The 5-Step plan for creating a successful loan recapture program

by. David Karl

Remember your teeter totter from childhood? Economics are a lot like that. Examples are supply vs. demand, bonds vs. stocks, and interest rates vs. inflation. Another example is the rise and fall of deposits, which fortunately, is on the upswing, thus, leading to the need for more lending.

One of the most economical ways to increase lending is through an effective loan recapture program. Potential borrowers who have a checking or savings account with you are already aware of your financial institution—they know you offer loans and, most importantly, they know why they went elsewhere. It’s your job to build an attractive program to discover and address their needs and bring their business back. To help you accomplish this feat, follow these five steps:

Step 1: Determine your potential

Weighing your indirect relationships and the impact a recapture program may have is unique to every financial institution, but consider it! Some institutions are quite sensitive to this factor, while others pay no attention to it. Also, look at your loan close ratios, current customers to potential customers, and borrowers to customers–all of which will give an accurate idea of the potential number of loans that are available to you.

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