Banking in Today’s

Environment.
What do banks look for when
evaluating your loan applications?

 Earnings
 Financial Condition
 Management Experience
 Credit History
 Collateral
What do banks look for when evaluating your loan application?

Earnings
 Net Income
 Cash Flow Available for Debt Service
What do banks look for when evaluating your loan application?

Financial Condition
Balance Sheet Analysis to support the
Financial Health of the Company
What do banks look for when evaluating your loan application?

Management Experience
Resume of each owner and key
management members and their industry
knowledge.
What do banks look for when evaluating your loan application?

Credit History
 Reports from outside agencies, references, other bank
customers
 Evaluation of your personal credit and business credit
history

 3 Years Financial Statement

 3 Years of Personal and Business Tax Returns
 Personal Financial Statement
 Accounts Payable and Receivables
What do banks look for when evaluating your loan application?

Collateral
List real property and other assets to be
held as collateral.
What do banks look for when evaluating your loan application?

Most loans will have at least two

identifiable sources of repayment:

1. Cash flow generated from profitable

operations.
2. Collateral pledged to secure the loan.
3. Personal Guaranty.
Trend Analysis
Review of historical results to identify trends
or patterns in performance.
Early Warning Signs
May affect your relationship with your bank
and loan officer.
Examples of Early Warning Signs

 Failure to provide information requested by the bank

 Borrower becomes hesitant to allow lender to visit
their operations
 Frequent changes in high level management
 Frequent changes in accountants
 Borrower who expects an immediate decision.
Examples of Early Warning Signs

 Payment Delinquency
 Repeat Overdrafts
 Increase in Loan Requests
 Tax Liens
 Unusual Capital Withdrawals by Owners
 Communications with Lender Ceases
Communication with your
Lender is KEY.
Be honest and trust your lender. Your
Lender is your partner.
Thank you.