Frustrated with Calling the SBA

We know how frustrating it is to spend time and energy following up with the SBA on the status of Your EIDL loan or Reconsideration request!

We’re sharing our experiences from having worked on dozens of EIDL loans and our interactions with SBA Agents. We want to you to know you’re not alone in your frustration, but also to help you to understand how the system works.

1. WE LOVE SBA AGENTS! Every call we experience an SBA Agent who is very professional and eager to help business owners obtain the EIDL financing they need to survive this pandemic.

2. SBA Loan Officers are, to quote an SBA Agent, “Working 15 hour days” on loan requests and reconsideration requests.

3. Okay, once you understand the value of the intrepid SBA Agents and how enthusiastic and hard-working they are, let’s discuss the frustrations of follow up.

4. We did a video on “How To Speak With An SBA Agent” we recommend you watch that for tips on how to make your follow up call.

5. Next, know that SBA Agents don’t always have a complete picture on your loan status. Their system has notes about your file’s progress with “Codes.” We don’t know what those codes are, but let’s hypothesize that a typical code could be something like this: “9837: IRS Form received” or “9822: Email sent to Applicant”.

Trevor has seen coding like this in his previous career as a Mortgage Banker. It’s an efficient way for a system to track the progress of a file.We’ve spoken to a couple of Agents who told us they don’t know what some of the Codes mean when a file is in the Reconsideration system.

6. Apparently, the Reconsideration Team works like a “Black-Ops” enterprise. SBA Agents can’t speak with them and their Codes can’t be deciphered by the SBA Agent you call for a status.

7. Beware of general statements made by an SBA Agent such as “Reconsideration processing times are 5-6 weeks.” Another Agent told us that is not true; she’s seen Reconsiderations take substantially longer. She said the other Agent should never have made that statement. Moral of the story: Take anything an SBA Agent says on general matters with a grain of salt.

8. Don’t think you’re going to call and get very clear guidance. The SBA is STILL overwhelmed with the number of new and Reconsideration requests. There’s a lot of moving parts, a lot of confusion, and long waiting times.

9. Remain consistently vigilant, and always polite. Check in regularly on your file. You won’t always get a definitive answer, but once in a while you might discover the SBA sent you an email that you didn’t know they sent! We’ve seen that happen…the email was sitting in the client’s spam folder. Other times, no such email was received. Moving parts. Confusion. Not quite controlled chaos.

10. Patience is a virtue. We know you need this money to help you survive this pandemic. We know the SBA is working diligently. We also know that sometimes some folks in an organization (Bank, SBA, etc.) get a file and it sits there waiting its turn because that person in the organization is overwhelmed, confused, slow, or, maybe, just maybe, even lazy. Think of the real world and how folks work in your business; the SBA is no different.

Contact us with questions or maybe with some good news you’ve experience contrary to our unabashedly vocal disappointment.

Schedule a FREE 15 minute call to review any complications you’re having with your disaster loans.

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.

The Deal Closes When It Closes

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Trevor worked many years ago with a top producing loan officer at a mortgage Bank. This top-producer brought in a lot of business and Trevor was the new kid on the block climbing the ladder, building his business.

In his travels, Trevor met a local real estate attorney who could potentially refer business. Trevor had been working with that attorney on a home purchase transaction. The attorney said, “Oh, no, that’s where you work? I’ll never do business with your company because so-and-so is a nightmare and your company is a nightmare.”

That other top-producing loan officer had a terrible reputation. This loan officer had a bad habit of not responding to anybody’s phone calls inquiring asking, “What’s going on with the deal? When is it closing?”  He simply did not answer phone calls.

This was in the days before email, the days of beepers and telephones and he simply did not respond to anyone. The attorney told Trevor, “I beep this guy all the time, he never calls me back. I guess your company is just slow to get things done that’s why he doesn’t respond. Why should I expect you’d be any different?”

So when Trevor confronted his fellow loan officer about this complaint, his response was very laid back.  He said, “I have one philosophy. The deal closes when it closes.”

WOW. He made Trevor and the entire company look bad.

On the positive side of the story, he kind of wasn’t wrong because there is a process to getting a loan approved and closed. The fact that he was a terrible communicator is a different issue entirely; he never spent any time communicating to manage expectations.

We did a video on managing expectations, emphasizing follow up. Sometimes the timeline to close can really be a bit much, and especially with how many people are involved in the loan process.

We’re working now on a business acquisition deal, and the sellers were involved. They just could not get their head around what was needed, even after the loan was approved, and they knew the Lender was going to do this deal.

Their responses to requests for documents through the entire process were, “Why this? Why that?”  Week after week, all they did was push back. The Seller’s  attitude was constantly to fight the process.  Then, when they’d actually submit a document at 10 a.m. in the morning, they’d follow up by sending an email at 1:30 in the afternoon, “So when are we closing?”

This is not really understanding the loan process either.

So, to take that “top-producer-bad-communicator’s” phrase and reconfigure it,  “The deal closes when it closes.”

There is a real process to achieving the loan approval and getting to the closing. As  long as all parties are communicating and cooperating, it will close in a reasonable time, but it doesn’t mean it’s closing in 10 minutes.  Communication and cooperation, those are key elements.

For our part, we maintain clear communications. As often as this particular seller was impatient, we still kept a clear head and kept our communications positive, responded accordingly.  Ultimately, we got what we wanted from the seller in the way of documents we needed.

We did another video describing how the lender reviews everything. If you spend so much time asking, “Why?” And spending so

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much energy fighting the process when you could have gotten what was needed to expedite the process.

With this particular seller it was constantly “When are we closing?” and, “Where’s my money?”

We understand how financial professionals can get jaded. Someone like the former colleague in the industry can say to themselves, “Okay, I’m kind of exhausted with these calls.”  And they shut down because they know the deal will close when it closes.

People can get upset about the process, but when all is said and done, if there’s clear communication, you have to understand the process and you have to be patient.

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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The Scorsese Way

Martin Scorsese has had a long and storied career in cinema.  The legend he has created is that of the Director using his extensive knowledge of film to enhance his cinematic creations. As a Director, he pushed the boundaries of macabre crime drama.

Along the way, according to this latest biographical feature in the New York Times, Mr. Scorsese developed his own way of working within, or rather, without, the “Hollywood machine.”  In particular, Mr. Scorsese created a separate path for financing his films using independent financiers and eschewing the financial support from the studios.

Frustrated with the unrealistic pressures of working within the confines of the studio system, he came to believe that Hollywood studios had become his “mortal enemies.”

As he says in the NYTimes piece, “It’s like being in a bunker and you’re firing out in all directions…you begin to realize you’re not speaking the same language anymore, so you can’t make pictures anymore.”

The latest development in the “Scorsese Way” of making his movies is his partnership with Netflix, the streaming service that is about as far from the Hollywood studio system as you can get in the early 21st Century.

We think the key element of this aspect of Martin Scorsese’s story is the financing component.  In short, those folks with the money–Hollywood Studios–brought unrealistic expectations, exerted extraordinary pressures, and ultimately hampered one of the greatest cinematic talents of the past 100 years from achieving his true potential.

We see this time and again with Small and Middle Market Businesses too.

If your business marches in the “big leagues” that is, with gross revenues exceeding $3Billion annually, then Bankers are the friendliest bunch of people on the planet. But if your business is in the Middle–$10 Million up to $3 Billion in revenue—or worse, a Small Business (below the $10M mark), you’ll find Bankers are not so friendly.  

To define friendly, let’s refer to our description above of the Hollywood Studio system’s treatment of the incredibly talented and successful Martin Scorsese.  In the NYTimes piece he discusses the unrealistic pressures from studio executives (the folks with the money) to shorten movie running times, and other extraordinary requirements for his films, “The last two weeks of editing…The Aviator’…I said if this is the way you have to make films then I’m not going to do it anymore.”

Imagine that.  Imagine the cultural and entertainment loss sustained when a talent as large and ambitious as Mr. Scorsese decides he’s had enough because the people with the money keep telling him what to do.

We blogged recently about “Don’t Tell Me How To Make My Pizza” about a similar story about an ambitious and creative young business owner.  He’s created a unique new type of sourdough pizza.  As he grows his business, he needs capital.  But he chose to bring in equity investors instead of engaging with us at Aurora Consulting to find quality credit financing.  You can be sure that sometime in the near future his equity “partners” seeking higher returns on their investments, will insist on changes to that unique pizza recipe.  Martin Scorsese all over again.

It’s the New Year and we’re committed here at Aurora Consulting to financing solutions for your business success story.  We believe in access to credit.  We’ll work diligently and enthusiastically to find the best credit financing solutions for your business.  

Take a page out of the Martin Scorsese playbook (except the part where they dump the bodies!), and find your own “Scorsese Way” to finance your working capital needs while preserving your vision of how your business should run and grow.

Download our DOCUMENTS CHECKLIST here.

The Lender Reviews Everything

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When you apply for financing and your tax returns and/or personal financial statement shows that you have interests in other businesses or property, the lender will want to review the financials on those other businesses.

When it comes down to it, the Lender has the right to ask for this information.

The question from our client is often, “Why is this germane to my financing request for my business?  That other business has nothing to do with the business I’m financing.”

While this may be true, remember that you’re asking the lender to assess the risk of lending money to you and to your business (the one on the application), and if there are negative aspects to your other businesses that affect the financial health of this business, the lender wants to assess that risk.

The good news is that you can control the narrative to an extent. Describe what the other business is via a summary statement and how it interacts with the business you are financing.  Especially with regards to debt.

There’s nothing wrong with full disclosure.  Get it out of the way upfront. Don’t wait for the Lender to ask for it.

Understand why the Lender wants that information instead of fighting the request.

The Lender has the right to ask these questions.  Pushing back is okay, as long as you do so in a gentle fashion.  In the end, it’s about achieving your goal of obtaining the financing you need to grow your business with the least muss and fuss as possible.

Contact with questions about the most important documents to have in order at all times. Solutions@AuroraConsulting.biz.

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.

Getting Unstuck

Wall’s Ice Cream is a very popular ice cream brand in The United Kingdom.  The Wall’s logo is prominently displayed at convenience stores, groceries and restaurants and cafes all throughout England. Wall’s is apparently also famous for their “Stop me and Buy One” tricycles roaming the streets filled with ice cream treats.

I haven’t personally seen the logo there by visiting England.  No, I’ve seen the logo often when I watch my favorite British Detective mysteries.  But enough about me and my Brit-Binge.

Wall’s has been making ice cream for over 100 years, but Wall’s didn’t start out as an ice cream business.  No, Wall’s was a butcher shop!  T. Wall & Sons Ltd. was a sausage maker since 1786.  But in 1913, the owner, Thomas Wall, realized that his sausages weren’t very appealing to his customers during the warm Summer months.  He hit on the unique idea of selling ice cream during the Summer to increase sales and to save the jobs of his employees.

It didn’t hurt the bottom line, either. Now Wall’s survives over 100 years later, branded and thriving.  As an ice cream provider.

Would you make a similar choice in your business, a choice where you change your entire business model so that your employees are taken care of?

Do you have to make such a radical choice?

Maybe there is another way to demonstrate your sincere interest in the financial well-being of your employees.  In this economy of nearly full-employment, it is certainly in the best interest of businesses to hang on to valuable employees.  Time and again, successful companies have proven their success comes thanks to the people working for them, the people showing up every day eager to do their jobs and to see their employers achieve long-term success.  Surely it’s in the best interest of the employer to invest in those employees, whether that’s in small ways or in a radical way.

Like Wall’s, a company in business literally for centuries, but thriving in incredible ways for the past 100 years thanks to a small but ingenious investment on the part of its owner at the time.

Where will your business be in 100 years?

Streamline Your Financing Request

Click on Image to View Video

Want to become a priority with the banker?

Summarizing your financing package can help to prioritize how your banker reviews your financing request.

We recently submitted a client’s financing request to one of the Lenders on our lending matrix.  Our Lender Rep. said, “Holy cow, you guys are on top of it with your summary. Not many brokers make it this easy to review the package.”

We made it easy because the client provided us with their financials. The financials were comprehensive. It’s a multi-million dollar corporation and we’re at the early stage of presenting to the lender. We want to show something that’s easily digestible. We want to ease  the process for the lender to give us a prompt review and tell us their interest in offering the financing.

Summarizing your financials is easy to do.  When you have a lot of line items that lead up to one, just one, type of deduction or one type of income source, simply summarize it. Drop it down to as few lines as possible so the lender can do a quick review and say,  “Okay, I see the picture here.”

The Lender doesn’t need to know the granular line by line details at this early stage; you want the Lender to give a fast review to gauge their interest. If the Lender expresses interest and offers a Letter of Intent for the financing, you can present the more detailed financials with your full loan application package.

For each client financing request, we write a summary statement.  We present a one or two page statement describing some background on the business, the reason for their financing request, and, in bold, large font, the amount of our financing request.

Our presentation package for the initial Lender review is compact yet complete.  The “first glimpse” by a Lender is sufficient to tell us if that particular Lender is the right fit for our client’s request, or if we need to locate a different Lender.

If you’d like a copy of our Documents Checklist, click HERE.

And if you have questions on the best way to present your financing request to a Lender, send us an email to curious@AuroraConsulting.biz and we’ll be happy to provide advice.

Lessons, Lenders, Decisions and Documents

Lessons with Lenders and Decision with Documents

Lessons with Lenders and Decision with DocumentsWhen we locate the right Lender to provide a financing solution for your capital needs, the Lender requests documents as part of the application process.  We prefer to collect and review as many documents as possible early in our qualifying process.

We review each document you submit.  We do this to determine your business’ qualifications for the different financing products available through our matrix of Lenders.  But we also review your documents to look for any issues that might arise in the financing request and to resolve those issues before we submit your request to a Lender. Not all Lenders require all these documents, and occasionally we prefer to submit certain documents only after a detailed conversation with a Lender.

The definition of a successful Loan Application is the approval you want, the approval you need, and the approval that meets your timeline.

Early on in our long experience working in the financial services industry, we learned the lessons of successful applications:

Lesson 1: The Application can make or break the deal.  The Application is the source of all information and, ultimately, the guidepost for processing and Underwriting.  The more complete and accurate an Application, the better the Underwriting RESULT.  That RESULT is not only an approval, but a timely one.  The complete Application typically anticipates the Underwriter’s thinking and answers questions before they’re asked.

Lesson 2: It’s all about the paper.  Yes, even in the 21st Century (is it time yet to say, “Beam me up, Scotty?”), you have to support your Application with documents.

Lesson 3: The front-loader.  When you submit your Application with a complete basic set of documents at the onset, your process moves much quicker along to the goal line.

Lesson 4: Give ’em what they need, not what they want. Many times a Lender and/or Underwriter will ask for more documents than are necessary.  We’ve learned time and again to push-back on certain documents requests.  Often, we’ll ask the Underwriter for a valid reason for the document request.  Piling more documents into the Application package simply because they “want it” slows down your approval timeline.  You’d be surprised with how many times a requested document isn’t actually needed for the loan approval.

Lesson 5: Garbage in, garbage out.  A single document, presented incorrectly, can torpedo your financing request.  At the very least, a document that presents a challenge to the loan approval process should be presented with an accurate explanation, whether the document provides a positive or negative aspect to the entirety of the Application.  We learned long ago the value of the phrase, “Garbage in, garbage out.”

Lesson 6: Underwriting is Subjective.  Underwriting is more a subjective than an objective process. You want your Application to move quickly through the system for one important reason: don’t give the Underwriter time to develop a dislike for your Application.  When an Underwriter can move efficiently and quickly through a Loan Application, they don’t have time to develop negative opinions about the Application. The lingering-loan-application simply provides an Underwriter with more time to excessively scrutinize details that may not really be negative, but can develop into a negative aspect in the Underwriter’s subjective way of thinking.  You know, they’re human too.

When you subscribe to our email newsletter, we’ll send you our Documents checklist.

 

FEE Fi Fo Fum

When you walk into your bank to apply for Business Credit Financing, the most likely result is the Banker chats with you for a few minutes then hands you an application package for you to complete.

It’s a nice package. The Bank logo is prominently displayed and the information required is laid throughout the package.  The documents are listed in the package to make it easy for you to move through them in a logical progression.

When you’re done with the package, you bring it back to the Bank, along with your supporting documents (Tax returns, Updated Financials, etc.), and the application fee.

The bank isn’t taking any action or providing you with a decision, or even feedback on your financing request without the completed application and accompanying fees.

At Aurora Business Consulting, we’re happy to be your resource to spend the time BEFORE the application is presented to the Lender to determine your business’ qualifications, identify obstacles, consider strategies and outline the financing products that will help you to achieve financing success that will help to attain your goals. 

We find the right Lender for your needs.  It doesn’t stop there.  We’ll act as your “concierge” as we handle all the documentation and communications with the Lender.

In short, when you begin your process to find Business Credit Financing with us, we don’t simply hand you an application package and ask you to fill it out, return it and pay the fee. Yes, we do require a small investment from you in the form of our processing fee.  

We ask this and require this because there is a process to qualifying your financing request and we invest time to search for the best financing solutions for your financing needs.

Occasionally we’ll meet a new prospective client, conduct our initial telephone interview and discuss how we can move forward.  We send out our Introductory Broker Package which includes our Broker Fee Agreement, an Overview of the process and a Credit Authorization Form to run credit report(s).   

Occasionally the prospective client doesn’t return the package nor pay the fee. They disappear.

We understand that sometimes the upfront fee might seem to be an obstacle in the mind of the prospective client.  

But, we also understand the common procedures in our industry and that processing fees are a standard requirement. We’re not the Bank.  We’re YOUR Broker.  We work for you, not the Bank.  We’re investing our time and experience to a dedicated strategy: Find your requested financing.

We are not the right fit for everyone and that’s okay. Some of the clients we work with may have already been down a dead-end path with lost money and time to show for it.

We work with people that understand and value the time it takes to vet the banks that have specific appetites for your financing request.

We value your time and appreciate the consideration it takes to move forward to build your business. 

Don’t Tell Me How To Make My Pizza!

We had a conversation with one of our Real Estate Broker Extraordinaire friends about all things business-related and, more specifically, about PIZZA.  She loves pizza similar to one of us here at Aurora Consulting (we’ll let you guess which one).

The chat happened while discussing an innovative pizza-restaurateur who created a wonderful and completely yummy pizza product.  This brilliant entrepreneur has come to realize his business is growing so rapidly that he suddenly finds himself in need of working capital to fund an expansion simply to keep up with the growth.

Good problem to have…except for the seeking working capital part.

The money part is where it gets challenging for this smart young pizza-entrepreneur.  He faces an important choice while facing the money challenge.

Should he search for a Lender to provide credit financing, or, surrender part of his business to an equity investor?

At Aurora Consulting, we believe this question has a simple answer.

Why surrender equity, and cede control, when you might very well find a credit solution to obtain the much needed working capital?  Yes, the answer is a question!  Or, the answer to the pizza-entrepreneur’s question can better be stated with the retort, “Don’t tell me how to make my pizza!”

Bringing in an equity investor for any growing business could (someday sooner or later) lead to your equity investor asserting control with how the business should be run.  That opinion could include, for this innovative pizza entrepreneur, suggestions on how to adjust the unique pizza recipe, you know, to make the product more cost-efficient.  Or the opinion from the new “partner” could be any number of other ideas, suggestions, opinions, plans, assertions, on growing the business, you know, to be more profitable.

That equity investor may have no idea at all about how to make pizza.

Many business owners are concerned with the idea of credit financing.  Let’s face it, credit financing can scare the heck out of many people.  Thank you to the global credit bust and subsequent recession for that anxiety-filled-ideation.  Borrowing money from a Lender, whether a traditional bank, or a non-traditional portfolio lender, is often a much more tranquil experience than you might think.

The question becomes one of finding the right lender.  The question never, ever, ever, becomes one of, “Hey, how about we use this ingredient in the pizza recipe instead of your original because this ingredient is cheaper and our product will be more profitable?”  Yeah, that question.  It’s not going to happen when you finance your capital cash needs with the right loan product and the right lender.

We’d be happy to help you with that search.  And help guide you through the process to ease your worries even further, and, more importantly, to help you fend off the potentials of an equity investor demanding your response of, “Don’t tell me how to make my pizza!”

Email us at Curious@AuroraConsulting.biz or call us at 203-788-2570.

Growth Can Be Sneaky

Growth?

Sometimes, it sneaks up on us!

And when it does, sometimes we need working capital to finance that growth.

That is, if you welcome growth and want to ride that momentum.

If change is NOT your thing, STOP reading NOW!

IF YOU ARE STILL READING, there are ways to access the capital you need to ride the growth wave very quickly.

You’ve been busy growing your business, and it’s paying off.  You’re keeping your financials current and do your best to predict future market trends, sales goals, and costs.

But growth can sneak up on you.  And when it does, you need to fund that growth, whether it’s for marketing expenses, operating capital, equipment purchases or other costs dynamic to your growing business. If you have sufficient cash assets, then you’re all set.  If you have a sufficient line of credit from your Bank, you’re good to go.

The problem is, when you set aside those cash assets in the first place, when you created that line of credit, you couldn’t perfectly predict the cash you’d need when the moment of truth arrived in the future.  Growth has a way of surprising you, a lot like flood waters after a heavy rainstorm, but in a good way.   You may find yourself scrambling to find the capital you need to fund that growth.

Traditionally, businesses caught in this capital-crunch-conundrum turn to their Banker for assistance for a new Line of Credit or an expansion on an existing Line.  Maybe a straight loan, or a loan mixed with a Line of Credit.  The business owner in this scenario can’t predict if the Banker can or will take on the appropriate risk to fund the right amount of capital needed.  The Banker may not see the optimistic opportunity presented by your sudden collision with your growth floodwaters.

Plus, the timeline to obtain the requisite capital funding from your Banker may be too lengthy to get the cash in hand quickly enough.

For the business owner confronted with the surprise of growth, the uncertainties faced with the traditional Bank financing may be too much to bear as they consider matching capital needs with growth experiences.

Pivot to the other extreme, business owners find themselves funding their capital requirements with funding that is quickly available and sufficient in dollar amounts, but the cost of that capital can be astronomical.

In the middle ground between these two financing scenarios exist alternative options.  Asset-Based Lending leaning against your Accounts Receivable or Inventory, or specialized financing against your Purchase Orders, provide timely, strategic and cost-effective solutions.

There are also hybrid solutions, financing that meets your short term needs while you work on completing the more complicated traditional financing package.

At Aurora Business Consulting we seek out those alternative financing solutions with a creative mind towards getting you the capital you need in an efficient timely basis to continue your business success story.

There’s no surprise in how we work, with diligence, enthusiasm, and experience.

Email Trevor for more info on how this may or may not work for you!