Improving cash flow, maintaining solid banking relationship can ease refinancing - Kansas City Business Journal:

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“Right now, the credift markets are so tight that it can be difficultr to get any type of financing unles s your company is verysound financially,” said Bob owner of . “Refinancing is historically a tougher route to go than new A lot of tough questionzscome up. What happened at your othere bank that you want torefinancr here?” Koester said it’s imperative in a tighrt market to generate as much cash flow as possibl before going to the bank. “Thart means if accounts receivable arerunningb slow, you need to be a better for example,” Koester “Improving your cash position can help you avoid having to wander around town lookinyg for credit.
” Grant CEO of , said business ownerse also should make sure their personal credit is cleaned up beforee going to the bank. “That usuallyt speaks to how you pay your businessedebts also,” Burcham said. “We also look at the specifi transaction requested and how the cash will flowfrom it. can you afford it?” Burcham said the bank wants to know how leverageds thecompany is, its historic growtg and profitability, and anything else that helpsd determine whether it is a viabler business. How much money the ownefr is willing to personally fronft often determinesloan size.
Bill Ferguson, executivee vice president of retail and small business lendingb at inKansas City, said he woulrd categorize the cost of refinancing righrt now as moderate. He said that most banks are lookingg at raising interest rates right now but that because of the way loansd are set up in terms of length and size of the overall cost through time willremaihn similar. Ferguson said having very solid collateral is importantrightf now. “It certainly makes your financing optiona a lot better and easier to Ferguson said.
“Having some solix projections, as well, gives the indication that a business will continue to perform well and can handle payment of the new Ferguson said businessowners shouldn’ty be afraid of loans, despite the paperwork involves and the hoops to jump through. “z preferred lender can help with a lot ofthose hoops,” Ferguson said. “An SBA loan will also help increase the term of your and that helps improve cash Sometimes it’s the best financing available.
” Pat Trysla, managinh director of , recommended creating a checklist that goes over existingf loan covenants and measures how a company is He said that helps show the bank the business ownerf is aware of obligations and wantse to be proactive with banking relationships. “If you’re getting along with your lender, you should try to give them all the businessx thatyou have,” Trysla “If you’ve got some noncredit like processing or letters of credit, you let them earn fees on that so you can continu to gain favor with them.” Trysla said the more a bank does business with a company and understands it, the more likel y the bank is to help out.
Burcham of Missour i Bank & Trust agreed, saying that the success of a banker-client relationshi boils down to trust. “Whethee there are troubles or goodthings ahead, we want to Burcham said. “If we have a customet who has banked here for 20 yearsd and falls onhard times, chances are we’rew going to help them through it because we know the peoplse well.” Mike O’Malley of business brokerss O’Keefe & O’Malley Inc. said he tellx business owners that the best time to get a line of creditg is whenthey don’t need it. That way when timez are tough and capitalis needed, they’ve alreadyu proved themselves trustworthy.
“So if you’re proactive on it and something happenws toyour business, like you lose a majot customer, you already have access to the capitapl necessary for the business while you sort things