Commercial Lending Training

What is Commercial Lending Training?

Commercial lending training provides an opportunity for loan officers and other credit professionals to build or upgrade their credit acumen.

Commercial lending training runs the spectrum from beginner-level course work for aspiring commercial credit professionals (that want to be loan officers or other types of SME lenders), all the way to much more advanced training for experienced lenders (including financial modeling skills, larger credits, or niche topics like agricultural lending or commercial real estate finance).

Purchasers of commercial lending training may be individuals seeking to develop or advance their career. Alternatively, buyers may be firms and financial institutions that employ credit professionals; they may purchase a large number of “seats” and enroll their staff according to training and development needs.

Program Considerations

Commercial lending training comes in many shapes and sizes, and considerations around what kind of program or course may be right for you tend to be quite personal. 

An obvious consideration is cost, although value is perhaps a better measure when looking for commercial lending training. After all, there are many expensive courses that aren’t all that transferable or valuable across different jurisdictions (for example). Conversely, there are some very cost-effective programs that offer extraordinary value. Don’t let a high ticket price necessarily serve as a proxy for quality or value – do your own research.

Broadly speaking, there are four very important dimensions across which training candidates may wish to measure prospective courses when making a purchase decision. These are:

1. E-learning vs. Instructor-Led

Historically, you could have classified these as “online” and “offline” (or classroom), but that’s an oversimplification today. E-learning is only available online; however, many e-learning providers are supplementing their module-based training with virtual “office hours” and other instructor-led components. Instructor-led training may be conducted in a traditional classroom setting, or it can be done virtually, too (often called virtual instructor-led training). 

Some questions to ask yourself include whether you learn best in a cohort and with an actual instructor or if you’re more of a self-directed type. Some people love doing group work and asking questions – those folks should consider instructor-led, cohort-based training.

Many people find instructor-led training inconvenient and distracting, though, as it can only be consumed at the scheduled time, and group work often leads to “free riders,” where some people in the class don’t actually contribute much but still get credit for completion. People with a more self-directed learning style will likely gravitate toward self-paced e-learning.

2. Global vs. Domestic

When the firm you work for enrolls you in commercial lending training, it tends to be a more jurisdictionally-specific training provider (meaning they’ll cover local norms and regulations around security filings and other regional topics).

For those enrolling themselves or for whom geographic mobility is considered desirable, they may wish to consider a more global brand or program. 

Some learners do really well thinking about theories and best practices that have been adopted by professional counterparts in other countries or even continents; others prefer a much more local context. Neither is right or wrong, but rather should be considered based on one’s personal learning style and career goals.

3. Skills-Based vs. Certifications

All commercial lending training courses and programs cover information and skills. Those purchased by an organization to train their staff may even feature highly specific, tailored skills. 

Some training providers also include certifications, however. When considering a commercial lending training provider, it’s worth thinking about whether or not the credentials will retain value and “transfer” beyond just the current learning requirements of this next role. Some areas of the banking and finance community have really evolved into a “credentialing culture,” so this incremental value should be factored into purchase decisions.

4. Course vs. “Ecosystem”

And finally, all commercial lending training providers offer courses. Some increasingly forward-thinking organizations, however, are offering a variety of other value-added benefits in the form of a learner “ecosystem” (so to speak). 

These may include:

• Membership in various associations that provide ongoing resources, research, webinars or podcasts, and lobbying efforts.
• Innovative, practical applications like simulation-type exercises designed to immerse learners in what a day-in-the-life really looks like.
• System integrations with other tools that are commonly used in the industry (maybe sales tools or industry research providers, etc.).

Training Areas

Commercial lending training topics are sometimes general in nature (like the 5 Cs of Credit), but they can also be highly specific, nuanced topics. 

The commercial credit process is widely understood to feature five stages, and training topics usually fall within one of these categories. The stages are:

1. Origination

Origination is the process of identifying and sourcing new business. While some people have a strong network and others may be more “naturally” effective in sourcing new business, there are many elements of sales and relationship management that can be taught.

Some commercial lending training will be centered around:

• Sourcing and vetting prospects
• Communication, presentation, and pitch deck skills
• Relationship management best-practices
• Identifying potential cross-selling opportunities with other divisions of the firm

2. Client Discovery/Credit Structure

The client discovery step is an important part of the onboarding process for new business. At this stage, credit professionals will be working with partial information while competing against other lenders for the client’s concurrence to move ahead and seek formal approval. Lenders must have a very strong understanding of their firm’s policies and how to structure credit.

Commercial lending training at this stage generally focuses on some of the following topics:

• Asking effective questions 
• Negotiation skills
• Vetting a business plan and financial projections
• Understanding collateral security and LTVs (loan-to-values)
• Loan covenants
• Other elements of effective credit structuring

3. Analysis/Underwriting

The analysis and underwriting stage is where the loan officer or relationship manager has access to the full due diligence package and can begin working with their analyst teams to submit a formal credit application that will be reviewed and approved by the firm’s risk management or adjudication group.

Many commercial lending training providers focus on this area, as it’s a critical step in the credit process and in maintaining a healthy loan portfolio. Training topics may include:

• Financial (and credit) analysis
• Financial modeling 
• Scenario and sensitivity analysis
• Loan pricing and LGD (loss given default)
• How to write an effective credit application
• Managing and mitigating credit policy exceptions 

4. Documentation/Perfecting Security

The importance of having documentation in place and correctly executed cannot be understated when it comes to commercial credit. 

Many parties are involved in this stage, including (at minimum) the borrower, the lender, and their respective legal counsels; larger borrowers with more advanced financing needs may require that equity investors and/or other lenders (and their counsel) be represented at this step, too.

Commercial lending training at this stage generally focuses on:

• Understanding the capital stack 
• Security filings (jurisdiction-specific)
• Understanding other types of credit documents like priority agreements, personal guarantees, and GSAs (general security agreements)

5. Loan Advance

This is when funds are actually disbursed to a borrower and repayment schedules go into effect. Training in this area tends to be firm-specific since each financial institution (and non-bank private lender) has its own internal process for advancing funds and then collecting payments.

Commercial Banking vs. Commercial Lending

These terms are often used interchangeably, but that’s a slight oversimplification. Both focus on managing borrowing relationships with commercial clients, but commercial bankers usually work for a traditional financial institution (like a bank or credit union) – so they also provide their clients with non-lending financial services like day-to-day accounts, payment processing, and other treasury management products.

While all commercial bankers are, at least to some extent, also commercial lenders, not all commercial lenders work in “banking.” There are many private, non-bank capital providers in the market. These include equipment finance firms, asset-based lenders, factoring companies, real estate finance businesses, and family offices (among others).

Commercial lending training will focus on the five stages of the credit process that were outlined earlier; the training is highly credit-specific. Commercial bankers must also understand non-credit financial services and how they fit into the broader bank ecosystem, so their training may include non-lending products.

Career Mobility in Commercial Lending

While role titles vary from location to location, commercial lenders generally work in the front office, the middle office, or the back office. Both front and middle office positions tend to require strong credit acumen and can benefit from tailored commercial lending training.

Front office roles include client-facing titles like relationship manager, loan officer, and account manager. These folks often also work with an analyst and an associate; though, again, titles may vary.

Middle office commercial lending roles include risk management or credit adjudication titles, as well as hybrid-type positions like credit restructuring (sometimes called special assets or “workout banking”).

The back office is where a lot of administrative work is done; positions like documentation specialist and compliance officer fit here. 

Understanding the arc of banking and lending roles available may influence the type of commercial lending training that credit professionals seek out. Consider CFI’s Careers in Commercial Banking course for a more comprehensive overview of the opportunities that exist in this sector.

Related Readings

Thank you for reading CFI’s guide to Commercial Lending Training. To keep advancing your career, the additional resources below will be useful:

• Banking Certifications
• Credit Risk
• Commercial Banking & Financial Planning Career Booster
• FREE Introduction to Banking Course
• Introducing the Corporate Finance Foundations Professional Certificate (Press Release)
• See all career resources