What Does Bank Ask For

What does a bank ask for when financing a company, and why

As a starting point, banks usually ask for the following:

1. Signed/completed personal financial statement. The rationale behind it is that more often than not, the business and the individual running it are one in the same. In other words, John Harris IS Ecliptic Brewing. Nat IS Nat's Hard Cider…Nick IS Wandering Aengus and so forth. The other part of the equation is that often a business has issues managing additional debt solely on its cash flow, so some banks that have flexibility with credit decisions can look at global cash flow (i.e. business and personal cash flow) and can sometimes get deals done where they might not be able to with just business cash flow.
2. Previous Year(s) financial statements, profit/loss and balance sheets including current financials and any aging reports/receivables This is the main driver of a loan decision. These allow the banker to glean whether or not a company can pay back a loan, whether it’s for a building, equipment, lines of credit, credit cards etc.
3. Copies of bank statements for both personal assets and business assets.The rationale behind this is to verify liquidity and also understand if the banker can either save the business some $$ or create efficiency in their cash flow.

Ultimately, yes, a banker can handle a single transaction for a company, but the real goal is to have meaningful discussions about the plans for the future, how the banker can help you grow (by making introductions etc), and how to help the business grow efficiently. All of this information goes into financing decisions. What I've found here, relative to Indiana and even Vermont, is that there's something for everyone ranging from start up to established company. I had the fortune of meeting and interviewing with just about every bank in town this past fall, so 1) I met some REALLY good bankers/banks to refer people to or partner with, and 2) I realized that our industry as a whole supports the beverage/food industry, particularly cider and beer, and that different places help different companies at various stages of growth.

Written for the Northwest Cider Association by David Nijhawan