Small Business Lending Essentials29 November 2014 Written by By Taylor Bell
Published in December 2014 Articles
At ECC Bank, we are happy to provide loans to help businesses be successful, but it is essential that loan applicants understand the bank’s requirements to lend money so they can assist in helping them succeed.
If you have a business and are in need of a loan for improvements, expansion,short term operating expenses, or purchase of commercial real estate, come see us, but be prepared to educate your banker on your business. Doing so involves your ability to support your need for a loan by having a complete financial package for the bank to review your loan request. The bank reviews your package to determine if the request meets its underwriting criteria.
ECC Bank offers a unique loan approval process for all of our borrowers. In most cases, our loan approval process is completed in three steps:
- The Commercial Banking Officer meets and interviews the customer to see if the bank can accommodate thecustomer’s loan request. If we can, werequest a list of financial as well asprojectinformation to submit for initial underwriting to our centralized loan department in Stockton.
- The loan package is submitted by the Commercial Banking Officer to the bank’s Chief Lending Officer who assigns the package to a Commercial Loan Officer. During this process, the borrower is introduced to the Loan Officer responsible for underwriting the loan who works in conjunction with the Commercial Banking Officer. The Commercial Loan Officer would contact the customer if they have questions after reviewing the loan package or request additional information. It is the goal of the Commercial Loan Officer to have the necessary information to make aninformed recommendation to the Bank’s Credit Administration.
- At completion of the underwriting process and presentation to the Bank’s Credit Administration, the borrower is informed of the bank’s decision. If we can provide a loan to the borrower, we outline the terms and conditions to the borrower and expectation when the loan will fund. If we are not able to provide a loan, we communicate our decision to the borrower.
Here are some helpful things for you to know when you come to us seeking a loan. You must be able to clearly identify the business purpose of the loan you are requesting, the amount you need to borrow, your expected sources of repayment, and collateral you can make available to secure the loan. Required business information includes Federal Tax Returns for the preceding two years plus profit & loss reports and balance sheet statements for the most recent two years and year-to-date, and a schedule of all your debt and contingent liabilities. We also request personal information which includes your most recent two years’ Federal Tax Returns and a Current Personal Financial Statement.
Our decision of whether or not to grant the loan will be based upon our assessment of the information provided to the bank. We look at management and management succession, your industry, and your ability to repay the loan that you are requesting as well as your other loan obligations. We also look at how long you have been in business and how you have handled other previous credit arrangements. ECC Bank will generally not make loans to businesses that have been in operation fewer than three years.
In summary, the Bank looks at how you are going to repay the loan and what the risks involved are. We look at your cash flow to ensure that your company can repay the loan as well as service your other loan personally. Collateral is viewed as the security for the loan in the event your business is unable to repay the loan from your cash flow. We require that the collateral value is sufficient to support the bank’s loan.
ECC Bank is a community bank that wants to help its local businesses succeed. We are ready to assist you in providing loans as well as other banking products and services that your business might need.