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August 2008
Do You Have A Borrowing
Checklist?
Part
of keeping your business agile and ready for ever-changing
opportunities in today's marketplace is to keep your borrowing
information up to date. For most leases under $75K, a one-page
credit application and possibly recent bank statements are all that
we require. However if you are looking for a higher dollar amount or
a special circumstance arises, more information is often needed. To
save time, frustration, and possible declines take a few steps each
year to keep updated info on hand.
Sam
Thacker from Allbusiness.com has put together a borrowing checklist.
A few of the most important items that we trip across at First Star
are listed below:
1. "Make sure all
shareholders who own more than 20% of the company knows what their
credit scores are. A shareholder should be
fully informed about any negative characteristics of their report
and be prepared to proactively explain them. If a principal finds
any discrepancies, they should be handled expeditiously. Negative
entries on a credit report that are explained honestly will have
less impact than if the lender finds them and must ask about them.
2. Keep accurate and up to date
business organization records available in one place.
For a sole proprietorship, this would be any business
license and assumed name certificate. A corporation should keep
original and copies of a) articles of incorporation b) certificate
of incorporation, c) corporate bylaws (up to date), corporate
minutes, and copies of all corporate resolutions. The operating
agreement is often requested if you are an LLC. There are similar
documents for partnerships.
3. Keep good accounting records.
Lenders are often more concerned about the accuracy of the
records then the actual information presented. Keep a set of
interim financial statements for each month end or quarter and
keep a set of end of year statements for the last three years.
4. Have all shareholders who own more
than 20% of the company keep a personal financial statement up to
date. Generic forms or forms from nearly any bank are often
acceptable. Generally a personal financial statement that is less
than one year old is acceptable as long as it has not materially
changed.
5. Management should keep
easy to find proof that all necessary taxes and
governmental reports have been filed and that the company is in
good standing." |
