The Lender’s View Communicating with a new or prospective lender is about telling your story: 4 Where you have been. 4 Where you are now. 4 Where you are going. 4 How you plan to get there.

What You Provide 4 Current Balance Sheet 4 Historical Balance Sheets 4 Most Recent Income Statement / Tax Return 4 Historical Income/Returns (3 - 5 Years) 4 Detailed Projected Cash Flow 4 Concise written Plans in Adverse Situations

The Balance Sheet 4 The lender sees where you are financially and quickly develops a “first impression” (consciously or unconsciously). –What is the applicant’s financial condition? – Does the applicant understand that position? – Is it a reflection of a a good manager? – How did the current situation evolve? – In the absence of details...

Historical Balance Sheets 4 Changes or solidifies lender’s impression of the applicant. 4 Looks for earned net worth changes –Is it possible? 4 Tries to reconcile good or bad trends. 4 Will it support the credit decision?

Balance Sheet Content 4 Lists all assets with reasonable values. 4 Accurate Inventories 4 What are “COWS” or “MACHINERY”? 4 List every liability (yes, the credit cards) 4 Are debt payment schedules and loan terms obvious?

Income Information 4 Tax returns are a minimum. 4 Schedule F may be unsupportive and reviewed before an income statement. 4 Be proactive on “strange” 1040 items 4 An income statement with production information, combined with balance sheet detail provides the lender with best possible “first impression”.

Cash Flow Projection 4 Does it provide needed detail? 4 All sources and uses reflected? 4 Is it plausible? 4 Was it put together by a good manager? 4 What are the assumptions? 4 How sensitive is it?

Why a Good Presentation? 4 It may only get the loan and nothing more But... 4 Second chance at first impression is tough. 4 The world is small for a loan shopper. 4 Good information part of building trust with your lender and getting the best loan terms.