Pricing Your Loans: Dealing with Rate-sensitive Borrowers | Ep. 40

Welcome to The BDO Show! A podcast for passionate BDOs wanting to level up their game with advice and stories from battle-tested BDO's. In this insightful episode of the BDO Show, the hosts delve into the intricacies of pricing strategies within SBA lending, emphasizing the importance of aligning pricing with risk. They explore real-world scenarios where BDOs face challenges in maintaining competitive rates while ensuring sustainability. Through engaging discussions, the hosts stress that execution in deal-making surpasses mere rate considerations, as Alan Peterson states, "Execution on your deal isn't the main thing, it's the only thing." Sterling Birdsong and Ryan Kroge share their experiences and advice on managing customer expectations and standing firm in pricing negotiations. The conversation further underscores the importance of building lasting relationships and knowing one's strengths and limits in the lending space. Alan and Ryan bring to light the concept of market makers versus market takers, where the former adds value through consulting and relationship-building, contrasting sharply with those who rely solely on offering the lowest rates. Ryan encapsulates this with an insightful remark, "Build your relationships, build your brand." For those navigating the landscape of SBA lending, this episode provides an in-depth guide to prioritizing relationship-building over chasing unsustainable rates. Key Takeaways: Understand risk-based pricing: Deals must be priced according to the risk to maintain sustainability and competitive advantage. Execution over rate: The effectiveness of deal closure is emphasized as being more critical than just offering low-interest rates. Building relationships: Investing in strong networks with customers and referral sources can significantly impact business longevity and success. Know your limits: BDOs should be aware of when to stand firm on pricing and when a deal might not be worth pursuing. Be a market maker: Strive to provide value beyond pricing through expert consultation and relationship-building.  If you have questions or comments, please send them to [email protected] ___________________________________________________________ This episode is sponsored by: Peak Business Valuations Peak Business Valuation works with over 80 SBA bank lenders across the country, performing around 1,100 SBA-compliant Business Valuations and 100 Equipment Appraisals a year. Those whom we work with label us as fast, reliable, and insightful.  For more information, visit their website www.peakbizval.com or email Ryan Hutchins at [email protected] ___________________________________________________________ CHAPTERS 0:00 | Introduction 2:26 | Aligning Pricing With Risk in SBA Lending 4:48 | Risk-Based Pricing Strategies in Real Estate Transactions 7:23 | Risk-Based Pricing and Navigating Loan Market Challenges 11:36 | Challenges and Strategies in Business Deal Pricing 16:49 | Navigating High-Risk Loans and Market Realities 23:52 | Building Trust and Expertise in Business Development 28:17 | Strategies for Pricing Deals and Managing Client Expectations 33:09 | Building Loyalty and Relationships in Business Deals 36:02 | Building Strong Referral Sources Through Thoughtful Networking