Does “Despicable Me” Describe Your Banker?

It does if you repeatedly accept commercial banking mysterious service or worse, allowed absentee accounting turn your banking relationship to “friendship” status.

I will be covering a 4-part series of articles about how to successfully make the business owner’s request for a loan from their banker—the expectations, misconceptions and revelations of the whole process.

Imagine you are in your office, looking over your cash needs and suddenly realize that your cash needs exceed your cash availability.  What do you do?  Logically you go to the bank to get a short term loan to tide you over.  You’ve had your business checking account there for years, since your busisness opened in fact.  Everyone knows your name, they ask about the kids.  And besides your company is profitable and you haven’t had any cash issues until now.  There are plenty of receivables that will be soon collected and you just need a little money for a short time.

Besides the business accounts, you’ve been a great, long-term customer for your personal accounts long before you started your business. So getting a short-term business loan to bridge the cash flow shortage should be a no-brainer. You’ll have the money in your account before lunch.

The visit to your banker.

You arrive at the bank and introduce yourself to one of the people sitting at a desk.  You know this isn’t something that a teller will handle.  You explain what you want, and they direct you to someone else.  Someone who can help.  It may be the assistant branch manager or even the branch manager!  Both are Vice Presidents!  You’re thinking this will be real quick because I’m meeting with the decision-makers.

The questions you’ll be asked.

After some pleasantries, the questions start – how long have you been in business?  What does your business do? What is your total revenues? How many employees do you have? Full Time? Part Time?  How much do you have in receivables?  What is you DSO on your receivables?    How much is in inventory?  What is your inventory turns?  What is your total assets?  How much is your accounts payable?  What is the aging of your payables?  Amount over 60 days? Amount over 90 days?

Then finally, how much do you need?  Based on your cash flow projections how much do you need?  And, based on your cash flow projections, when do you think you can pay it back?

Is it no wonder that many business owners who think they have a good relationship with their bank, suddenly feel like they are find themselves in a one-sided relationship.

This escalated quickly!

You explain the reasons and amount of your needs.  You are stunned by the response.  They need three years of financial statements – two past years and the most current for this year.  They also want the past two tax returns on the business.  And because you are the owner, they also want three years of your personal tax returns.  They also want a brief description of your business, strengths, weaknesses, opportunities and threats (SWOT), major competitors and projections for the next twelve months.  Once they get the information, they will write it up, take it to the loan committee/underwriters and get approval.  Shouldn’t be a problem.  The whole process should be completed in 4 to 6 weeks.

Aren’t you glad you came in?  Now what?  This scenario is not uncommon for many business owners managing the financial aspects of their business.  Let’s continue the discussion with my next post: I’m Just Asking for a Short-term Business Loan — Why All the Questions?

See my other posts in this series:

I Bring Financial Knowledge, Provide Financial Training and Generate Financial Stability

I am fluent in “financialspeak” and can translate your monthly numbers into strategies for future success.  I take companies to a higher level of success


Email :  Phone: 909-732-4917

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