ACQUIRE: Conventional Financing - Basic Financial Statement Template for Banks
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As you begin to gather your financial documents to speak with a lender, you may feel overwhelmed by all the moving parts. Instead of overwhelm, try to re-frame it as completing your favorite puzzle.
There’s a strategy here! You must pull all the different pieces of your financial puzzle together to create a complete picture. You’ll need to gather supporting documents so that you financial statement is complete.
If you’re not a “Numbers Person” - don’t despair! Numbers are merely a way to communicate. Think of your numbers as a way to share your heart and vision with those you will be partnering with in funding your business. Numbers build a bridge of trust and credibility that you will be honest and do what you say. Your Financial Statement should be simple, honest, and easy to read. Adjust the spaces between items as needed. Make it easy for your lender to read your document. They read hundreds of pages and you want your documents to make their life easier!
Undestand how most bank works:
Most banks that you want to work with still have a real live person who will process your loan. The larger mortgage companies use Artificial Intelligence complex computer systems and we want you to avoid that if at all possible. Real people are far better for actually getting approved when you are building residential real estate.
The first person you will likely meet is the Loan Officer. They may even be called a Vice President of Lending at small banks. Understand that they are the “Gatherer” of info but NOT typically the “Decision Maker.” This is the person who can teach you about what the bank likes, but know they don’t have the final call in approving a loan (even if they look and sound very important!)
The next person whom you won’t meet but is very important is the Loan Processor or Credit Analyst. This is a detailed-oriented person who stays in the background with your file crunching numbers with gusto to presumably predict if you’re a good “risk” for the bank. You want them to be happy crunching your numbers! The more organized you are….the less cranky they are. You want to get them any additional docs, well organized and labeled clearly for them to finish their fun puzzle of analysis. Yes, they truly like their job.
The last people that your file goes to usually are the actual Decision Maker/Approval Committee. You may or may not know who it is, but you can gently ask. This tends to be a hush-hush step. They don’t like to disclose it to protect their Decision Maker from revenge acts when they have to say no.
Be confident in your numbers, be professional as you ask about the process and who is in charge, and be quick to be anything that they ask for but not too much info that they’re overwhelmed. It’s a delicate balance and it helps if you have a detail-oriented person at the helm of this process. If that’s NOT you, don’t despair. You will need to enlist one person who loves details to help us with the project and connect that person directly to the Loan Officier and to your own Data. Check-in frequently with BOTH the loan officer and your bookkeeping/data person to be sure everything is arriving on time to the right person. You need to stay in charge of the whole process but empower each person to do their part.
Finally one warning about technology. Most banks have a private portal to upload and it’s not a technology that has grown up yet to be easy. Right now, the Loan Officiers we work with have a terrible time losing documents. The Portal “ate” my loan-work! It’s an all too common problem and can cause costly delays. We get around this by taking in paper copies if possible to the physical location OR sending it via secure email but not the Portal. Just know, if something gets lost, always just cheerfully replace it! Never get frustrated or accusatory as that will most definitely not help you case for getting approved.