Back to Reinventing the Loan Default Management Process On Demand
These are critical times, with borrowers, banking customers, and lending institutions being pushed to the limit. What’s important to realize is that:
a) This situation is not going to go away in the near to mid-term, and
b) It is important to retool commercial lending teams to handle this crisis and problem loans effectively. Until a vaccine for Covid-19 is developed and months pass to manufacture enough to cover a critical mass of the population, we are likely looking at one to two years to eliminate the outbreaks and one to two year economic recovery after that.
What worked before, including during prior crises, is not likely to work in this situation. We need to retire for a while our old playbooks and adapt to this unique situation quickly. The waive of deferrals and the PPP funding only postponed and masked our true assessment of the economic damages to our borrowers, our credit facilities, and our organizations.
One of the first steps in adapting to the new environment is changing our underwriting / portfolio management process, as it will face a mass wave of troubled credits. How do you manage them efficiently and effectively, maximizing recovery of viable borrowers and minimizing loan losses? The seminar will cover:
- Understanding the key five stages of a crisis like this one, from the initial Phase 1 - Crisis Shock of the first 2-4 weeks of business disruption to Phase 5 of looking past the 12-month mark
- First level of assessment of the most critical drivers to borrowers’ survival, ranging from cash flow shortfall assessment to liquidity and equity reserves and implications to credit viability
- Mapping an immediate to interim portfolio management process
- Looking at possible portfolio decisions your organization can make and potential implications
- Creating a dashboard to manage the process of addressing your customers’ needs
- Developing a robust, tight, and well-organized process for handling your borrowers’ credit requests
- Addressing vital and targeted communication with your borrowers and within your team members
- Retooling your staff’s skills to properly manage the next several months, understanding that traditional underwriting approaches will not be as relevant, if at all.
The survival of commercial lending organizations in this environment will depend on their ability to map the new process and other critical areas as well as to implement them quickly and effectively. This must happen in the next one to two months.