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Monthly Archives: July 2011

Valuation of business on owner's balance sheet

Lender question:

For privately held companies, how should lenders consider valuation of the business by owners on their personal balance sheets? These dollars clearly will impact level of leverage, both on a personal basis as well as global.

Linda says:

The amount an individual reports on their personal balance sheet for their owner share in a business can be anything from the actual share of business capital per GAAP statements to a ‘fair market value’ estimate based on their own sense of what it is worth.

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S-Corps vs LLCs: A Lender's Perspective on the Differences

A corporation that decides to be taxed under Sub-chapter S of the Internal Revenue Code is an S-Corporation. The Corporation files an 1120S instead of an 1120.

The big difference between a ‘regular’ corporation and an S Corporation is that the latter is a pass-through entity. Income, deductions, credits all pass through to the shareholder’s return, where it is taxed.

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Five things to do with excess capital at your Bank or Credit Union

Your question:

What do you do with excess capitalization? This question was asked by a Financial Institution Director after my session on ‘Finance 2.0 for Directors: Beyond Check-the-Box to Good Governance’ at their Association Conference.

Linda says:

Great question! And first, let me congratulate you that you have excess capital on hand. Many financial institutions wish they were in your shoes.

Actually, many financial institutions are in your shoes and have the same question…when can we let go of the extra cushion we created during the recession.

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