1. Business Lending Basics
Dave Esworthy
October 15, 2015

2. About First United Bank & Trust A Local, Community Bank
Headquartered in Oakland MD since 1900
$1.3 Billion in assets;
$700 Million in assets under management in Trust & Investments Division
25 offices in Maryland and bordering West Virginia communities
Deep commitment to each community we serve
Responsive and attentive service through local decision making and dedicated relationship management
Talented staff offering expert advice in banking and long term financial planning
11/19/2018

3. Tension within the industry
Lending Environment
Tension within the industry
Regulatory pressure
Financial statement scrutiny
Need for loan growth
Relatively low demand
4/22/2013

4. Start with Personal Finances
Assess personal financial condition
Personal credit
AnnualCreditReport.com /
Credit reports available from
Experian
Equifax
Transunion
Request all 3 annually OR
Request one bureau at different times in the year
Take Action
Clean up public records
Pay down revolving debt - credit cards (balance to available ratio)
Minimize inquiries
Examples
4/22/2013

5. Start with Personal Finances
Personal financial statement
Bank form
Create your own
Example
Personal Tax returns
3 years
4/22/2013

6. Business plan (start-up & ongoing)
Business Information
Business plan (start-up & ongoing)
Organizational structure
Product
Market
Projections 3-5 years
SCORE
Financial statements & quality– 3 years
Spreadsheet
QuickBooks
CPA Compiled
CPA Reviewed
CPA Audited
Tax returns – 3 years
4/22/2013

7. Key factors Business Information Conditions Character Collateral
Story (business plan)
Plausible
Credible
Character
Credit
Collateral
Capital
Liquidity
Skin in the game
Capacity (cash flow)
Example
4/22/2013

8. Underwriting Priorities
Cash flow
Net income + interest expense + depreciation/debt
Officer salaries
Secondary source of repayment
Guarantors
Collateral
Credit history
Balance Sheet
Liquidity
Account Receivables Aging
Equity
4/22/2013

9. Line of credit (LOC) or term loan
Loan Options
Line of credit (LOC) or term loan
Small Business Administration (SBA) Loan
Partial guarantee by SBA
Fees
Great for start-ups
Secured
Cash/liquid investments
Real estate
Commercial
Residence
Equipment/Vehicle(s)
Tenant improvements
Receivables
Unsecured
Add co-borrower
4/22/2013

10. Relationship versus price
Choosing a Lender
Relationship versus price
Advisor role vs. transaction
Price – rate and fees
Underwriting standards
Other banking services
Payments/transactions
Cash management
Fees
Funds availability
Service quality
Convenience
4/22/2013

11. Questions/Discussion
Dave Esworthy
mybank4.com