In Credit, Underwriting

The Merchant Phone Interview: Outdated Requirement or Necessary Step?

Since the beginning of the 21st Century, our society has become increasingly reliant on communicating electronically. While there are benefits to communicating electronically rather than verbally, what is lost in this trade-off can have lasting effects on not just the personal life of individuals, but also the way we conduct business. In the alternative lending industry, time is of the essence, so communicating in the fastest and most efficient way possible will help us to stay on top in our constantly changing digital world. For underwriting, this begs the question: when assessing a prospective borrower’s application for a loan, is it better to communicate solely by email or to conduct that old standby, the merchant phone interview?

The answer, of course, is not completely black or white.

The Case for the Merchant Phone Interview

Most of an Underwriter’s job is done on a computer. Our data-driven work, by nature, doesn’t involve much face-to-face interaction. For speed and efficiency, we rely more on numbers and reports than on phone calls to complete our work. An Underwriter does make calls when it is necessary to speak to a merchant, especially for larger businesses.

Based on my experience as an Underwriter, it is easier to build a relationship with a merchant by conducting a call. A person’s voice and tone can tell a lot about them, cues that don’t necessarily come across when communicating via email. In addition, it’s easier to explain terms, rates and other complex stipulations of loans in a merchant phone interview to those taking out a nontraditional business loan for the first time.

The Case for Sending an Email

That’s not to say email communication doesn’t have its benefits. Email allows us to communicate with more people faster, making it easy to reach out to several merchants at a time. Many owners are busy juggling the day-to-day tasks that come with running a business, so writing a detailed email gives them the option to reply when they have time in their schedule. Leaving a voicemail is an option, but email is better for communicating simple messages than playing a game of phone tag.

The Verdict

Here at Herio, what we find works best is a mix of both methods. Email’s a fast, convenient way to reach a small business owner who’s submitted a cut-and-dry application without too much hassle. That said, the importance of Character is a key part of our lending decisions. Picking up the phone to speak directly with a merchant gives us the personal connection that completes the overall picture we have of that merchant, which helps us put together the best loan offer possible to help our customer’s business grow.

What works for one Underwriter in conducting merchant interviews doesn’t always work for the next. One’s experience and knowledge will guide them to make the best decision. In an industry where speed and accuracy is key, experimenting with all available options and finding what works best for you and your customers can prove invaluable.

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