Tips for Approaching a New Lender
If you're looking to cover margin calls or expand your operation, make sure you have your financial house in order before approaching a bank.
Amy Gales, executive vice president of CoBank’s regional agribusiness banking group, explains: “The last thing a borrower wants to do in this new world of volatility is borrow more than it can handle. You still need some cushion for the unexpected. If you run into a period of continued volatility, your operating loans will need to be increased and the cushion can be eaten in a short amount of time.”
To summarize: Do not borrow every dollar made available to your company.
Proper paperwork is pivotal
Potential borrowers should have a firm financial package prepared. The key items include:
- Audited financial statement
- Three years of previous year-end audited statements
- A borrowing base, as well as borrowing bases to match up to previous year-end statements
- Historical profit-loss statements
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