We Anticipate Problems to Create Solutions

Our Process Anticipates Problems, Creates Solutions

The good news is that Banks are lending again on a limited basis for non-disaster loan requests.  The bad news is that the loan products are limited and the underwriting guidelines are very, very restrictive.

Many industries/businesses are excluded from loan programs.  Banks simply cannot determine yet the viability of the businesses to survive the pandemic. Risk is too high and thus doors to the lending vault are tightly shut.

Today we spoke to a Bank on four different loan scenarios. Each of these businesses has challenges on their loan applications of different sorts, whether it’s credit, cashflow, type of business, COVID-19 impact on the ability of the business to earn income.

In the hour-long conference call with the Bank, thanks to our qualification process here at Aurora Consulting, we easily addressed the Bank’s concerns and answered their (often) difficult questions as they assessed the risk on each loan scenario. In three out of the four scenarios, we received positive feedback of interest from the Bank. While this interest does not guarantee a loan approval, this, in our experience is a giant hurdle we overcame. 

The rest of it is the loan process.

We also spoke today with a prospective new client in a follow up to our initial call last week.  This client seeks over $4Million in funding for a unique business, a business for which many Banks and Lenders do not provide funding due to their lack of understanding of how this business operates.

We had already identified a Lender for this financing request.

In our follow up call today, the prospective client indicated they would soon make a final decision on moving forward with Aurora Consulting to secure the financing. They also indicated they were working on their credit.

STOP. RIGHT. THERE….BEFORE we go any further. (Meatloaf medley playing).

A client should not “work on their credit” without proper guidance. Luckily, we provide that kind of guidance here at Aurora Consulting. While we don’t believe in credit repair/restoration, we do have decades of expertise with credit and we also know the appetite of commercial lenders when it comes to credit. Note: We have not yet seen this person’s credit.

Our process at Aurora Consulting includes running a credit report as soon as we sign a consulting agreement with a new client. We do this so that we can anticipate any issues that could slow down or prohibit the lending process. We do this upfront so that we can provide advice that leads to a positive result for our clients.

The same holds true for our entire process. We review all financial statements, business plans, marketing plans and any other pertinent items in the early days of working with a new client.  

We do this to anticipate and resolve problems a Bank or Lender may have in the future.

When you apply directly to a Bank/Lender for commercial financing, these items, credit reports, financial statements and the like, are not seriously reviewed until the very late stages of the loan application process. By then the applicant has spent time collecting and submitting documents and spent money on application fees, appraisal fees and other associated costs.

Literally most Banks/Lenders do not run a credit report until the very final stage of the application process, weeks or months after the initial application. At that point, if a credit issue arises on the credit report, all those weeks and months of work are quite literally flushed down the toilet and the loan is declined.

Our role as your financing Broker is to review all relevant documents, including a credit report, in the early stages of your request, before the application, before we’ve even considered conversing, in depth, with a Bank/Lender.

That’s why today, we hit the mark with 3 out 4 of our loan scenarios getting the green light from a Bank to move forward to the application process.  

We were prepared for every question and concern the Bank had because we’d reviewed credit and documents. We anticipated problems in advance and could converse honestly with the Bank on possible workarounds for those problems.

It’s what we do, because we are the business-owner’s advocate. We work for the business-owner. We would be remiss if we didn’t share with you that banks call us when they can’t underwrite the loan. So we understand their process.

Ask us any questions when it comes to business loans. If you want your business to survive, and THRIVE despite the worst crisis we’ve seen in our lifetime, please call us with your questions.

Email Curious@AuroraConsulting.biz

Tough Questions from Lenders

The good news is that Banks and Lenders are opening up their coffers to provide business credit financing. The other news, that’s more anticipated than “bad,” is these Banks want business owners to answer some tough questions about preparedness for further pandemic-related challenges.

If you are applying for business financing—a loan or line of credit—that’s not Disaster Relief-related, here’s a sample from one of our Bankers on what to expect:

  • How has your business been impacted throughout the crisis?
  • How have you and your employees been affected? Your suppliers? Your customers?
  • What are your key priorities over the next 30/60/90 days?
  • How do you anticipate accomplishing these goals? What hurdles do you anticipate?

To achieve a successful response to your application, you should answer these questions with all appropriate gravitas and extreme detail.

  • The Bank wants to know that, should the pandemic-related lockdowns get tighter:
  • How have you planned to get through that?
  • Do you have cash reserves?
  • An employee-furlough action plan?
  • Do you have the ability to provide your services or products with a serious downturn in customer traffic (think early days of lockdown)?

Banks make loan decisions by assessing the risk on the credit profile of the Borrower. As with any aspect of a loan application, the COVID-19 pandemic has created another layer of risk for Banks. Your successful loan application will take that risk assessment into account as you prepare your application for submission by anticipating how to make a Bank/Lender get into a “comfort zone” about your ability to make payments on the loan as other challenges from the pandemic arise.

Reach out to discuss if your answers to these aforementioned questions would suffice. We are your advocate in the process.

Email us at Curious@AuroraConsulting.biz.

The Dreadful Disorganized Document Disaster

Our resident Chief Financing Rock Star, Trevor Curran, was a Mortgage Banker for 30 years. His specialty was helping first time homebuyers with low down payments to achieve the American Dream of Home Ownership.

From the early days, with no computers, no internet, no email nor a beeper on his belt—until the day of his retirement in 2018, a mortgage loan application was all about the paper. Documents to support the application needed to be submitted, reviewed, dissected, parsed, and collated.

Trevor’s clients submitted their documents in many and varied ways, including coffee-stained tax returns, crumpled paystubs pulled out of an old wallet, and badly-scanned PDFs.

Considerable time was spent by Trevor and his loan processing team to put these documents into a manner acceptable for review by an Underwriter.

And of course there was the pushback from clients.
“Why do you need that (document)?”
“I can’t find my tax return.”
“The dog ate my homework.” Oh, wait, wrong story.

Trevor’s response, time and time again, including in the early days when he would literally drive to the clients’ home, workplace, a McDonald’s parking lot, or the real estate office, to pickup their required documents, was, “We need these documents because the bank requires it since you’re asking the bank to lend you several hundred thousand dollars.”

This obvious message was delivered in a kind and patient but firm manner.

Still, it always seemed incredible, time and time again, how people could be so cavalier about their loan application requirements. “Don’t they want the house?” he would often ponder in the moments of extreme frustration.

Now, as the primary processor for Aurora Consulting, Trevor’s manages the document flow and the loan applications for our business clients. When we launched this business we remember discussing how this document issue is going to be so much better because we’re dealing with serious business people.

Unfortunately, we were mistaken.

Especially over the past eight weeks as we have assisted over 30 businesses to apply for and receive Government Disaster Relief financing, the poor quality of document management is mind-blowing. Especially at a time like this, when the desperation of keeping a business alive requires this emergency infusion of cash. You’d think business owners and their representatives (CPA’s, mostly) would be sharper than ever to get documents submitted in an organized and prompt fashion.

Again, mistaken.

Moral of the story for anyone thinking they want to ask a Bank or Lender for money—whether you’re buying a house or financing a business—it’s all about the paper. Organize your documents, submit them in a clean, efficient manner, and submit them promptly.

Rant over.

Send us a message with how you’ve successfully managed your team to understand your high level of standard when it comes to managing your documents.

Who’s Not Afraid to Say “I Don’t Know”?

Who else is an avid fan of Warren Buffett? The “Oracle of Utah” presided this weekend over the annual—virtual—Shareholders meeting for Berkshire Hathaway. Mr. Buffett was a stout, granite-like, believer in the recovery of the American economy after the crash of 2008. This time, not so much.

Much of his ideas, though overall optimistic, were tempered with uncertainty for the future of the American economy in particular and the Global economy as a whole. “Nothing can basically stop America” and “You can bet on America” are two optimistic quotes in an article about the Berkshire Hathaway meeting and Mr. Buffett in today’s NYTimes.com. But he tempered much of his positivity with more than a few “I don’t knows” when queried by the audience and journalists on the uncertain future of a continuing COVID-19 world.

Not that he was necessarily espousing “doom and gloom” as much as he was following a traditional line of thinking for himself and his company: Cautious optimism. Warren Buffett would rather lose out on an opportunity for an investment than to have acted to quickly, without the due consideration such a decision deserves. You can clearly see this as a bedrock concept of his success as a stock investor. He’s not sure which way the economy is headed, but he’s hoping for the best.

Warren Buffett is a student of economic history, and he presented his analysis at the meeting of the American economy from 1789, up to and past The Great Depression. He pointed out that the stock market took 22 years to recover to its highs between 1929 and 1951. His realistic assessments are important for us at Aurora Consulting as we determine ways to continue our Brokerage and find working capital for businesses.

We’ve spent the past six weeks working feverishly—including more than a few all-nighters—to help our clients obtain SBA Disaster Relief financing, in particular the EIDL program and PPP loans. We’re happy to report we’ve been quite successful with that project. But now we find ourselves casting about to see what our horizon looks like, and how to continue helping our clients.

To take two of Mr. Buffett’s phrases into our context seems appropriate today. “I don’t know” is the first. We have some good ideas and you will see those concepts unfolding in the coming days and weeks. Already this week we’ve scheduled conferences with different types of Lenders as part of our deep-dive into lending availability for our clients. We’ve also created basic strategies for Aurora Consulting on the best ways to move forward and help Small Business during the ongoing pandemic and its attendant economic challenges.

The second of Mr. Buffett’s quotes, and the inspiration for this blog, seems most appropriate to what we do here at Aurora Consulting, we find working capital from Banks and Lenders for our Small Business clients. Warren Buffett, as quoted in today’s NYTimes.com: “This is a very good time to borrow money, which means it may not be such a great time to lend money.” Realistic words, a realistic assessment from The Oracle of Utah.

Here at Aurora Consulting, we’re going to embed the Oracle’s words into our strategic thinking so as to best serve our Small Business Clients. If you want to know more about how we help business owners, please email Curious@AuroraConsulting.biz.

 

5 Mistakes Business Owners Make

5 Mistakes Biz Owners Make with Linda Rey & Trevor standing and looking perplexed

5 Mistakes Biz Owners Make with Linda Rey & Trevor standing and looking perplexedLet’s get it out of the way right now. We say 5 mistakes, but there are more. Don’t shoot the messenger. Part of the reason we post our blogs & vlogs is to raise awareness that financing doesn’t have to be as difficult. Don’t get us wrong, it can be a long process, but you have more control than you think.

These are the top 5 mistakes we’ve experienced with business owners when they are seeking financing.

1. Thinking the Bank knows everything about you.  You have all, or most, of your accounts with your local bank, including your operating account, savings, personal account, maybe even merchant services & payroll. It’s easier to bank in one place.  You think the bank maintains a detailed file on your financials, that they know how much revenue passes through your accounts every month.  This would be an incorrect assumption. The bank will still ask you for your full set of financial statements and much, much more.

2. Old Financials.  A business plan that’s five years old won’t fly. If you’re updating your Accounts Receivable aging report or your Profit and Loss statement on an infrequent basis, you will have some work to do and this most certainly will delay the process. You control the timeline when you apply for credit financing. Having updated documents at the ready lets you submit them with all speed and alacrity to move your financing request along.

3. Incomplete Financials.  No business plan? Many businesses don’t have one whether it’s a new business or an existing business. There are many, MANY financial forms that a lender will require. It will be your responsibility to provide complete, comprehensive information that many businesses, unfortunately, do not have easily accessible. Lender’s will have a debt schedule form and if this is inaccurate, it will slow down the process and delay your approval.

4. Too Busy, Too Rushed, Too Overwhelmed…Too Late. Bad decision-making often arises from lack of time and a local preparation. However, it happens that then you’re faced with a sudden, unexpected need for working capital. This sounds like opportunity, but if you’ve not been minding the store in the meantime, you will be faced with a high probability that you could be without options or very few options if any at all.

Bad decision-making begets more bad decisions by way of choosing financing options that is super expensive and over priced such as Merchant Account Financing (Merchant Cash Advance – MCA), hard money, equity investors, refinancing a personal residence and/or hitting the credit cards. This leaves you vulnerable to a lack of income & profit taking away any joy in running your business. We bet that you didn’t get into business to be broke and stressed out.

5. Failure to Fight.  Your Banker wants to make the loan work for you, because they truly value your relationship with the Bank.  When you get bad news, don’t take it lying down.  Dig in with your Banker—in person whenever possible—and get to the solution-seeking.  What do you need to do to flip this decision from a negative to a positive?

We have seen good people who own good businesses make bad decisions. We are truly fortunate and grateful that we have forged many valuable relationships with Bankers & Lenders. They know that sometimes they can’t do the deal, but they value the relationship with their client. If the Bank doesn’t make a decision favorable to your business, that doesn’t mean you should make a subsequent bad decision.

Call us for a free consultation on what options you may have available to you.

The more proactive and prepared you are, the more options you will have.

It’s Not Your Bankers Fault

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If your credit score is low and your financing request isn’t approved,  it’s not the Banker’s fault when she delivers the bad news of a loan denial to you.

Your Banker wants to be your friend, your “go-to” financial resource to help you build your business.  But there are are areas out of the Banker’s control, not the least of which is your credit history and subsequent credit scores.

Certainly you should be aware of your credit score…with the caution that, as a consumer, you cannot access the true credit scores used in financial services-related decisions.  This score is otherwise known as the “FICO CLASSIC” and all the credit monitoring services in the world cannot provide you with access to this score.  Thus there can be wide variances between the scores you find online and the “true” score your Banker will pull when you apply for credit financing.  In our experience at Aurora Consulting, we’ve seen variances in either direction, positive and negative, as much as 100 points in the scores.

But if you have very low scores, chances are very good that you are aware of your credit history circumstances.  That is, scores less than 620, and certainly any scores that are in the 500’s.  Many consumers with scores at 620 and above, where they’re not hitting the high-700’s or even the 800’s, tend to believe they have “bad” credit. This is not always the case, and often that kind of score range, down to 620, will qualify for business credit financing.

But if you are fairly certain, even with the incorrect consumer-access scores, that you have credit circumstances that are pushing your scores down below 620, you need to be aware and to disclose that to your Banker.

And you should be specific with your Banker about those circumstances.  For example, “I’m currently delinquent on the mortgage on my other house,” or, “I have several small collection accounts from three years ago that I have not yet paid off.”  If you’re clear and honest with your Banker about your potential credit history, it helps to manage those expectations, both yours and hers, when presenting a financing request application.

At Aurora Consulting, our process with each client includes a credit report that we run at the very outset of our relationship with the client. Because we’re working on behalf of the client, we have a different perspective on the credit review process.  And we actually have successfully placed loans with credit scores in the 500’s.   The options in that range can be limited. But there are options.  And, like with your Banker, we find it very helpful when the client is clear with us upfront about concerns for their credit history and scores.

Finally, being aware of your credit status is important for you personally and professionally to be aware of how you are managing your money and your bill-paying as you grow your business. When the Banker denies a loan request due to low credit scores, the issue is the lack of awareness of this money-management, not the Bank’s lending protocols.

You can find out more about the “Myths Of Credit Repair” by downloading our free white paper.

WATCH OUR VIDEO HERE.

Bankers and Artists

background abstract art with gold dollar sign in center

background abstract art with gold dollar sign in center“When bankers get together for dinner, they discuss Art.
When artists get together for dinner, they discuss Money.”
~ Oscar Wilde

Bankers have the money, control the money, determine where the money will go and who will get it.  In the vernacular, those decisions are called “loan approvals.”  Do Banks skew to the conservative when making lending decisions?  Depends on the Bank, but overall, the answer is probably “YES.”  Sure, riskier credit scenarios can find a home, along with commensurate difficult terms including higher interest rate and other factors.

That leaves the Artists, or, you, the Business Owner, out in the cold and wondering about how to obtain the capital you need to grow your business.

At Aurora Consulting, we believe the path to success for your business credit financing request lies in three factors.

The first factor is the choice of Lender.  Different Lenders have different tolerances for risk.  And, different Banks have different perspectives to find a profitable return for their Depositors’ money. Any given Bank may create lending opportunities due to a strategic decision to lend more in certain credit profile areas.  In both these types of Banks/Lenders, though the credit risk may scare away a more conservative Bank, the terms of the loan don’t have to be onerous.

We believe the second, and maybe the most important factor in credit financing success is in presentation.  We recently watched the Will Smith movie “Hitch” where he plays a coach of sorts to lovelorn men seeking to get out of their own way to find success in love.  Much of the advice “Hitch” gives has to do with presentation, the manner in which a man listens to a woman, the way he honors her presence, and more.

We think that the Loan Application and the manner in which it is presented to a Lender is the fundamental key to success, combined with the other two success factors.  That’s why we strive to ask all the same zillion questions an Underwriter may ask, why we collect so much documentation up front from our clients, and why we carefully package our loan requests to present to Lenders.

The final factor for success in credit financing is the positivity of “The Close.”   Obstacles pop up along the way in every financing transaction.  Our aim is to overcome obstacles with positive attitudes and a sharp focus on getting to the closing.  We use positive language, we seek out positive solutions; we refuse to be waylaid by negative emotions, words, challenges.  This is our Closing Attitude at Aurora Consulting.

Bringing these three success factors together is what we do at Aurora Consulting.  It’s no secret to any experienced financial professional, but it certainly feels like it’s our own secret recipe for credit financing success.

Pages from a Salvador Dali notebook including doodles and calculations of income and expenses, the artist thinking about Money.  
Pages from a Salvador Dali notebook including doodles and calculations of income and expenses, the artist thinking about Money.

Whether you are an entrepreneurial “Artist” seeking to bring your vision for success to life with business credit financing, or a Business Owner searching for the best solution for your working capital needs, let us at Aurora Consulting be your concierge to guide your financing needs to the right conclusion, the one where the Bankers embrace your “art” and release the money to fund your continuing business success story.

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It Can Happen That Fast

We’re famous here at Aurora Consulting for the phrase, “Growth sneaks up on you!”  We’ve written a blog about it and have done a few videos where this notion comes into focus as the reason we are doing the video in the first place.

Even the best-prepared, most-organized, super-efficient Business Owner can find themselves with a new client who’s blowing up the revenue to extraordinary levels, or new orders for products and services that far exceed previous orders and expectations.

We like to say, “One Vehicle leads to 20 Vehicles.”
It can happen that fast.

We believe in your business success story.  You are putting in the effort every single day to grow your revenue and live the business life of your dreams.  That’s why we also believe that your financial services relationships today are so vital to your business growth tomorrow.

Begin with your Banker relationship.  It’s not enough that you know your Business Banker’s cell number; she has to answer it when you need her.   It’s not enough that she promises to get it done; RESULTS are the only thing worth talking about.   

Both these items are great metrics to help you understand if your Business Banker puts as much value in your relationship as you do.   If your Banker is meeting these basic standards, then you’re in good hands.  If not, then you should reconsider your banking relationships.

Along the lines of your relationships is thinking about future credit financing. We heartily recommend you invest some time at least once a year, if not more often, to sit down with your Business Banker and review your business’ financials.  You want to know if you are positioning yourself in the most favorable way possible to apply and be approved for credit financing when you need to grow from ONE vehicle to 20 vehicles.

Some Business Owners fear exposing their financials to their Banker.  Maybe the fear surrounds the Banker questioning the Bank’s commitment to your relationship.   We have found the opposite to be true for one reason.  

Your Banker’s commitment to you is driven by the motivation to maintain and grow your banking relationships with the Bank.  When we say relationships, we mean bank accounts.  Bankers are driven to grow depository relationships.  That’s their goal.  And once they have your business, they want to grow it and make sure you stay with them.

Reviewing your financials with your Banker can only further the Bank’s confidence in you and your business.  And it may provide you with cogent advice and knowledge that will help you prepare for that moment when you need 19 more vehicles.

At Aurora Consulting, we are Brokers. We work for you, not for the Bank.  And we know the tolerances that Lenders have for financing businesses on a growth trajectory.  

We understand the Underwriting guidelines and how your business financials fit into those “boxes” at different Banking institutions. We’re happy to review your financials too and prepare you for the eventuality you’ll need credit financing for more vehicles.

Email us at Curious@AuroraConsulting.biz to chat more about how you can proactively position yourself for future financing.