Accessing Credit: How to Sweep Your Banker Off Her Feet
Share current LOB: small-business-banking
Credit is the lifeblood for growing firms and for the economy overall. As the economy recovers, businesses are slowly but surely riding the wave to stronger bottom line profitability. Small businesses wanting to grow and expand, or simply secure their position within their industry segments, are now finding credit more accessible because of their improved financial position.
Three key elements that help you access credit
What does your business have to do to obtain the credit you need? Simply give your banker a better insight into how your company operates and its overall potential through an engaging, thorough and well thought out business story. The three areas of interest to your banker that should be included in your story are:
Business environment and plans
Integrity and reputation
Picture how you might use credit for your business situation:
Young companies may benefit from the flexibility of a line of credit, fixed terms and payments of a term loan, or Credit cards for small purchases.
Growing companies might make use of SBA loans or conventional term loans.
Mature companies might benefit from term loans, lines of credit or even equipment leasing to preserve working capital for other uses.
Your company’s level of financial reporting is a prime indicator of how well you handle and understand the underlying economics of your company. Your banker will therefore want to know what type of reporting you will be able to provide to the bank that can show them:
Balance sheet statement
Income statement (to show operating profits, margins and net profits)
Net profits (how much money you retain/reinvest in the business annually)
Accounts receivable aging schedule
Schedule of business debt
Loan to value on real estate holdings
Fluctuations in sales, inventory levels, production
The ability to provide cohesive reporting on the financial fundamentals listed above will help your banker recognize the level of financial understanding you have as well as the relative financial position of your company today.
Business environment and plans
Understanding your recent history, looking objectively at current conditions and making a compelling case for your future business plans are all influential parts of the background a banker needs to assess your company’s credit opportunities.
Business history: Tell you banker how your business began, the challenges overcome and victories achieved throughout its stages and how you have participated along the way.
Competition: Include an overview of the competition in your market and how you have met challenges, demonstrating your understanding of the strategic pressures and opportunities present in your business segment.
Projections: Combine an overview of your past 12 months with 12 to 18 month projections to indicate how you think your business will react to shifts in the economy, product manufacturing or services supplied, including a realistic expectation of how the funds you are requesting will be used and to what outcome.
Integrity and reputation
Facts, figures and documentation are the backbones of the support you will need to have on hand as you craft your story. But in this day and age, bankers really want to understand, and be comfortable with, the owner or key manager at the company. Bankers want to know who you are, what you stand for and how you will react in stressful situations. You can really sweep your banker off her feet by being honest and open – transparent. Chronicling negative situations and how you solved for them go further to promote your character than glowing recitations of all that has gone right for you and your company. A banker wants to know that you are able to talk openly and honestly about all situations – with the implication that those open communications will continue throughout your relationship.
Building character into your story rounds out the whole picture for your banker and can make or break the credit-worthiness perception of you and your company.
Tell your story properly to position your company for credit
Expressing your financial insight, company history, overall character and views of the future – warts and all – is truly a banker’s dream. In order to make a knowledgeable, and financially sound, decision about extending credit, a banker wants, and needs, to understand everything about you and your business. This is why a thoughtful, knowledgeable, even provocatively, conveyed business story will differentiate when it comes to obtaining credit.
As you work with your banker, it will also help you to understand her role in the bank. Typically, banks separate credit and relationship management, meaning that you usually are not dealing face to face with the ultimate lending decision maker. You will want to meet with as many bank representatives (credit managers, your banker’s boss and the boss’s boss) face to face so you can personally impress them with your story and business focus. Also remember that relationships take time to build, so meet your bankers well before you need funds and keep sharing your plans and successes along the way to strengthen your overall relationship and position yourself for credit when you need it.
SunTrust takes pride in developing a complete relationship with you in order to understand your business needs and deliver sophisticated and flexible credit solutions. Ask your SunTrust banker how we can help you grow and strengthen your business today.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.