10 Things I Know About...Business lending
Gene Amato is the founder and CEO of Northborough funding assistance provider Capital Biz Solutions. Reach him at Gene@capitalbiz.net
10) Banking relationships. Business owners should develop a solid relationship with their current bank and get to know the commercial management team of the bank.
9) Forging alliances. This mutually benefits all parties and should be an ongoing effort for the business owner/entrepreneur and management teams of the bank.
8) Ancillary services. Review what type services the bank offers, which will benefit the efficacy of your business, such as online banking, remote deposit capture and merchant services.
7) Business banker/loan officer. If your bank hasn't assigned you a small business or commercial loan officer, ask why. Upon meeting that individual, evaluate them.
6) Asking the tough questions. As a business entrepreneur, take note if the loan officer is asking you the tough questions about your business and your management team. You'll be able to ascertain how seasoned and knowledgeable he or she may be in a short period of time.
5) Looking for capital. Get your financial house in order by insuring that your business has the adequate cash flow to pay back the debt of the loan request.
4) Develop a strategic plan. Meet with your accountant and loan officer to discuss where you want to take your business, and ask for their guidance.
3) Review most recent financial statements. Understanding your financial statements will enhance your understanding of your business cycle and how you can improve cash flow.
2) Catch 22. Business owner always want to lower their tax liability by paying the least amount of taxes. A continual habit year after year of this practice will not benefit you or your business. In most cases, your company will not be able to display the adequate cash flow which banks will need to approve your loan.
1) Business value & equity. When it comes time to sell your business, buyers want to see how much equity remained in the business and how profitable it is. They always want to see what the ROI will be. What are the seller's discretionary earnings? What have the trends been in the most recent three years? Reporting small losses annually devalues your business and most likely you will not be able to obtain the level that you believe the business is worth.
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