Wells Fargo Bank Talks About What Bankers are Looking For | High ...

September 29, 2012

Wells Fargo has passed the billion dollar mark nationwide for SBA lending. Doug Hargraves,?Wells Fargo Regional Manager for Riverside and San Bernardino County says they do see a lot of SBA lending, through two programs, the 7a and 504. 7a is a flagship program and up to 80% of their lending volume comes from that program. ?Wells Fargo is number one nationally for that program.?

According to Hargraves, banks are looking for business owners who show high character, have a good reputation, are known in their industry and are able to weather good times and bad. ?It continues to be a challenge to lend to people with difficult credit,? he said. ?If people have experienced difficulties, it is even more important than usual to have a relationship with the bank so they understand what has transpired.?

Traditionally banks don?t lend to those with a bankruptcy on their record, but will look on a medical bankruptcy more favorably. Hargraves explained, ?A medical bankruptcy doesn?t generally indicate a person?s character. Bankers are really trying to evaluate not just the ability, but the willingness of a person to be responsible for the loan. You don?t want to lend to someone with a poor ability to pay their debts.?

1. Credit: You need to be credit worthy, with good business and personal credit. It?s a person?s character we are looking at, and that?s how we judge. If you haven?t already pulled credit reports, do it. Be prepared to explain derogatory credit points.
2. Cash flow: Banks want to see how profitable the business was in its most recent fiscal year, and two of last three years.
3. Collateral: Banks like collateral. With something tangible to liquidate, the bank has something to fall back on in an effort to repay all or a portion of the amount lent. Real estate and equipment are easy to lend against. Companies without hard assets are more difficult to lend to. For instance a software company?s inventory is code, so it is not something that can be liquidated easily.

LENDING ADVICE from a Banker

• The three key professionals you need for your business are a CPA, an attorney, and a banker.
• Don?t be afraid to approach your local bank. The mistake a lot of business owners make is to wait until they are about to start their business, to establish their relationship with a bank. It is much easier if you have an established relationship with the bank.
• Before you walk in for credit, reach out to a business banker in your community. In terms of selecting a bank, whether it is a small local or regional player or a large bank that has a strong presence in the community, and has a small business focus. You want to make sure the people you are meeting with from the bank are empowered and can make decisions in your local community. Some big banks will send out a package to Texas, for instance, to be decisioned.
• At Wells Fargo, we take pride in being a bunch of small community banks inside of a large bank. Within the $2 ? $20 million customer segment, all decisions are made locally to extend pricing, manage it locally so it?s not about a transaction, it?s about a relationship. It doesn?t start with the loan. It starts well before and extends well after.

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Source: http://www.highdesertbusinessjournal.com/http%3A/www.highdesertbusinessjournal.com/2012/high-desert-finance-economy/wells-fargo-bank-talks-about-what-bankers-are-looking-for/admin/?utm_source=rss&utm_medium=rss&utm_campaign=wells-fargo-bank-talks-about-what-bankers-are-looking-for

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