Do You Have A Borrowing Checklist? - Part Two

Do You Have A Borrowing Checklist? - Part Two

Last month we shared a few items that will make the borrowing approval process easier and more efficient. This month we have some more items to add to that list. You may already be on top of these items, in which case- outstanding! If not, hopefully this will be a useful business guide, for any current or future plans.

Most leases under $75K only require a one-page credit application but often times other issues come up, or the equipment you'd like to lease is unexpectedly more expensive than you originally though. Knowing pertinent company information, or having it easily accessible will save you precious time and let you get back to focusing on what you do best!

Continuing with the list from Sam Thacker from Allbusiness.com, here are a few of the items he lists followed by a synopsis of our own experiences at First Star Capital.

"Know several important statistical characteristics of your business." It is a good idea for management to have a list of the following items either in interim form or fiscal year form, depending on the time of the year.

Year to date gross sales

Year to date gross and net profit

Up to date accounts receivable balance

Up to date accounts payable balance

Projected annual sales for the current fiscal year

If you have proper accounting/financial reporting (as mentioned in last months article) these numbers should be very easy to gather, and will greatly expedite the borrowing process. Staying organized will reduce waiting time and have you back on operations in no time.

"Keep a one page, smartly worded, easy to understand description of your business." Having a written version of your company's "elevator speech" is always a good idea. It should never take more than a page to explain your business, what it does, how it does it, and why it is profitable. If things are too convoluted or in any way more complicated than they should be, lenders will disengage and look for more "common sense" businesses.

"Write a quick and easy to understand description of the equipment you are looking to acquire." A quick explanation of why you plan to acquire the particular equipment, and how it will benefit your organizations ability to operate is a great way to quell any questions from lenders. The clearer and more concise the information is, the higher the chances are that lenders will get this transaction done as quickly as possible.

Following these simple steps, along with the steps from the previous article, will greatly expedite the process of borrowing. Nothing is worse than having your daily operations be delayed, or worse grind to a halt. Keeping this sort of basic information updated and organized can greatly increase your chance of acquiring that next piece of vital equipment for your organization's operations.

- Brad Harmon, CLP

www.firststarcapital.com

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