Oh, the Interesting Things People Say About Financing!
I’d like to share with you a story of two Clients in two different industries, who were in two very unique situations but both needed financing. One of them gave the bank all the information they requested and awaited a response, while the other Client stated that, “If they can’t get this loan done in less than 10 days, just forget them! I’m moving on!” Well, that approach is OK if you have lots a time to burn, but really, does it make sense to meet and fill out forms for 10 banks for two weeks each, racing through five months of time, only to find out that you’ve burned bridges with all of them? Wouldn’t it make more sense to meet with three or four of your top banking candidates and make certain that they can complete the type of financing you desire? I think so. In fact, I find that if we hold discussions with several banks at the same time and provide each of them with the financial information they need, we can be much more efficient in our approach to the loan process. While it still may take four weeks to get to the point of signing loan documents, we can be much more effective in completing this task, simply because each of them will likely want the same information. What will they probably need?
- Three years of Financial Statements & Tax Returns for your business.
- A current Personal Financial Statement for each owner of the business.
- Cash Flow Projections for the current year, and possibly “in house” Interim Financial Statements if you are already part way through the current year when you apply.
- A potential Loan Structure you desire, as outlined in your Cash Flow Projections.
Once you have submitted all of this information, be patient, for two reasons. First, banks are under a lot of pressure from the Fed and the OCC, as well as other regulators, to make only the most optimal loans. Doing so will require them to scrutinize every loan prospect very closely. With this in mind, work with the loan officers as best you can. Understand that they have a lot of people to report to, and often, they are not the final approver on your loan proposal. Another reason to be patient is that your deal is most likely not the only one they have pending at the same time. They get paid to produce results, so give them a chance… Actually, is this all that different from ten years ago? Not really. With all of agriculture being subjected to much higher levels of volatility, the anxiety levels of both lenders and borrowers have climbed a great deal, as have our expectations. You may be thinking – Hey, I have survived the downturns of 2003, 2006, 2009 and now 2015-16 – I must be good. You may be correct, but the same rules still apply. Is your “Burn Rate” stronger or weaker than it was 10 years ago? Work patiently with the banks, as outlined above, and I’m confident that success will come your way, and probably long before five months have passed. If I can assist you with your business financing in any way, please let me know. Be sure to watch for upcoming announcements of my new program entitled Six Hours to your Best Year Ever! available at www.success-strategies.com soon.
