One of the LinkedIn Groups I belong to is having a raging debate about whether that first C of Credit, 'Character', can be considered any more. Or should be considered again!
Monthly Archives: March 2011
Many business lenders use global analysis to consolidate cashflow among related entities. For example, if a small business has one 80% owner and another 20% owner, it is likely you’ll consider the cashflow of the business combined with the cashflow of the 80% owner.
Under a headline ‘Small Business Lending Strong in 2010′ I found this lead sentence:
Lending to U.S. small businesses in 2010 saw it biggest year-over-year
gain since December 2006, according to the Thomson Reuters/PayNet Small
Business Lending Index.
Sounds good, yes?
So let me point out, a huge year-over-year gain up from a terrible year does not equate to small business lending being ‘strong’ in my view.
In his newsletter, The Tea Leaf, Jeff Thredgold covers where the jobs are, where they still are not, and what is next. Here you go!
How should loans to S Corp shareholder(s) be looked at in underwriting a loan? Income? Debt? In a negative way?
Great question and one we often don’t consider. My standard cashflow worksheet does not include a place to indicate loans made to shareholders in the same way it has a place to enter shareholder distributions, for example. And I have trained banks all over the country with standard and proprietary software and do not see this routinely considered.
Hard to keep up with the impact of all the new (and old) rules, don’t you think? So if you are not heavily into compliance but don’t want to trip over yourself in conversation with your prospects and clients, here is a free webinar I think might be helpful. I’ll be attending.