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11-19-2019, 08:07 AM #2
Reputation points: 68233
- Join Date
- Dec 2014
- Location
- Quogue, NY
- Posts
- 1,108
Gil,
By all accounts you are a very nice man- and we appreciate that you sent us a few files. It isn't about knowing lenders or brokers- it is about preparing a file for a loan.
Banks need to see 2 years of personal and corporate returns (minimally), and YTD PL and Balance. They need to understand the credit of the guarantors, and see that the client has the wherewithal to pay back the loan, and when collateral is needed- enough to attach to in the event the client goes sideways.
Unfortunately the amount of documentation needed is infinitely greater than the MCA world, and the clients need to understand that- and have realistic expectations. Your Construction client out of Texas- the one that showed COGS greater than his sales- and blatantly appeared to be a fix and flip entity: given losses, volatile business type- with other debt on the Balance Sheet- made his business not attractive to a bank to lend to. THAT'S why they don't have a term loan.
Just because a business does a significant topline annually doesn't mean they are 'bankable'. That's why there is alternative finance.
Creating realistic expectations is a huge part of what we all do here. Knowing what is and what isn't bankable is what defines our most valuable resource- time.
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