It's easy for a bank to say "yes" to a loan request if the numbers look good.

It's not difficult to say "no" if the bank feels it will have a tough time getting its money back. It may lose the customer, but that's less onerous than losing the money.

The tough job is to say "no" and keep the customer happy. That takes talent.

What's involved?

First, make the decision fast. Most borrowers prefer a fast "no" to a slow "yes." If they are turned down quickly, they can seek out another lender before the project's potential erodes.

Second, and more important than speed, offer an alternative way to help the potential borrower if a loan application is rejected.

Good bankers often have ways to make a project "bankable," though it may not be so at first. They can suggest ways to change or scale down a project to improve its chances for success, or suggest other ways to raise collateral.

But what many potential borrowers really want is an understanding of what other avenues are available if the bank won't lend to them. And the banker who can supply this information has a far better chance of keeping the customer than one who sends him away empty-handed.

Of course, before a banker can be helpful, he must be working with a reasonable customer.

If the need is for venture capital, the applicant must understand that a bank is not going to risk putting up the bulk of the capital for only the market rate of interest plus a small fee at best. "Heads you win, tails I lose" is not the way a banker wants to set the odds.

Similarly, collateral must be reasonable. The bank has to have something it can sell if it must foreclose.

How can your bank be accommodating even if you can't make the loan right now?

Let the customer know what has to be done to qualify later.

Tell the customer whether you think the project has merit. Offer guidelines to measure progress toward becoming eligible for a loan.

Offer to start a dialogue with someone in authority to make the loan when the company is ready.

A rejected customer once told me that borrowers want to feel the banker would make the loan if he could. Recently I received a pamphlet that could send that message.

The pamphlet, called "The Blue Book of Money," is sent free to prospective small-business customers by Broad National Bank of Newark, N.J. It outlines forms of organization, financing options, hints on obtaining loans, and government programs that aid small business.

Other community banks could develop similar pamphlets. And your bank must have had something special about it-location, reputation, friendliness, or size-to make the loan seeker come to you in the first place.

Even if you have to turn down a company's credit request now, you can build a relationship that could prove profitable in the future. u Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.

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