Welcome to MAU Talks, a captivating series of conferences held every week at Millennia Atlantic University! We are delighted to present an insightful session that delves into the world of bank loans and equips you with the knowledge to access financial opportunities.
In this blog post, we will explore the intricacies of obtaining a bank loan, empowering you with essential insights and strategies to secure the funding you need. Join us for this enlightening MAU Talks conference as we introduce you to our esteemed speaker, Susie Perez, a seasoned banking professional with a wealth of experience in commercial lending and personal banking consulting. Let’s embark on this journey together, as we learn the keys to unlocking financial success through bank loans.
About the Speaker:
Susie Perez boasts nearly two decades of expertise in the banking and finance industry, with a strong focus on commercial lending and personalized banking consultation for high-net-worth clients. Over the past 12 years, she has held several leadership positions at Apollo Bank, including her most recent role as Vice President Market Leader. In this capacity, she spearheaded business development and growth initiatives in the Doral and Hialeah markets.
As a firm believer in exceptional client service and community engagement, Susie’s contributions extend beyond her professional achievements. She is deeply committed to financial education and community outreach, actively supporting non-profit organizations like Toys For Kids Miami, which works towards breaking the cycle of poverty. Additionally, Susie Perez is an esteemed member of the Hialeah Chamber of Commerce, further exemplifying her dedication to fostering strong connections between the community and its banking institutions.
Susie Perez began her academic journey at Miami Dade College, studying Business and Finance. Continuously striving for excellence, she pursued further professional development by earning a Certificate in Business & Commercial Lending from the American Bankers Association, as well as completing a diploma program at the Florida Bankers Association’s Florida School of Banking at the University of Florida.
With Susie Perez’s wealth of experience and dedication to empowering individuals and businesses through financial knowledge, her insights will undoubtedly enrich our understanding of accessing bank loans. Join us at MAU Talks and embark on a transformative learning experience, as we unlock the potential of bank loans in achieving your financial goals.
Unlocking Financial Opportunities: Join MAU Talks to Learn How to Access a Bank Loan
How to Access a Bank Loan: A Guide for Entrepreneurs
In the business world, accessing a bank loan can be crucial for the growth and development of a business. However, the process can be complicated if certain key aspects are not taken into account. In this article, we will explore the steps you should follow to access a bank loan and increase your chances of financial success.
Define your goals and acquire knowledge:
Before starting any loan application process, it is important to have clarity about your long-term goals and objectives. What do you want to achieve with your business? What are your financial needs? Additionally, it is crucial to have knowledge and experience in the area you are venturing into. Research and educate yourself about the industry you wish to operate in.
Establish a relationship with the right bank:
When it comes to accessing a bank loan, it is essential to find a banking institution that understands your business needs and is willing to provide a personalized approach. Look for a bank that is willing to invest time in understanding your business and discussing your financial goals. Community banks or non-bank entities are often more flexible in this regard.
Prepare a solid business plan:
Before applying for a loan, make sure you have a detailed business plan that includes strategies, operations, and projections. It is crucial to know the market you will operate in, identify your competitors, and understand the existing demand. Success in your industry will depend on your vision and ability to make strategic decisions.
Demonstrate repayment capacity and provide collateral:
Banks will assess your repayment capacity before granting you a loan. It is essential to show that you have experience and knowledge in your business area. If you lack the necessary experience, consider surrounding yourself with people with relevant expertise. You can also seek training or education in the field to increase your chances of success. Additionally, banks often require collateral, a person responsible for repaying the loan in case you are unable to do so.
Know the available loan options:
There are different financial options, such as lines of credit for operations, short-term and long-term loans, and government-backed loans like the SBA loan program. Understand the characteristics of each option and choose the most suitable one for your business based on your needs and repayment capacity.
Prepare the necessary documents:
When applying for a bank loan, you will need to provide certain documents, such as financial statements, bank statements, contracts related to properties or leases, and proof of capital injection. Make sure to gather and submit all the required information completely and accurately.
Submit your loan application:
Once you have prepared all the necessary documents and are confident that you meet the bank’s requirements, it’s time to submit your loan application. Schedule a meeting with the loan officer and submit all the required documents. Make sure to complete all sections of the application accurately and provide all relevant information about your business.
Maintain open communication with the bank:
During the application process, it is important to maintain open and regular communication with the bank. Respond promptly to any requests for additional information and keep the loan officer informed of any relevant changes or developments in your business. Maintaining a cordial and professional relationship with the bank will increase your chances of success.
Evaluate loan offers and conditions:
Once you have submitted your application, the bank will evaluate it and provide you with a loan proposal. Carefully analyze all the offers and conditions, including the interest rate, repayment terms, required collateral, and any other relevant clauses. Consider all the financial implications and make sure you fully understand the terms before accepting any offer.
Negotiate and finalize the details:
If you are unsatisfied with any of the proposed conditions, do not hesitate to negotiate with the bank. Some terms can be flexible and willing to adjust based on your needs and circumstances. Once you have reached a mutually beneficial agreement, make sure to review and understand all the details of the loan before signing any documents.
Fulfill post-loan requirements:
After obtaining the loan, make sure to comply with all the post-loan requirements set by the bank. This may include providing periodic financial reports, maintaining certain minimum balances in bank accounts, or meeting other specific conditions. Fulfilling these requirements will help you maintain a strong relationship with the bank and avoid future issues.
Conclusion:
Accessing a bank loan can be a challenging process, but by following these steps and adequately preparing yourself, you will increase your chances of success. Remember to have a solid business plan, demonstrate repayment capacity, choose the appropriate loan option, and maintain open communication with the bank. Good luck with your loan application and the growth of your business!
MAU Talk Transcript: How to Access a Bank Loan
“Good morning. First of all, thank you for taking the time to come, join us, and have this conversation, this talk. Speaking a bit about today, about how to access a bank loan, it seems like something that is a bit deeper when we already have a business, but the whole process starts when we have nothing planned.
I always say that in life we have a goal and we must work and make decisions around that goal. Preliminary decisions, before having a business, before working for a company, as Virginia told me, are crucial. Now it is good to think about the future: What decision can I make today that will benefit me or not in what I want at the end of my life or in the way I want to maintain myself financially?
So, I must focus on what I want to do, on my line of work, education, or training. Sometimes we study something, we perform in another field, or we find passion in another industry. Let’s follow our passion, and do what we like. When you do what you like, you give it 200% and work hard. In addition, it is essential to educate ourselves about the industry we want to enter.
Sometimes, when I sit down with people who have a certain business, I ask them: “Do you have a background in this? Did you study something about this?” And they answered me: “No, they just told me that so-and-so is making money in this industry and I also want to make money.” Let’s see if we are going to enter an industry, as I told you, we must first like it, we must have education about it and, if we do not have it, seek the necessary information to develop in it. Because if we do not educate ourselves, if we do not train ourselves, if we do not know the market, it will be a bit difficult to succeed.
Before starting the company, and we will see this a bit later, credit is very important. The decisions we make before, such as paying credit cards on time and using credit properly, are crucial because later that will be one of the aspects we will evaluate when sitting down to create relationships, which is extremely important.
We are in an environment where we have 10,000 options, but sometimes not all the options are the ones that suit us, neither us nor the other person, nor what they are looking for. When starting a business, in my opinion, it is good to sit down with a bank that has the time and interest to understand, to sit down to talk, and want to know about me and my business.
If the financial institution does not understand me, if it does not understand the operations and what I am looking for, it will be a bit difficult to understand each other in the future and for the relationship to be beneficial. Within the banking industry, banks are divided depending on size or category. Almost always, community banks or super non-banks will have more capacity for that officer, that person, to sit down with you and dedicate all the necessary time to understand what you are looking for.
What is the client looking for? Once we have that clear, we open the company and know what we want, we go to the bank and sit down. We always hear that there are banks for businesses that are starting and for businesses that are already established. So, how do we sit down with the bank officer and what do we have to take into account?
It is crucial to have a financial ally who understands me, and to have a business plan, strategies, operations, and projections. Going back to why I chose that industry, let’s take for example a food company or a restaurant. It is very important to have a business plan, to know the market, to identify who my competitors are, and what the demand is, and to always have a clear strategy.
The officer will want to know that you know and have experience in the sector you are entering. It is vital to have knowledge about the market you are entering and what knowledge you have of the industry. It is also crucial to be clear about the purpose of the credit need. We must be clear about why we need the money since when we go to the bank, there are different loan options available.
There are business lines and working capital lines, but there are also loans. A business line is used as daily support for the operation of the company. These usually have shorter terms and the interest rates charged vary. Why? It can be to manage cash flow or to handle fluctuations in it.
Suppliers give me a term, but the time it takes me to sell is longer than the time I have to pay the supplier. I need to leverage myself financially. So, I use the line of credit, receive payment from the customer, pay off the line of credit, and so on. On the other hand, with loans, the terms are longer.
The term “long” refers to amortizations, that is, to that credit facility that we pay both to the principal and to the interest. All these lines or credit facilities must be analyzed based on the cash flow of the business. How much money, after covering my monthly expenses and my income, do I have available to pay off that debt?
When the business is in its early stages, it is common to opt for SBA (Small Business Administration) loans. If we are not familiar, this is a type of loan partially guaranteed by the government. It is crucial to demonstrate experience or knowledge in the sector. You may not have direct experience, but perhaps you have taken a course, educated yourself, or worked in a company in the same sector. For example, if it is a restaurant, maybe you have been a chef or manager. You must have some relationship with the sector you are entering, as this will increase your chances of success. Another option is to surround yourself with experienced people.
In the credit analysis, several aspects are evaluated. If we talk about a restaurant, the cash flow will be analyzed to determine the repayment capacity of the loan. The owner of the company acts as a guarantor. If the business is new, it is most likely based on projections to assess viability, since there is no financial history yet.
On a personal level, even if the cash flow is not optimal, it will be taken into account in the analysis, as well as a good credit history, generally looking for a minimum score of 680.
Sometimes it is possible, other times it is not; it is not always the right time to take out a loan. Whenever we consider a credit facility, we must remember that the main source of repayment is the operations of the company. That is what we must focus on the most. If the client has money and plans to invest it, for example, as capital in certain aspects, it is advisable to also reserve a part for daily working capital.
All available options must be analyzed. Ideally, there would be a viable option at that time, but sometimes there is not and it is not the right time. Until the company has a bit more history, it can be considered as new or newly established if it has been in operation for less than three years. Going back to what we discussed with Jairo, it is crucial to rely on important projections to plan how the loan will be repaid.
Although I have organized these points according to my criteria, the first is character. There may be times when, after starting a company and experiencing growth, it reaches its peak and then faces a recession or any other difficult time. Problems may arise and perhaps the loan cannot be repaid. What should you do in that case? Ignoring the calls from the credit officer is not an option. The right thing to do would be to communicate with him, explain the situation, and seek a solution together. That shows character, and as I always say, in all relationships and aspects of our lives, keeping our word and demonstrating integrity is the most important thing.
We want to see that commitment and responsibility from the beginning of our working relationship. What is your commitment to the responsibility you have taken on? Now let’s talk about capacity, specifically the repayment capacity. In an interview I had on Tuesday, the interviewer asked me: “With such high interest rates, what can we do?” I always think and say that if you have the capacity to repay, even if interest rates are high, the important thing is to have the money available to face the debt.
A young man came the other day and told me that he is buying a building. “Interest rates are high for rent, and besides, they also raised it for me. So, instead of paying rent for a business that is not mine, I prefer to pay myself.” As long as there is that repayment capacity, there is an important opportunity to obtain a loan with collateral. Monica, who works in construction or real estate, knows that almost always the collateral is going to be a building or another tangible asset, right?
In the commercial and industrial field, which are the most common lines of credit, repayment almost always comes from accounts receivable, inventory, and all the assets that the company owns. Going back to the topic of credit, which is very important, the usual thing until now is to have an optimal credit of more than 680.
What information do I need to present? Almost always we are going to have a checklist or a list of items that we need to complete the loan package. Among what we are always going to review, usually are the tax returns. When the company has been established for more than three years, we want to see the tax returns for the last three years and we are going to analyze the sales trend during that period, whether they decreased or increased, and the rates, due to fluctuations in their sales and financial status.
The financial statement is like the skeleton of the company. I don’t know if it is somewhat related, but what we carry in the financial statement is the information that is reflected in the taxes at the end of the year. Accounts payable show us the commitments we have, either with suppliers or for events, and accounts receivable reflect the sales we are making.
Almost always we want to see the last three bank statements and we ask for, almost always, the last three tax returns. This is because we want to analyze the history, the trend, and the movement of the company, as well as what the projections are for the future, assuming that the loan being requested at this time is for the company to continue growing.
Proof of capital injection. Ok. In all loans, it is necessary to provide what we call a down payment. The bank can lend up to a certain amount, and if it is real estate, for example, Monica has established her company and has been in it for a while. Now she wants to buy her own building. Let’s assume that the building is worth 1 million dollars. Banks have policies and percentages that determine how much they can lend; the rest of the money must be provided by the client. This is what we call capital injection or equity.
In the case of acquiring a property, we want to review the contracts. If the property is not going to be occupied by the buyer, but is going to be rented out, we want to see the lease contracts.
Inventory represents the assets that you own, and this is part of my collateral.
Application process: Ok, they provide us with the checklist, we collect all the information, make the package, and go back to the bank officer with everything already prepared. We collect the required information and, once we receive it, we always follow a process in which we enter everything into the system and perform what we call a rigorous analysis of all the information provided. This does not mean that everything is ready.
Almost always, an analyst will say: “Ok, we have some questions regarding the personal information of one of the guarantors or perhaps
about how sales and purchases have been handled in the company.” There will always be questions. Once everything is backed up and the loan is approved, congratulations! We close the deal and from there the loan repayment begins.
It is very important, once again, to highlight the importance of moral character and responsibility. It is crucial to create a solid relationship with the bank, just as we do with our managers, clients, or suppliers. Having trust and credibility is fundamental. If there is going to be collateral, there must be a repayment plan in case the loan cannot be met.
But that is not ideal. The financial institution does not like the idea of saying: “Ok, you didn’t pay me, so I’m going to take the building away from you.” That is not the intention of the institution. Our purpose as a financial entity is to provide you with support and serve as a lever for your success. Almost always we start with a certain amount or with a loan, and as the company grows, so does the trust and the opportunities available to the client within the institution.”
Check out the event page: MAU Talks: How to Prepare to Access a Bank Credit