Bank VP gives lending tips at seminar
So you've got a sure-fire idea for business that you figure will make you rich in a few years.
You've got the scheme; you've got the know-how; and all you need is a line of credit to make it go.
That means meeting with a banker, whom you may or may not know at an institution whose doors you've never darkened. If you've done your homework and are well prepared, don't sweat it. But if you?re indifferent about your business plan, don't expect miracles.
Bankers consider you an expert until you prove them wrong, said Roger Busse, U.S. Bank senior vice president for credit administration and practices. Don't assume anything; don't leave anything to chance.
Busse was in town Thursday to give business leaders and educators an insider's view of how banks evaluate business customers. The conference was sponsored by Oregon State University's College of Business Austin Family Business Program.
The top characteristic every lender looks for is the ability to identify and achieve business plan objectives so that a firm can repay its debt.
You have to put it into the context of the challenges the business will meet in the next 12 months, Busse said. In business plans, one-year outlooks are 70 percent effective, 35 percent accurate over two years, and when you get to three years, it's pure speculation.
Banks try to uncover the risk factors when they are reviewing your business plan. How you define your market is very important.
Bankers want to know if the product or service provided is the best perceived value in a market, if a business offers a unique product or service in that market and if there is a geographical or need niche.
They want to know whether you are making money or losing it, he said.
Business managers need to communicate: What they do and what they sell, who uses the product and why; what the market is for the product; potential contingency risks as well as regulatory issues; have management teams changed; what sets the company apart from competitors; if there is a national standard for quality assurance or testing of the product or service; external factors that could adversely affect or benefit the product or service; and if plant and facility locations have the capacity to produce products or services.
If possible, highlight the financial future of your customers, Busse said. Define the demand for what you do, and explain the customer's desires and needs.
Approval time can be sped up if bankers know about a company's research and development costs, suppliers, raw materials, the impact of weather and global economics on its business.
Busse said there was a 50 percent increase in approvals when a lending officer made a site visit.
The more stable a business is, the less risk there is of a bank losing funds, he said. In our business we can only be wrong 2 to — percent of the time.
For 40-year-old Troy Hutchens, preparing for a move into general manager duties of F.V. Martin Trucking, the day was well spent.
The 26-year-old company has 70 employees, and its two sister companies provide another 26 jobs.
This is teaching me how to present our company to the bank in a positive manner, Hutchens said. Hopefully, this will help when our company is ready for truck purchases, trailers purchases or lines of credit.
Reach reporter at 776-4463 or e-mail