On a very basic level, every loan officer wants a healthy portfolio of clients. Delinquent loans or defaults are not only time and emotionally consuming to deal with, but can also be taken personally as they reflect poorly on the loan officer’s job. What every loan officer needs is reliable information to make the right decision about every new prospective client.
A loan officer at HOPE Ukraine pointed out the two main questions that any loan officer seeks to answer:
• Will the client be able to pay back the loan?
• Will the client want to pay back the loan?
At HOPE Ukraine, the client usually comes into the office to meet the loan officer and discuss the need for a loan. Oftentimes the reason for a loan, the amount needed and type of business already tell the loan officer if there is an opportunity to extend a loan. The client fills out an application, provides a copy of personal and financial documents and answers the loan officer’s initial questions regarding their business. The loan officer’s analysis of the financial documents and his subsequent visit to the business itself (very often it is a stall or a small shop at the city’s market), coupled with his job experience and intimate knowledge of the market itself, help him determine if the client will be able to pay back the loan.
Then comes the harder part of the job – determining if the client will be honest and responsible. In addition to visiting the place of business, the loan officer also meets the prospect at their home. The loan officer pays attention to body language, the substance of their conversation, their mannerisms and general attitude, their openness and lifestyle. The overall impression of the client weighs heavily in the final decision to bring the application to the loan committee for approval. If the loan officer doesn’t feel like he can trust the new client, then obviously extending credit to that person would be a risky decision for his loan portfolio. These client assessments not only have a psychological aspect to them, but also involve a lot of intuition.
After years of work experience extending loans to hundreds of clients, loan officers rely on their gut feeling to ask the right questions and dig deeper. Obviously, mistakes are made, it is human. Some loan officers regret extending loans in situations where all the financial indicators were perfect but their instinct was telling them something is off. There are also situations where perfect clients find it difficult to deal with their debt in light of unusual events such as high inflation, theft, fire or sickness in the family.
From my own interactions with loan officers, I was happy to find out that they enjoy the personal nature of their job. They spend quite a lot of time at the markets, know a lot of vendors there, and are easily accessible to their clients. They know their clients’ families, keep an eye on their inventories, and certainly hear things from everyone at the market. They also actively advise their clients to only take loans they will really feel comfortable repaying; it is not unusual for them to decline the requested loans only to have the clients come back and thank them for extending a loan of a more manageable amount.
Last thing that loan officers may not know they want, but surely sometimes need is a fun visit from a Kiva Fellow!! Please enjoy a little video I made of my recent borrower visit to Kakhovka:'
Margarita Salasyuk is a Kiva Fellow with HOPE Ukraine in Zaporozhye. She is slowly but surely getting used to the “avto-vokzal” or the local bus terminal, though sometimes buses do leave right in front of her nose while she tries to match the departure time and the route name to reality!