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What Your Banker Really Cares About

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Bankers look at 5 different characteristics. What are those 5? Watch the video to find out more.

 

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Read below for the video transcription.

They look at five different characteristics of your business. And I actually have met with a banker who showed me on a spreadsheet, how they rate their customers based on these five characteristics.

One is your character or your commitment. Do you have the experience? The integrity? One of the questions that came up with is what do I do when I have two years under my belt, but they don't lend unless you have three, I'll answer that in a few minutes.

Capacity. Do you have sufficient cash flow to service the debt and service your company?

Third is capital, your net worth. Okay.

Fourth is collateral. What security are you going to give them for the loan?

And fifth is the conditions, the economic conditions. What are the trends in your industry? Where's it going?

But here's something I learned many years ago because in building my home building company in my land development company, I have personally borrowed over $200 million. That's a lot of money and I never lost any sleep because I knew I was using it as an investment. But the key to getting money is to ask for it before you need it.

There's an old joke about Branch bankers. Okay. They want to lend you an umbrella, but as soon as it starts to rain, they want it back.

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