How To Get Your Credit Team To Quickly Process & Approve Your Deals!
Victor Castillo
I help Business Owners & CRE Investors secure the capital they need to execute their growth strategies, and I help bankers become Business Banking Superstars!
All of the credit teams I ever worked with had one thing in common: they all loved to work on complete loan application packages! If you want your credit team to fall in love with you, start submitting complete loan application packages! If you want your credit team to approve your deals at lightning speed, start prequalifying your deals before you ship them up to your credit team! If you want to get your deal off the street and shut out any other business bankers, you need to quickly put together a complete loan application package and prequalify your deal so that you can make a compelling case for your credit team to support your deal right out of the gate! You can put a complete loan application package in 5 easy steps!
Step 1:?Send A Personalized Needs List
If you can, determine who your borrower(s) and guarantor(s) are going to be. Put together a list of the documents you need for each borrower and guarantor. Talk to your credit team about what is typically required for the operating business, the real estate holding company and the individuals (aka business owners). Below is a list of the documents that the majority of banks require for these entities. Personalize your needs list by using the actual names of the borrowers and guarantors that will be participating in the transaction. Most bankers send out a generic list. By personalizing the needs list, you set yourself apart from other bankers right out of the gate! Additionally, offer to contact their CPA to get the package going!
The Operating Company:
o??Financial Statements:?3 most recent company or CPA-prepared
o??Federal Tax Returns:?3 most recent with all schedules attached. If the most recent tax return has not been filed, you will need to include a copy of the extension and a financial statement for that year.
o??Interim Financial Statement:?current year-to-date
o??AR & AP Aging Report
o??Inventory Report
o??Schedule of Debt
o??Bank Analysis Statements:?2 most recent
o??Loan or Line Statement (if refinancing or paying off)
o??Business Insurance Information
o??Formation Documents: If S or C-Corp:?bylaws & articles of incorporation, If LLC:?operating agreement & articles of organization, If Partnership:?partnership agreement, and If SBA 7(a) loan request project cost breakdown.
The Real Estate Holding Company:
o??Federal Tax Returns:?3 most recent with all schedules attached. If the most recent tax return has not been filed, you will need to include a copy of the extension and a financial statement for that year.
o??Schedule of Debt
o??Rent Roll & Copies of Leases:?if less than 100% owner-occupied or investor
o??Formation Documents: If S or C-Corp:?bylaws & articles of incorporation, If LLC:?operating agreement & articles of organization, If Partnership:?partnership agreement, and If SBA 7(a) loan request project cost breakdown.
o??Loan or Line Statement (if refinancing)
o??Insurance Information
o??Purchase Agreement (if acquiring real estate)
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o??New Real Estate Holding Company: Tax ID and Formation Documents
o??Construction Loans: Approved Plans, Construction Budget, and Contractor Financials.
The Business Owner(s):
o??Personal Financial Statement
o??Federal Tax Returns:?3 most recent with all schedules attached. If the most recent tax return has not been filed, you will need to include a copy of the extension.
o??Bank & Brokerage Statements:?most current
o??Trust:?if operating or real estate holding companies are owned by a trust
o??Schedule E Companies:?If you own any multiple other businesses, you will need to at least submit the 3 most recent Schedule K-1s and a schedule of businesses owned. If you own multiple investor properties, submit a schedule of real estate.
Step 2: Use a Secure File Sharing Service
The typical business loan application package contains a lot of documents. If you want to get a complete loan application package fast, you need to make it easy for your prospect or client to send you the files! Most banks have a secure file sharing service. Learn to use it and send your prospect the file sharing request. If you are using email, don’t be surprised if takes forever to get the files or if you don’t get the files at all! Trying to send tax returns via email is one of the most frustrating experiences business owners have when applying for a business loan! You need to make it as easy as possible for them to get you the information you need!
Step 3: Review The Documents Your Client Or Prospect Sent You
As soon as your client or prospect starts sending you the documents, review them to determine if there is any missing information. Review the Personal Financial Statement to determine if they own any real estate other than their primary residence. If they own commercial real estate, confirm that it is owned personally or in a real estate holding company. Business owners regularly include commercial real estate owned by a real estate holding company on their PFS. If the CRE is not owned personally, you will need to ask for the Schedule K-1s or tax returns (based on your bank’s credit policy). Review the Schedule E Part 1 & Part 2 of the personal tax return. Schedule Part 1 will list any income properties they own personally. Make sure these properties are disclosed in the PFS. Schedule Part 2 will show the business entities in which they have ownership interest. If there are businesses listed in Schedule E Part 2, you will need to?get the Schedule K-1s or tax returns (based on your bank’s credit policy). Review the operating business’ schedule of debt and the business tax return’s Schedule L to ensure that all the business debt is accounted for. If you do this, you should be able to catch most of the missing information!
Step 4: Update Needs List & Send It Back Out
If you determine in Step 3 that there is additional information you will need, update your original needs list and send it back to your client or prospect. Remove any documents you already received and add the missing information. Keep the fire lit under your client or prospect. Offer to follow up with the CPA to speed up the process.
Step 5: Prequalify Your Deal
Putting together a complete loan application package is half the battle! You also need to get your credit team to buy into your deal fast! The proven method to get this done is to prequalify your deal. By prequalifying your deal before you ship the file to your credit team, you are setting the “approval tone”. If you determine that your deal is “doable”, it significantly increases the probability that you credit team will concur with your assessment and quickly support your deal. I recently published a LinkedIn article on how to prequalify your deals. See article link below.
Bizpetrol has information, insight and tools that will help you become a Business Banking Superstar!?You can start elevating your business credit skills using the free Commercial Lending Toolkit at www.bizpetrol.com. You can see all the Business Banking articles (like this one) at www.bizpetrol.com/blog. You can access a series of how-to business banker guides at https://www.bizpetrol.com/Downloads-Free. Please spread the knowledge and share the article with your colleagues!?Follow #bizpetrol on LinkedIn!