The Microwave Society

MAY 3, 2011 BY GEORGE LOVATO JR
Everything in Three Minutes or Less

I listen to and review anywhere from forty to seventy potential transactions a week. BHCL cannot help everyone. But you have to spend the time to listen to see who in fact you can help. Recently I listened to possibly my fifty thousandth pitch from a prospect. After twenty nine years of structured finance, yes, that number is pretty close. I often hear the same request surrounded by the same unworkable structure but this particular request illustrated the mass expectation of business professionals and entrepreneurs around the country.
Everyone wants everything in three minutes or less. They want meals in three minutes or less. They want credit card approval in three minutes or less. They want to be able to download Gone With The Wind to their home computers in three minutes or less. This is the state of our Microwave Society. Everything …Now!
The Golden Question

This particular prospect was requesting a loan for his business in the neighborhood of $5,000,000. The manner in which he wanted to structure the loan was unworkable. I then suggested we go another route. He said he would consider it. We talked about the alternative among other elements of the his business. It was clear there were possible underpinning’s of penitential in the proposed transaction. I listened some more. The conversation went on and then it happened. The golden question; “How long will this all take?” My response was that there is a procedure and with all factors considered, inclusive of numerous financial statement corrections, modifications and elevation in the type of accounting opinion, plus appraisals, valuations as well as a mountain of documentation required it would take up to six months. His response was simple; “I can get an approval from my bank for this in a week and close in two.” I suggested he do so and then the conversation ended cordially and I was back to doing what I do best.
I knew he was full of BS. I knew his banks could not provide an approval of any type. The transaction needed a ton of scrubbing before it would be ready to present. His posture was poorly positioned. After twenty nine years in this business and knowing the scores of banks and bankers I do, as well as being familiar with their procedures, this was nothing more than prospect smoke.
It Just Does Not Work That Way

Soon he called back. I listened again. He reiterated that his bank could close the loan in record time. I asked why he called me back? His response bounced around and avoided a direct answer. I pushed the question again. He finally admitted his bank turned him down months ago but he did not want me to think that he had no other options. He wanted to deal with me from a position of strength. I told him he could but he needed a better position than his bank could do it two weeks. That was not realistic.
The conversation went on then timing came up again. I reiterated my original estimate. He responded; “For five million dollars you should be able to do it in three or four weeks! I can do a home mortgage in a week. Why does this have to take so long?” Once again I explained how complicated his request was and all that would be needed to complete the financing he was requesting. Again he pushed for a three week time frame. I cordially ended the call and suggested he continue to seek a solution elsewhere. I was just wasting my time.
This prospect’s perception was that he was requesting credit for a credit card and nothing more. His view, and more to the point was acquisition of any and all credit should be able to be accomplished in days rather than months. He did not understand he was nowhere near ready for presentation to the financial community. He just did not get it. Just like he downloaded Gone With The Wind in less than three minutes he was looking for the same service for a five million dollar loan. It just does not work that way.
Listen to the Experts and Follow Instructions

Complicated transactions take time to construct. A home mortgage in today’s market is a demanding task. There are a lot of moving parts to the application process. Now you take a very complicated commercial loan request, add in some accounting treatments that are inappropriate, two inch thick corporate tax returns and misstated values and you have a formula to eat at the clock. I can only suggest after reading this blog that you incorporate this thinking into your next request for a commercial loan. You need to be organized and patient. You also need to take the prescription that the doctor writes. That prescription reads…Listen to the experts and follow instructions.