Pros and Cons of a Career as a Commercial Lender
Commercial lenders seek out companies who may need loans and assess their creditworthiness. Read on to learn more about the pros and cons of a career in commercial lending to help you make an informed decision about your future.
| Pros of a Career as a Commercial Lender |
|---|
| Relatively high pay (median salary of $62,000, as of May 2014 for loan officers)* |
| Minimal education requirements (a bachelors degree is usually sufficient to enter the field)* |
| Employers usually provide on-the-job training* |
| Satisfaction of assisting businesses with obtaining funds for major purchases* |
| Cons of a Career as a Commercial Lender |
|---|
| Many positions are largely commission based, which means your income could frequently fluctuate* |
| Potentially long hours (if you're relying on income from commission, you may find yourself working extra hours to attract and retain clients)* |
| Volatility (the demand for commercial loan officers fluctuates with the economy)* |
| Responsible for delivering bad news to clients whose loan applications are rejected*** |
Sources: *U.S. Bureau of Labor Statistics (BLS), **O*NET OnLine.
Career Information
Job Description and Duties
Commercial loan officers are a subset of loan officers who specialize in helping businesses obtain loans for various purposes, such as starting a company, purchasing supplies or acquiring property. Unlike consumer loan officers, commercial lenders may handle extremely large sums of money, which often requires them to understand extremely complicated financial statements and terms. The level of complexity involved may also require these professionals to use their analytical and decision making skills to determine whether a loan should be approved, instead of relying solely on underwriting software. Similar to other loan officers, commercial lenders review loan documentation for accuracy and manage case files, among other professional duties. Some of the various technologies that loan officers may be required to work with include accounting software, personal digital assistants, scanners, financial analysis software and laptop computers.
Client interaction is another important facet of the lending process. As a commercial lender, you may need to seek out clients and then assist them through the lending process. You may also be required to resolve conflicts with customers, address complaints and conduct interviews. Additionally, commercial lenders typically travel to their clients' homes or places of business, rather than working out of an office. Some lenders, especially those working on commission, work long hours to maintain a large client database.
Job Prospects and Salary Info
According to the U.S. Bureau of Labor Statistics (BLS), national employment of all loan officers was predicted to increase 8% from 2012-2022. Nonetheless, the advent of Internet underwriting may limit the demand for entry-level loan officers in the future. Additionally, the availability of jobs in this industry is largely tied to the state of the overall economy. As of May 2014, the median annual wage for all loan officers was about $62,000. The lowest paid 10% of these professionals earned around $33,000 or less, while the highest paid 10% earned roughly $128,000 or more.
Training and Licensing
Commercial loan officers are typically required to hold a bachelor's degree in finance, economics, accounting, business or a related field. Most other professional training is either gained on-the-job or through employer-sponsored formal training programs. You may also be required to take employer-sponsored courses that teach you how to use a company's underwriting software. Additionally, you'll be required to know or learn relevant banking and accounting regulations, loan classifications, company lending standards and information about other financial services offered.
If you plan to help businesses obtain loans to purchase real estate, you're required to hold a mortgage loan originator license. As part of the licensing process, you'll have to take at least 20 hours of continuing education classes, successfully pass a licensing examination and complete background and credit checks. Some states may also have additional requirements. Additionally, you'll have to renew your license each year.
Useful Skills
Commercial loan officers will need a variety of different skills to successfully execute their professional duties. These may include the ability to:
- Sell and market yourself and your services to the public
- Synthesize and understand reams of data
- Read financial statements
- Pay close attention to detail
- Effectively communicate to customers, peers and supervisors
- Use financial analysis software
- Utilize basic computer skills, such as sending emails and operating word processors
Job Postings from Real Employers
Employers generally seek applicants who hold at least a bachelor's degree in accounting, finance or a related field. The amount of experience required for each position varied with the employer. The following job posts obtained in March 2012 can provide an idea of the qualification employers sought:
- A national bank in Connecticut advertised for commercial loan officer to manage its commercial loan underwriting services. The employer sought to hire someone with at least 10 years of experience in commercial lending and a bachelor's degree in finance or accounting. Other qualifications sought included leadership abilities, customer service skills and communication skills.
- A Pennsylvania bank advertised for a commercial loan officer with at least one year of experience and/or training in commercial lending. A bachelor's degree in accounting or a related field was also required. The successful applicant would cultivate relationships with the bank's established clients and develop relationships with prospective clients, among other tasks.
- A bank in New York advertised for a commercial mortgage loan officer with three years of commercial real estate underwriting experience and two years of commercial real estate loan origination experience. The employer also required candidates to possess a bachelor's degree in finance or accounting. The successful applicant would be responsible for facilitating loan closings, performing inspections on all new loans and verifying escrow endorsements, among duties.
How to Stand Out
By obtaining certification, you demonstrate to potential employers your level of commitment and seriousness to the lending profession. The BLS also indicates that certification could improve your employment prospects. Organizations such as the American Bankers Association (ABA) and the Mortgage Bankers Association (MBA) offer several credentials for loan officers. The ABA, for instance, offers the Certified Lender Business Banker (CLBB) designation, while the MBA offers the Commercial Certified Mortgage Banker (CMB) designation. To obtain these certifications, you'll typically need a combination of education and work experience.
Continuing Education
There ABA and the MBA also offer other ways for you to acquire more training and expertise in lending and other financial fields. These organizations may provide a range of learning tools, such as telephone briefings, conferences, diploma programs, certificate programs and online training programs for professionals.
Other Careers to Consider
If you're interested in performing the duties of a commercial lender but are deterred by the often commission-based salaries, consider becoming an insurance underwriter. Insurance underwriters perform many of the same tasks as commercial loan officers, such as evaluating documents, assessing client risk and screening clients. Many employers prefer to hire insurance underwriters who possess a bachelor's degree, but some will hire individuals with experience in the insurance industry and strong computer skills. As of May 2011, insurance underwriters earned a median annual salary of about $61,000, according to the BLS.
Individuals who are interested in a similar profession with less stringent educational requirements might consider a career as a real estate broker. These professionals assist clients with buying, selling and/or renting assets, such as land, homes and apartments. In most states, only a high school diploma or its equivalent and a license are required to become a real estate broker. The BLS indicated that these professionals earned a median annual salary of around $59,000, as of May 2011. However, the lowest paid 10% earned about $26,000 or less, while the highest paid 10% earned approximately $103,000 or more.
