From Inside the Vault...

How a banker critiques your loan package

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Your loan package will likely be the first impression your banker will have of you and your business.  A banker will begin to critique it immediately. 

Here’s how to make the best of it. 

• Three years of financial statements (balance sheet and income statement), interim financial statements less than 90 days old with the comparative financial statement for the same prior year period.  Occasionally, a bank will require business tax returns
• A personal financial statement (on the bank’s form) will be required with at least 2-3 years personal tax returns
• A 1 page background and history of the company
• A 1 page summary describing your loan request, loan amount, purpose, repayment, collateral and any other terms and conditions that are important to you

Depending on the type of business loan you’re requesting, there are a few other items

• An SBA loan will require a statement of personal history (SBA form 912), a personal financial statement (SBA form), a request for tax returns (SBA form 4506 T) and a business debt schedule (SBA form)
• A line of credit will require an aging of accounts receivable and accounts payable to match the date of the interim financial statement you provided
• A commercial mortgage loan will require a legal description, copies of any leases and a purchase contract for a purchase transaction

With these items, you should pass the critique with flying colors.  A few things to avoid in loan packages:

• Avoid fluff.  Fluff is information that may be important to you, but not to your banker.  If your loan package has no historical financials or personal financial information, you may have too much fluff.
• Avoid partial copies of tax returns or historical financial statements.  Bankers want the complete return and complete financial statements including the notes that are included in CPA prepared statements.

Need help putting together your loan package?  Contact us today!