lenders to determine whether to extend credit and at what interest rate.
Interest Rate. The rate of interest charged by a lender, typically expressed as a percentage of the principal loan amount.
Loan Term. The length of time over which a loan is scheduled to be repaid, usually expressed in months or years.
Loan-to-Value Ratio. The ratio of the amount of the loan to the value of the underlying asset, typically expressed as a percentage.
Underwriting. The process by which a lender evaluates a potential borrowers creditworthiness and decides whether to make a loan.

Frequently Asked Questions

What is a Commercial Lender?

A commercial lender is a financial institution that provides financing to businesses for the purpose of expanding their operations, purchasing equipment, or other business-related activities.

Who can qualify for a Commercial Loan?

Companies that have a good credit history, sufficient collateral, and a solid business plan can typically qualify for a commercial loan.

How does the Commercial Lender assess risk?

The commercial lender will assess risk by analyzing the borrower's creditworthiness, the value of the collateral, and the potential profitability of the business.

What types of loan terms may be offered by a Commercial Lender?

Commercial lenders may offer fixed-rate loans or adjustable-rate loans with terms ranging from 1-25 years depending on the type of loan and the lender's risk tolerance.

What documents are needed to apply for a Commercial Loan?

To apply for a commercial loan, borrowers will typically need to provide financial statements, business plans, and other relevant documents that demonstrate their ability to repay the loan.