Embed Size (px)
Citation preview
What You Need Before You Go to the Bank
Presented by Farm Credit employees Jeffrey Walker and Steven Bowman at Beginning
Farmer Financial Planning Workshops hosted by Farm Credit and the Farm Service Agency,
September 2014
Gather Information
– Pay stubs (1 month period)– Signed income tax returns (2 or 3 yrs.)– Bank statements (2 months)– Purchase contract– Construction contract/plans– Copy of deed– Business plan (start-up or transfer)
Business Plan
The “road map” for the business. Tells where you want to go and what you need to do to get there.
Business Plan
• If your idea is feasible
• How much the venture will cost to start
• How much volume you will need to do to stay in business
• What legal structure is best for your situation
Business Plan
Key Elements:
• Business Description
• Market Description & Analysis
• Operations Plan
• Financial Information & Analysis
• Appendix (Supporting Information)
Business Description
• Business location
• Owners
• Legal form of business
• History and/or start date
• Recent sales and profit figures
• Classification of business
• Business advisors
Market Description & Analysis
• Product or service• Target market• Market research & strategy• Competitive analysis• Pricing strategy• Promotional strategy• Distribution• Location synopsis
Operations Plan
• Logistics
• Suppliers
• Operating regulations
• Human resources
• Risks, problems, & future plans
Financial Information & Analysis
• Financial statements (last 3 yrs.)
• Interim financial statements (YTD)
• List of all notes & leases payable
• Personal financial statements
• Pro forma statements (projections)
• Break-even analysis
Evaluate Your Credit
• Credit bureaus–Equifax (800) 685-1111
–Experian (888) 397-3742
–TransUnion (800) 888-4213
• www.AnnualCreditReport.com
What’s in Your Credit Report
• Identifying information• Trade lines–Mortgage– Installment– Revolving
• Inquiries• Public record & collection items
How Scoring Works
• Your score is your “FICO” score
• Range is 300 to 850
• No one “score cutoff”
What a FICO Score Considers
• Payment history (35%)
• Amounts owed (30%)
• Length of credit history (15%)
• New credit (10%)
• Types of credit in use (10%)
Tips for Raising Your Score
• Pay your bills on time• Keep balances low in relation to credit
limits on revolving credit accounts• Avoid opening a lot of new accounts too
rapidly• Do your rate shopping for a given auto or
mortgage loan within a focused period of time
What the Lender Considers
5 C’s of Credit
ConditionsCharacterCapitalCapacityCollateral
Conditions
• Amount & purpose of loan
• Terms/structure of loan
• Environment/industry considerations
• Operational assessment
• Other lending relationships
Character
• Identification of legal structure• Evaluation of honesty & integrity• Assessment of management ability– Production–Marketing– Financial
• Assessment of credit history
Capital
• Liquidity–Working capital– Current ratio
• Solvency– Equity ratio– Debt-to-asset ratio
• Trend• Comparison to peers
Capacity
• Profitability• Cash flow• Reliability of source(s) of repayment– Primary– Secondary
• Capital replacement needs & family living expenses
• Comparison to peers
Collateral
• Loan-to-value relationship
• Liquidity
• Degree of specialization
• Stability of value
• Durability
• Environmental concerns
Business Entity Options
• Sole proprietorship• Partnership– General– Limited
• Limited Liability Company (LLC)• Corporations– S Corp.– C Corp.
Key Documents Needed for Formation
Sole Proprietorship–DBA filing
Key Documents Needed for Formation
Partnership–Partnership agreement
Key Documents Needed for Formation
Limited Liability Company–Articles of Organization
–Operating Agreement
Key Documents Needed for Formation
Corporations– Articles of Incorporation– Bylaws– Organizational Board– Resolutions to Borrow– Stock Certificates– Stock Ledger
In Review
• Gather & organize your information
• Get your credit standing in order
• Satisfy legal entity requirements
FCV Loan Programs
• Operating lines of Credit
• Livestock notes
• Equipment notes
• Construction notes
• Real estate mortgages
• Young & Beginning Farmer
• Youth loans
Contact Information
Jeffrey S. Walker
Team Leader
29 Military Dr.
Chatham, VA 24531(866) 408-9662 (toll free)
(434) 238-4517 (mobile)
Steven Bowman
Loan Officer
38 Murray Farm Rd
Roanoke, VA 24019(866) 868-3307 (toll free)
(276) 620-1489 (mobile)
