Your Personal Trainer for Financing Fitness

Guest writer, Lynette Hilgenberg, Vice President and Advertising Manager of Bank of American Fork shares her expertise on getting a loan: Every year hundreds of thousands of people turn to a personal trainer to help them get in shape. Some of them are already in good shape, some not so much. It is the trainer’s job regardless of the person’s condition to provide motivation and support in order to help clients improve their exercise techniques. A personal trainer is familiar with the way the body works. In fact, most fitness workers need to be certified. When a person hires a trainer she knows the trainer will do everything she can to make sure her body is in tip top shape. Similar things could be said of loan officers.

A loan officer will help guide you through the process of applying for a loan and when you are ready he or she will stand before the loan committee and present your case. The loan officer who is familiar with the way lending works will be more than willing to help you get things in order. There are many factors that banks must consider in approving a loan. These range from recent changes in lending regulations and market conditions, to the character of the loan applicant and the condition of the application itself and the financials included. Let your loan officer be your personal financing trainer.

The first and most important thing your loan officer will look at is your character. It’s important that you help him get to know you. One way that you can present yourself in a positive manner is to be prepared.

So what do you need to show the officer? She’ll want to see your capacity to repay the loan. The lender will look at the cash flow from your business and the probability of successfully paying the loan back on time. You’ll want to have very good accounting records that go back at least a few years. Have your financials supervised by an accountant if possible. Can you show that your currents assets outweigh your current liabilities? A current ratio of assets to liabilities of 1.5 to 1 is good, but it can depend on the industry you work in. Can you show that your business has a history of profitability? Are your records reliable and consistent?

To give the loan officer a complete picture of your financial condition be sure to bring a balance sheet, an income statement (less than a year old), statement of cash flows, statement of net worth or retained earnings and footnotes.

The loan officer will want to know how much of your money you have invested in the business, an indication of how much you have at risk if the business fails. She wants to know what’s at stake for you.  The lender also needs to know that you can provide additional forms of security if you’re unable to repay the loan. Be prepared to tell the officer what you plan to do with the money. Is it for equipment, inventory, or working capital? In addition the lender will be taking the economic temperature of your industry and the industries that could affect your business.

After looking over all of your information the lender will then do some research. She will confirm balances with banks and creditors, trace transactions, and count inventories. She will make sure your financial statements fairly represent your financial condition. If everything is in order and she thinks you are ready she will make your case to the loan committee.

When everything is said and done it, whether your loan is approved or not, do not take the result as a personal validation or rejection. It is important to remember that there are many factors that a bank’s loan committee must consider that go beyond the application. Economic and market conditions are important factors. And State and Federal regulators play a strong role in managing the parameters of a bank’s loan portfolio—how much the bank can lend in each area, such as commercial or real estate lending. All of these additional factors combined with the fact that business financing will continue to be an important element of your business strategy throughout the years support the need for developing a long term relationship with a community banker. Your personal financial fitness trainer can be a valuable partner for the long-term success and strength of your business.

Lynette Hilgenberg has had 29 years of experience in the banking industry and is the  current Vice President and Advertising Manager at Bank of American Fork in Provo, Utah. When Lynette isn’t working she likes to spend time with her family, sew, read and go horseback riding.

Thank you Lynette!