- The banking industry has seen consolidation over the past 15 years with one third of independent banks being acquired, while over 60 new banks have opened in Georgia in the past 5 years.
- It's important to evaluate how healthy your bank is by checking metrics like capital adequacy, asset quality, management, earnings, and liquidity on the FDIC website.
- Banks will evaluate your business's capital, asset quality, management, earnings, and liquidity when deciding terms for loans and lines of credit. It's important to proactively communicate with your banker.
The document provides tips for business owners on understanding banker language and getting the financing they need from banks. It discusses key aspects bankers consider like the five C's of credit (character, collateral, cash flow, credit, conditions). It advises business owners to analyze their own financial health, prepare financial statements and present a clear case to the banker emphasizing the five C's. It also provides ways to research the financial health of their own bank.
This document discusses ways to lessen the impact of financial difficulties ("crunch") for businesses. It argues that increasing trade credit availability alone will not help businesses that cannot adequately manage their working capital or pay back credit as required. Providing credit that is not needed or justified could lead to defaults, as with the subprime crisis. Instead, businesses need careful working capital management, cost review, accounts receivable management, inventory controls, and accurate financial reporting to convert profits to cash. Suppliers sometimes help businesses survive difficult times through collaboration, demonstrating the value of open communication and trust between partners.
The debt collection industry has changed significantly over the past ten years. The impact of technology on debt collection practices, industry consolidation
This document summarizes Sri Lanka's controversial bond issue and identifies potential governance issues and failures. It notes the bond issue appeared to involve mismanagement and potential fraud, costing an estimated Rs. 6 billion. However, the damage to Sri Lanka's reputation and future bond issues is likely much greater. The summary identifies specific failures around volume, price, and duration of the bonds that suggest existing processes were not followed and advice was ignored. It questions the relationship between the Central Bank governor and a primary dealer given insider trading implications. Overall, it argues the bond issue response was slow and questions whether political interference prevented proper accountability.
This document summarizes a study on debt recovery techniques, problems, and prospects at BASIC Bank LTD's Shantinagar branch. The study investigated causes of non-performing loans through a survey. It found that major causes included economic downturns reducing business profits and consumer buying. It recommended that banks carefully assess borrowers' repayment abilities, monitor loan use closely, and address insider lending to minimize bad loans.
A debt collector's job is to contact people who owe money on overdue bills and negotiate repayment. They update records, track down debtors, contact them by phone or letter, listen to their situations, and negotiate payment plans. Good listening, negotiation, speaking, and persistence skills are important. Debt collectors may work for collection agencies dealing with credit cards, mortgages, utilities, and more. The job can be stressful when dealing with financially struggling debtors.
Good credit is important and can be established by responsibly using a credit card. When starting out with no credit history, a credit card can help build a positive record by making small purchases and paying the balance off each month on time. Credit bureaus track credit habits like payment history and account balances over time to determine creditworthiness. Getting a credit card as a beginner may require proof of identity, income, and enrollment in school.
The document discusses the requirements of banks and businesses for loans. It notes that banks need information about the business owners, the business itself, existing financial position, how loan funds will be used, loan amount and security. Businesses want easy access to loans without collateral, quick funding decisions based on projections rather than strict requirements. However, businesses often don't provide full information or have financial shortcomings that make it difficult for banks to evaluate them. The document suggests businesses would benefit from financial advisors to help with tax planning, investment strategies, and financial discipline to better meet bank requirements.
The document provides tips for business owners on understanding banker language and getting the financing they need from banks. It discusses key aspects bankers consider like the five C's of credit (character, collateral, cash flow, credit, conditions). It advises business owners to analyze their own financial health, prepare financial statements and present a clear case to the banker emphasizing the five C's. It also provides ways to research the financial health of their own bank.
This document discusses ways to lessen the impact of financial difficulties ("crunch") for businesses. It argues that increasing trade credit availability alone will not help businesses that cannot adequately manage their working capital or pay back credit as required. Providing credit that is not needed or justified could lead to defaults, as with the subprime crisis. Instead, businesses need careful working capital management, cost review, accounts receivable management, inventory controls, and accurate financial reporting to convert profits to cash. Suppliers sometimes help businesses survive difficult times through collaboration, demonstrating the value of open communication and trust between partners.
The debt collection industry has changed significantly over the past ten years. The impact of technology on debt collection practices, industry consolidation
This document summarizes Sri Lanka's controversial bond issue and identifies potential governance issues and failures. It notes the bond issue appeared to involve mismanagement and potential fraud, costing an estimated Rs. 6 billion. However, the damage to Sri Lanka's reputation and future bond issues is likely much greater. The summary identifies specific failures around volume, price, and duration of the bonds that suggest existing processes were not followed and advice was ignored. It questions the relationship between the Central Bank governor and a primary dealer given insider trading implications. Overall, it argues the bond issue response was slow and questions whether political interference prevented proper accountability.
This document summarizes a study on debt recovery techniques, problems, and prospects at BASIC Bank LTD's Shantinagar branch. The study investigated causes of non-performing loans through a survey. It found that major causes included economic downturns reducing business profits and consumer buying. It recommended that banks carefully assess borrowers' repayment abilities, monitor loan use closely, and address insider lending to minimize bad loans.
A debt collector's job is to contact people who owe money on overdue bills and negotiate repayment. They update records, track down debtors, contact them by phone or letter, listen to their situations, and negotiate payment plans. Good listening, negotiation, speaking, and persistence skills are important. Debt collectors may work for collection agencies dealing with credit cards, mortgages, utilities, and more. The job can be stressful when dealing with financially struggling debtors.
Good credit is important and can be established by responsibly using a credit card. When starting out with no credit history, a credit card can help build a positive record by making small purchases and paying the balance off each month on time. Credit bureaus track credit habits like payment history and account balances over time to determine creditworthiness. Getting a credit card as a beginner may require proof of identity, income, and enrollment in school.
The document discusses the requirements of banks and businesses for loans. It notes that banks need information about the business owners, the business itself, existing financial position, how loan funds will be used, loan amount and security. Businesses want easy access to loans without collateral, quick funding decisions based on projections rather than strict requirements. However, businesses often don't provide full information or have financial shortcomings that make it difficult for banks to evaluate them. The document suggests businesses would benefit from financial advisors to help with tax planning, investment strategies, and financial discipline to better meet bank requirements.
This document provides information about library resources and services available to students at Scottsdale Community College. It outlines the technology available to students like computers and laptop checkout. It describes different study areas and sections for physical library materials like books, periodicals, DVDs and some textbooks. Electronic library materials are accessible online through databases and ebooks. Students need to login with their MEID when accessing electronic resources off campus. The document explains how to get research assistance from the library and outlines the different logins used at SCC for computers and online services.
This document is a list of attendees at the Future Camp event where networking and brainstorming will take place. Participants will break into groups and get connected by deciding how to best stay connected in the future through potential annual events, online, or through social media. The future methods of connection are left up to the attendees to determine.
The video introduces different community helpers through a series of shots featuring Ms. McConnell and the helpers. It begins with Ms. McConnell explaining what a community is and the need for helpers. The video then cuts to individual helpers, using both interviews and footage of them doing their jobs. It features fire fighters driving a truck and going down a pole, police officers at a station and using tools, and a postal worker delivering mail. It closes with Ms. McConnell explaining an upcoming unit and puppet play scenes of children portraying different helpers.
The document outlines Nova Southeastern University's NSU Experience model, which aims to increase student involvement, connection, identity development, recognition, and support in order to improve outcomes like belonging, affinity, and retention. The model identifies orientation leaders, resident advisors, student leaders, and regional campus directors as "connectors" to link students to involvement opportunities. Assessing involvement, satisfaction surveys, and institutional data will evaluate the model's success in achieving its intended outcomes.
The document summarizes key facts about elephants. It describes their physical features such as their gray skin, floppy ears, and long trunk. It notes that elephants are the largest land animal. It discusses their habitats in Africa's savannas and forests. It also outlines their diet of plants, their social structure in family herds led by the oldest females, and notes that they spend 16 hours a day foraging for food.
This document discusses taxation of shares in Australia. It explains that companies pay 30% corporate tax on profits and then pay dividends to shareholders which are then taxed as personal income, resulting in double taxation. To address this, the government implements a dividend imputation system which refunds corporate taxes paid to shareholders through franking credits. When receiving dividends, shareholders report both the cash amount and franking credit as income, using the credit to reduce personal taxes owed. For capital gains from share sales held over 1 year, only half the gain is considered assessable income.
Communications Trends For 2015 - Creative Approaches to Content Promotionprnewswire
Robert Rose, Chief Strategy Officer, Content Marketing Institute
Eva Rohrmann, Director, Solutions & Channel Marketing
PR Newswire
Don Montuori, Vice President of Publishing, MarketResearch.com
This document contains summaries of several traditional Chinese herbal formulas used to nourish the kidneys, tonify essence, and aid fertility. The first section describes two formulas: Yu Shen Tong Luo Fang which tonifies the kidneys and channels, and Yu Shen Pei Yuan Fang which nourishes the kidneys and consolidates the primordial. The second section details the formula Zi Shen Yu Tai Wan which nourishes the kidneys and aids childbearing. The third section introduces the formula Qi Zi Yan Zong Wan made of seven herbs. The last section presents the formula Zan Yu Dan for nourishing and aiding.
The document discusses using Tumblr to curate an art collection and raises questions about emerging online publishing and creative tools in Japan. It notes that Tumblr was created to curate an artist collection and that reblogging is a form of curation. It asks who has yet to embrace online publishing, where Japanese creators spend their time online, what emerging creative communities and tools exist, and what tools may be missing. It closes by questioning sentiments around public creative expression and who comprises the market for such expression.
This document provides information about preparing a tax return in Australia. It discusses who needs to file a tax return, how to prepare the first return including what software and documents are required, how to calculate capital gains, and tips for completing the return. It recommends getting help from an accountant if you have a business, investment properties, complex deductions, or are being audited by the tax office.
This document provides an overview of the history and development of the Index to Plant Taxonomic Literature (IPTL) and its electronic archive (TL-2). It notes key individuals involved like Frans Stafleu, Richard Cowan, and Dan Nicolson, and important milestones such as the creation of the printed index (ING) in 1967 and the conversion to an electronic database (TL-2) containing over 1.2 million records. It also includes a quote from Richard Cowan expressing his hope that the electronic archive would be maintained indefinitely as an important international resource.
At the conclusion of this course, the learner will:
Have a broad understanding of the banking system; its resources and opportunities as it applies to micro enterprises
Be aware of the needs, limitations and resources of your professional banker and the ways in which you can leverage these to your benefit
Preparing Your Company for the Next Level – Obtaining Bank Financingjpnash
The document provides information about obtaining bank financing for a company. It discusses cultivating relationships with banks, what bankers look for in lending, typical loan products and processes, assessing borrowing needs, and best practices for using external funding and requesting loans. Key points include choosing banks based on integrity and professionalism, having proper documentation ready, understanding the 5 C's of credit, and preparing clear loan requests with quantitative calculations and qualitative assessments.
This document provides information about library resources and services available to students at Scottsdale Community College. It outlines the technology available to students like computers and laptop checkout. It describes different study areas and sections for physical library materials like books, periodicals, DVDs and some textbooks. Electronic library materials are accessible online through databases and ebooks. Students need to login with their MEID when accessing electronic resources off campus. The document explains how to get research assistance from the library and outlines the different logins used at SCC for computers and online services.
This document is a list of attendees at the Future Camp event where networking and brainstorming will take place. Participants will break into groups and get connected by deciding how to best stay connected in the future through potential annual events, online, or through social media. The future methods of connection are left up to the attendees to determine.
The video introduces different community helpers through a series of shots featuring Ms. McConnell and the helpers. It begins with Ms. McConnell explaining what a community is and the need for helpers. The video then cuts to individual helpers, using both interviews and footage of them doing their jobs. It features fire fighters driving a truck and going down a pole, police officers at a station and using tools, and a postal worker delivering mail. It closes with Ms. McConnell explaining an upcoming unit and puppet play scenes of children portraying different helpers.
The document outlines Nova Southeastern University's NSU Experience model, which aims to increase student involvement, connection, identity development, recognition, and support in order to improve outcomes like belonging, affinity, and retention. The model identifies orientation leaders, resident advisors, student leaders, and regional campus directors as "connectors" to link students to involvement opportunities. Assessing involvement, satisfaction surveys, and institutional data will evaluate the model's success in achieving its intended outcomes.
The document summarizes key facts about elephants. It describes their physical features such as their gray skin, floppy ears, and long trunk. It notes that elephants are the largest land animal. It discusses their habitats in Africa's savannas and forests. It also outlines their diet of plants, their social structure in family herds led by the oldest females, and notes that they spend 16 hours a day foraging for food.
This document discusses taxation of shares in Australia. It explains that companies pay 30% corporate tax on profits and then pay dividends to shareholders which are then taxed as personal income, resulting in double taxation. To address this, the government implements a dividend imputation system which refunds corporate taxes paid to shareholders through franking credits. When receiving dividends, shareholders report both the cash amount and franking credit as income, using the credit to reduce personal taxes owed. For capital gains from share sales held over 1 year, only half the gain is considered assessable income.
Communications Trends For 2015 - Creative Approaches to Content Promotionprnewswire
Robert Rose, Chief Strategy Officer, Content Marketing Institute
Eva Rohrmann, Director, Solutions & Channel Marketing
PR Newswire
Don Montuori, Vice President of Publishing, MarketResearch.com
This document contains summaries of several traditional Chinese herbal formulas used to nourish the kidneys, tonify essence, and aid fertility. The first section describes two formulas: Yu Shen Tong Luo Fang which tonifies the kidneys and channels, and Yu Shen Pei Yuan Fang which nourishes the kidneys and consolidates the primordial. The second section details the formula Zi Shen Yu Tai Wan which nourishes the kidneys and aids childbearing. The third section introduces the formula Qi Zi Yan Zong Wan made of seven herbs. The last section presents the formula Zan Yu Dan for nourishing and aiding.
The document discusses using Tumblr to curate an art collection and raises questions about emerging online publishing and creative tools in Japan. It notes that Tumblr was created to curate an artist collection and that reblogging is a form of curation. It asks who has yet to embrace online publishing, where Japanese creators spend their time online, what emerging creative communities and tools exist, and what tools may be missing. It closes by questioning sentiments around public creative expression and who comprises the market for such expression.
This document provides information about preparing a tax return in Australia. It discusses who needs to file a tax return, how to prepare the first return including what software and documents are required, how to calculate capital gains, and tips for completing the return. It recommends getting help from an accountant if you have a business, investment properties, complex deductions, or are being audited by the tax office.
This document provides an overview of the history and development of the Index to Plant Taxonomic Literature (IPTL) and its electronic archive (TL-2). It notes key individuals involved like Frans Stafleu, Richard Cowan, and Dan Nicolson, and important milestones such as the creation of the printed index (ING) in 1967 and the conversion to an electronic database (TL-2) containing over 1.2 million records. It also includes a quote from Richard Cowan expressing his hope that the electronic archive would be maintained indefinitely as an important international resource.
At the conclusion of this course, the learner will:
Have a broad understanding of the banking system; its resources and opportunities as it applies to micro enterprises
Be aware of the needs, limitations and resources of your professional banker and the ways in which you can leverage these to your benefit
Preparing Your Company for the Next Level – Obtaining Bank Financingjpnash
The document provides information about obtaining bank financing for a company. It discusses cultivating relationships with banks, what bankers look for in lending, typical loan products and processes, assessing borrowing needs, and best practices for using external funding and requesting loans. Key points include choosing banks based on integrity and professionalism, having proper documentation ready, understanding the 5 C's of credit, and preparing clear loan requests with quantitative calculations and qualitative assessments.
Approaching Your BankerTips1. Keep in mind tha.docxrossskuddershamus
Approaching Your Banker
Tips
1. Keep in mind that to stay in business banks need to make loans.
Do not be afraid to ask for one. That is what the Commercial Account Manager wants you to do. To increase your chances of getting a loan, look for a bank that is familiar with your industry and who has done business with companies like yours. Seek out banks that are active in small business financing. Some banks lend on a conventional basis (lending money without government support), while some banks participate in government programs (in the form of government participations involving direct government funds or loan guarantees). However, be aware that banks often demand stiff collateral requirements for start-ups.
2. As an entrepreneur, make sure that you are thoroughly prepared when you go to your banker's office to request a loan.
You need to show your bankers that a loan to you is a low-risk proposition. Have on hand a completed Business PlanManagementMarketsMaterialsMoney Copies of cash flow (12Mth) Financial statement projections (3-4yrs)
3. Learn to anticipate every question that he or she has. Remember, the combination of information and preparation is the most powerful negotiating tool in the world. A confident and thoroughly prepared borrower is four times more likely to have his or her loan approved than a borrower who does not know the answer to some of the basic questions a banker asks. To show the extent of your preparedness, your business plan should also include answers to your banker's questions.
These questions normally are:
How much money do you need? Be as exact as possible; although adding a little extra for contingencies will not hurt. How long do you need it for? Be prepared to go into detail about what the money will do for you and why your business is a good risk. What are you going to use it for? Businesses use loans for three things: to buy new assets, pay off old debts, or pay for operating expenses. When and how you will repay for it? Your cash flow projections should provide a repayment time frame. Convince the banker of the long-term profitability of your business and your ability to repay the loan by using your financial projections and business plan. What will you do if you do not get the loan? Is your request Safe and Sound.
4. Do not take an apologetic and negative attitude. Keep your negativity in check. Present yourself as an entrepreneur who can and will repay the loan. Boost your image by providing your Commercial Account Manager with any promotional materials about your business, such as brochures, ads, articles, press releases, etc.
5. Dress in a professional manner for the interview. This is a business transaction, so treat it as such.
6. Do not stretch the truth in your loan application. Broad, unsubstantiated statements should be avoided. The lender can easily check many of the facts on your application. If you cannot support statements with solid data, then don't make them.
The document discusses ratios that small business owners can use to evaluate the health of their business when applying for a bank loan. It recommends focusing on liquidity ratios like the current ratio and quick ratio, which measure a business's ability to meet short-term obligations, and the debt-to-equity ratio, which measures leverage. The document provides an example of calculating these ratios for a sample business using numbers from its balance sheet. The ratios calculated indicate the business has adequate liquidity and reasonable leverage, but the owner should also provide a narrative discussing additional details like growth plans, customers, and internal controls.
GUIDE - Buyers - Guide to buying a HomeJosie Boyter
The document provides information and guidance to help a client prepare for and navigate the home buying process, including estimating their budget and what they can afford, reviewing their credit, gathering necessary documents, speaking to a lender, and understanding different loan types and costs. The client's real estate agent will guide them through each step, answer any questions, and help them find a home that meets their needs and desires.
Ratio Analysis and Business Performance – Why Should I Care – Part 2?McKonly & Asbury, LLP
The webinar is hosted by David Blain, Partner and Director of McKonly & Asbury’s Entrepreneurial Services Group, and Eric Fischer, Benefits Advisor at American Family Life Assurance Company of Columbus (Aflac).
This webinar is a continuation of the first webinar hosted on May 30, 2019. This webinar focuses on debt covenant and leverage ratios most used and reviewed by banks and other lending institutions. The webinar also focuses on how banks and lending institutions view these ratios and how to best prepare and present your business for compliance with these ratios.
This document is a guide to help clients through the home buying process. It discusses gathering documents like pay stubs, tax returns, and credit reports to understand affordability. It also covers getting pre-approved with a lender to learn financing options like fixed or adjustable rate mortgages. The guide emphasizes understanding interest rates, fees, and working with realtors or brokers to find the right home and loan.
The document provides tips for businesses seeking capital from banks, including preparing an executive summary and financial documentation, demonstrating adequate cash flow, articulating the business model, knowing how loan funds will be used, and ensuring good personal credit. It also outlines general bank requirements, the proper use of capital, cash cycles, the importance of a business plan and cash flow, collateral needs, the role of personal credit, cash injections, the U.S. Small Business Administration loan programs, optimizing chances for loan approval, and timing loan closings.
The document provides advice for financial advisors on helping clients dealing with cash flow issues. It discusses using treasury management products like remote deposit, ACH payments, and zero balance accounts to improve cash flow. It also recommends advisors check if their client's bank is financially stable and still lending before putting the client's financial destiny in its hands. Advisors should find clients a profitable bank that is adequately capitalized and actively lending if their current bank has regulatory issues.
FICO scores are a measure of credit risk calculated by Fair Isaac Corporation based on a credit report. Payment history makes up 35% of a score and factors like on-time payments, amount owed, length of credit history, new credit, and credit mix each influence the score. Individuals can improve their scores by paying bills on time, keeping credit utilization low, maintaining old accounts, and applying for new credit judiciously over time. A FICO score considers all these categories together to assess risk rather than any single factor.
To find a respectable payday lender, one should research online reviews to learn what others say about companies' reputations, services, and treatment of customers. It is important to understand all terms and costs associated with loans to avoid hidden fees, and to avoid lenders that require faxing documents or credit checks. Direct lenders may offer lower rates than brokers who charge commissions. Preventative maintenance and savings can help reduce unexpected expenses that lead some to rely on high-interest payday loans.
Financial advisors provide advice relating to investment strategies, mutual funds, bonds, and stocks, and their knowledge is more necessary than ever as Baby Boomers near retirement. Here's how to start your career as a financial advisor. In other words financial planning is the process of assisting the house owners in meeting their goals like child’s education, car purchase, vacation, retirement and so on, by way of appropriate management of the finances.
For more information visit now http://www.financialadvisertips.com
This document provides guidance on three key areas to understand before applying for a bank loan: 1) Knowing your business's cash flow needs by understanding billing cycles, costs, and how much working capital is required; 2) Having your business plan, financial statements, tax returns, and contracts in order; 3) Finding the right banker by asking for referrals from your existing bank or network and presenting your loan request information clearly.
This document provides an overview of credit scoring and its importance. It discusses the five factors that determine a credit score, including payment history, credit utilization, credit history length, credit mix, and number of inquiries. A low credit score can significantly increase interest rates on loans like mortgages, costing borrowers thousands over the life of the loan. It also outlines tips for improving credit scores, such as paying bills on time, keeping credit utilization low, and maintaining a mix of different credit types. The document emphasizes the importance of not making changes to credit reports or applying for new credit during the loan application process.
Get the perfect guidance to know how to get into owning ur own credit repair. You can easily find answers for your questions regarding credit business. Come here https://ccasite.org/
Let’s Talk: How to build a strong business credit profile?maziarforoudian1
The goal is always to have good credit, but it becomes much more important when it comes to business credit. New businesses must establish good credit since it makes it easier to secure capital and may qualify them for better terms from vendors.
Furthermore, some B2B goods and services may have a prepayment obligation and a strong credit rating, which can be used to negotiate with suppliers and vendors. Now that we’ve established the importance of a strong business credit score let’s look at how you can cultivate one from the bottom up.
In this week’s Let’s Talk, we asked experts how to develop a great company credit profile.
SMEs are an important part of any country's economy and provide opportunities for banks to diversify risk and earn higher profits. However, SMEs also carry more risk than larger businesses due to issues like lack of organization, financial transparency, and succession planning. The document discusses how the State Bank of Pakistan defines and regulates small and medium enterprises. It also provides tips for bankers to properly assess SME funding needs, obtain stronger security, and mitigate risks through steps like validating financials, market checks on owners, and close initial monitoring.
This document provides information about the requirements for obtaining business financing. It discusses the importance of having proper financing for a small business. The document outlines what a lender will evaluate in a funding assessment, including business structure, licenses, credit profiles, financial records, and a business plan. It also explains that personal credit is heavily weighed, as it demonstrates an individual's ability to repay debt and manage finances. The personal credit section analyzes the factors that determine a credit score, such as payment history, amounts owed, credit history length, new accounts/inquiries, and credit mix. Maintaining a credit score above 720 and keeping debt ratios below 30% are recommended for optimal funding chances.
This document provides a guide to understanding credit reports and maintaining a healthy credit score. It discusses the key components of a credit report including personal information, credit accounts, inquiries, and public records. It then outlines factors that affect credit scores such as payment history, credit utilization, length of credit history, and types of credit. The document concludes by providing tips for keeping credit in good standing such as paying bills on time, negotiating delinquencies, and using MyFico.com to monitor credit scores.
After 30 years in the banking industry, I have never seen such a dramatic shift in the banking industry, banks are being seized by the FDIC, many business owners are having difficulty finding credit to finance their business, leaving them both frustrated, confused and scared about their ability to finance their businesses. What I hope to cover today is a guideline for how to navigate your banking relationship by understanding the financial health of your bank, understanding what your bank may be looking for from you and understanding if those requirements have changed. We’ll also talk about how to optimize your relationship with your banker to create an atmosphere of a mutual proactive approach to the relationship and an understanding of what your bank can or will do when you loan matures.
The combination of events in the housing industry and in the investment banking community have created a crisis of confidence in the banking industry which has affected the business owner in his/her ability to obtain short term or long term financing. Many business owners are wondering is the ability to find financing based on their condition or the bank’s condition. It may be helpful to check out your bank’s financials on the FDIC web page
The FDIC does not publish any ratings of the banks, because the regulators consider this information confidential. However, they do publish the financial information for all banks on their web site, updated quarterly. You would want to know your bank’s performance relative to the criteria on the prior slide, capital, asset quality, management, earnings or liquidity. It may be difficult to analyze this information yourself, but if you want to contact me directly, I’ll be happy to help you.
Your bank asks for financial information at certain intervals depending on the amount of monitoring your loan requires. For some businesses, it can be monthly, but all loans are typically looked at by the bank on an annual basis. The bank will look at your most recent three years historical financial information and will identify any positive or negative trends in any of these areas. Your capital can be affected by profits, losses, distributions or contributions of equity. Asset quality can be affected by stale assets, either AR or inventory. Have there been any significant changes in management. Earnings is affected by any changes in margins or volume as well as increases or decreases in expenses. Changes in liquidity are affected by sales growth or decline or changes in collections or payables. These are all things you bank is looking at whether they tell you or not.
A great relationship with a bank can mean the difference between a company riding it out or closing its doors. And, the first step to building this relationship is proactive communication. Business owners should make the bank aware of any changes in their business and the market in which they operate. The second step to building a relationship with a bank is to speak the right language. A business owner must know what to communicate and be prepared to speak the lender’s language. Along with an update on operations, the owner should be prepared to speak on several financial aspects such as how quickly the company operations are generating and using cash, and financial benchmarks which gauge the strength of the company’s balance sheet and the effectiveness of current operating income. Typical financial measures include short term–current ratio (current assets/current liabilities), long term–debt to equity (total debt/total equity), sales as a percentage of working capital, return on assets, and gross margin percentage. The future direction of the company is another important topic of conversation with your lender.
Whenever possible, your banker should be prepared to address your banking needs for the future. You may want to begin this discussion in advance of your maturity date, it’s important to make sure there are no unmet expectations on either side. There have been changes in the banking industry where many of the decisions are consolidated in a central environment and the bankers they employ in the field have little to no authority over your banking relationship when it comes to your line of credit. Try to discreetly find out how credit decisions are made in your bank.
It is certainly desirable to understand the financial health of your bank in order to understand what they may do when your loan matures. If the bank is unhealthy, they may choose not to renew your line of credit or term loan. They may increase the rate or fee because of some pricing changes they may have to make, they may change the collateral or covenants to decrease the amount of risk they perceive they have in your credit facility. If possible, try to flush out all of these issues well before your maturity. Like business owners, bankers themselves do their own reassessment during difficult economic times and this includes evaluating clients with higher levels of risk. Accordingly, banks will seek additional information to better assess their level of exposure.
In addition to the maturity, many banks will institute certain types of formula or financial ratios that they expect the company to keep. A formula called a borrowing base is where the bank will loan a % of your accounts receivable this is typically between 75 and 80%, it can exclude AR that is over 90 days aging and can exclude significant client concentrations. Covenants can include changes of ownership or management, it can include certain financial ratios tied to liquidity, leverage or cash flow. Your bank considers the commitment letter that both of you signed to be the primary operating agreement other than the note and your collateral documents. It is wise for you to have your commitment letter reviewed to understand what the potential issues are.
Many times your note can have language that triggers an increase in the interest rate or an acceleration of the maturity. It’s important to know what your rights or the bank’s rights are with respect to those documents. You should consider having those documents reviewed by an attorney or a banking professional.
First, I believe relationships are important and are rewarded based on an investment of time and money. I would encourage any business owner to remain loyal to their banker provided that loyalty is reciprocated. One-sided relationships do not last. As I mentioned earlier that there has been a dramatic shift in the banking industry and many banks have internal issues that cause them to take their eye off client retention. If you are experiencing any of these issues, it may be time to get a second opinion
Have your CPA or bookkeeper prepare a thorough analysis of each account on your balance sheet. More often than not there will be some significant balances that need adjustment. Its very dangerous to be making business decisions about things like AR and inventory when the account balances you are looking are wrong.
Get with your industry associations and find out what kind of financial benchmarks and statistics they provide. One of the best way to evaluate your financial performance is to compare your results against other companies in your industry. This could be critical information that you may not be performing as well as you could. This may be the wake up call you and your team need to get focused on making your business more profitable
The process of creating a budget forces you and your team to really think about your business plan and what is most likely to happen next year. It helps you determine what has to happen in order to achieve your financial objectives. It creates accountability. You need to budget down to the detailed account level so you can enter that budget in your accounting system. Then every month you can review you income statement with the budget numbers by account. This will make your monthly review of the numbers fast and easy
Your budget projects specific revenue and expense categories and arrives at budgeted net income. Your collection of AR, purchase of inventory, loan payments, capital expenditures, accounts payable and other items that affect your cash flow also