How to Make Your Business More Bankable – Part 1 of 3 “Smart Business Banking Series”

| Business Miscellaneous, Financial

By Natalie Hopkins & Chris Mennel     The economy is improving.  The stock market is breaking records.  Your business spent the past 4-5 years either in a rebuilding mode or struggling to show positive or even break even financial results.   Fast forward to the present – now you have identified growth opportunities, but are fearful that no bank will lend you money without strong financial results.  There are several things you can do to make your business more attractive to a new banking relationship.

Build the relationship.  Your best chance of long term success with a bank is to establish a relationship with your banker by regularly touching base.  Let them know the full cycle of your company.  Then when a financial need arises, approach your incumbent bank first because they already know your story.

Expedite the lending process.  In those circumstances when your current bank is not your best option, Alerding CPA Group has had a high success rate of moving our clients to a new lending institution.  We  compile a comprehensive packet of information we know the banks will  require.  By providing these pertinent documents up front, we minimize the number of bank requests for additional information; thereby, significantly expediting the lending process.

Don’t cut corners on compliance services.  One of the first things a potential lender requests is historical financial statements.  Providing financial statements from an independent third party lends credibility to your company.   In an effort to save money, sometimes businesses downgrade their annuity work from an audit to a review or from a review to a compilation or even to nothing at all.  Don’t jeopardize your future lending needs by cutting out your annual compliance services.

Conduct a three-year financial statement projection.  Consider a three-year financial statement projection rather than an annual budget.  This projection gives the bank a complete balance sheet, income statement and statement of cash flows along with notes stating management’s assumptions.  Showing them the cash shortfalls also shows how the funds will be spent allowing them to structure the most beneficial package for you.

One of the cornerstones of Alerding CPA Group’s success is the relationships we have established with area bankers.  We recognize that one bank will not be the right fit for every client.  Therefore, we work with a number of local banks and often receive proposals from four or more so that our clients can choose the package that best fits their needs.

In our next segment, we will discuss how to maintain this newly developed banking relationship.

If you have a banking need or want to discuss how to improve your banking relationship, please contact Chris Mennel, 317-569-4181 ext. 260 or cmennel@alerdingcpagroup.com.  Alerding CPA Group is an Indianapolis-based public accounting firm. Visit our website: www.alerdingcpagroup.com.

This post was written by:

Natalie Hopkins, CPA
Audit Manager

Natalie services audit and assurance clientele with their annual compliance needs and general consulting services. Her client base includes wholesale/distribution, manufacturing, retail, service organizations, and health and welfare organizations. Natalie was chosen as an “Emerging Leader” by the Indiana CPA Society.
See Natalie Hopkins’s Full Bio ►

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