|
Loan Package
A loan package is the information we need to understand your business and make an informed decision on the products that are right for you. When developing your loan package, you will need to include a description of your products and services, an overview of key personnel and their backgrounds, a description of the market in which you operate (competition) and future plans for your company.
Financial information on your business provides the key to understanding how your business has performed in the past and why it may need a loan. The following basic financial information will be required to evaluate your loan application:
• Balance sheet (statement of assets and liabilities)
• Income statement (income and expenses)
• Other relevant financial data such as account receivable agings or equipment lists.
If your business is more than three years old, we will request copies of tax returns for the prior two years.
If your business is less than two years old, we will request copies of tax returns (if available) and a business plan.
If you are starting a business, please include projections in your business plan.
Additional information will be requested, included a completed application.
The Credit Process
The first step is to meet with a lender and discuss the "loan package." Bridgewater Savings has a legal and moral responsibility to make sound loans. Since the source of your loan funds is depositors’ money and the law requires this money be repaid to them, it must remain in investments that are reliable. We will apply the criteria known as the five C’s of credit.
1. Character – This is exactly what the name implies. It involves a review of honesty, integrity, trustworthiness, and management skills. A judgement is based on credit reports, business plan, and the quality of your presentation.
2. Capitalization – The structure of your business is important because it determines the level of risk. An analysis of capitalization includes a review of equity, total debt, the value of assets and permanent working capital.
3. Cash Flow – This is the cash your business has to pay debt. It shows the lender the sources of cash and the uses of cash.
4. Collateral – This provides a secondary source of repayment, thereby minimizing the risk of the bank’s depositors’ money. The amount and type of collateral needed depends on the purpose and type of loan. Common types of collateral are account receivables, inventory, machinery and equipment and real estate.
5. Condition – This refers to theout side conditions that may affect your business and the ability to repay the loan. This relates to general economic factors such as the general economy, and large concentrations of sales to a few customers.
Bridgewater Savings will perform a preliminary review and issue a term sheet in many cases. The term sheet provides the proposed terms of the loan, and required conditions. This works to ensure the bank and the borrowers are in agreement about the proposed transaction. After the Bank’s analysis the Bank will provide a commitment letter. This is the Bank’s approval of your loan request. Again, this will state the terms and conditions of the loan. Sometimes, if it is a simple transaction or the Bank has had numerous conversations with the borrower, the Bank will go directly to a commitment letter.
Contact Bridgewater Savings
For more information or to discuss financing options for your business, please use our business request form, or call our commercial lending team at 1-800-356-8622.
|
