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October 12, 2019 Best Practices Workshop

Michigan Montessori Society. October 12, 2019 Best Practices Workshop. Educating Your Banker to be Your Advocate. She’s Your Ally. Karen Gladney Business Banker. The Five “C’s” of Credit. 1. CASH FLOW. 2. COLLATERAL. 5. CHARACTER. 3. CONDITION - FINANCIAL.

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October 12, 2019 Best Practices Workshop

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  1. Michigan • Montessori • Society October 12, 2019 Best Practices Workshop

  2. Educating Your Banker to be Your Advocate She’s Your Ally Karen Gladney Business Banker

  3. The Five “C’s” of Credit 1.CASH FLOW 2.COLLATERAL 5. CHARACTER 3.CONDITION - FINANCIAL 4. CONDITION - ECONOMIC

  4. The Five “C’s” of Credit 1. CASH FLOW • Historic/Projected • Relative to Debt Service/Cap X Needs • Key Factors: Magnitude, Consistency 2. COLLATERAL 3. CONDITION – FINANCIAL 4. CONDITION – ECONOMIC 5. CHARACTER

  5. The Five “C’s” of Credit 1. CASH FLOW 2. COLLATERAL • Liquidation Value vs. Fair Market or In Place Value • Key Factors: Magnitude, Volatility 3. CONDITION – FINANCIAL 4. CONDITION – ECONOMIC 5. CHARACTER

  6. The Five “C’s” of Credit 1. CASH FLOW 2. COLLATERAL 3. CONDITION - Financial • How Well Capitalized is the Borrower • Key Factors: Leverage (Relative to Net Worth & Cash Flow) Liquidity Borrowing Capacity Access to Additional Capital 4. CONDITION – ECONOMIC 5. CHARACTER

  7. The Five “C’s” of Credit 1. CASH FLOW 2. COLLATERAL 3. CONDITION - FINANCIAL 4. CONDITION - Economic • Exogenous Factors • Key Factors: Industry Outlook Market Outlook Customer Relationships Supplier Relationships 5. CHARACTER

  8. The Five “C’s” of Credit 1. CASH FLOW 2. COLLATERAL 3. CONDITION - FINANCIAL 4. CONDITION - ECONOMIC 5. CHARACTER • By Far the Most Important • Key Factors: Capability and Integrity

  9. Ways to Establish a Great Relationship With Your Lender • Do What You Say / Say What You Do • Keep Bank Informed Continuously -- Particularly if News is Bad • Quantify Impact • Action Plan • Impact on Borrowing Needs • Meet Projections • UNDER Promise / OVER Deliver

  10. Ways to Establish a Great Relationship With Your Lender • Associate Yourself With Good Advisors • Leverage Relationships • Credibility • Get To Know Your Lender on a Personal Basis • Get to Know All Key Decision Makers in the Bank

  11. Are You Banking With The Right Bank? • Does your relationship with your bank run deeper than your last financial statement? • Do you hear from your lender only when she needs something from you or does she call periodically just to stay up to date? • Does your lender think and talk strictly like a banker or more like an entrepreneur? • Does your lender take a genuine interest in your business?

  12. Are You Banking With The Right Bank? • Does your lender take the time to really understand your industry, products and customers? • Do you have a close relationship with your lender such that you both are able to ask the tough questions and give honest answers? • Are you ever hesitant to provide negative information to your lender for fear she will over react? • Does the response time to your loan requests revolve around your bank’s internal committee schedule irrespective of whether or not that schedule meets your needs?

  13. Are You Banking With The Right Bank? • Does your lender always act with a sense of urgency, responding more quickly than expected and delivering more than promised? • Do you have the utmost confidence in your lender’s ability to fairly and positively represent your company internally to all key bank decision makers or, do you at times wish you could be there to do her job? • Does the senior management of your bank have an interest in meeting with you and understanding your business? Do you even know the key decision makers? Are they located locally?

  14. Are You Banking With The Right Bank? • Does your lender congratulate you on your company’s major achievements? • Do you consider your lender to be a commodity or a trusted advisor? • Does your lender treat your problems as her problems? • Does your lender find ways to get the deal done? Is she a doer or a talker? • IS YOUR LENDER SOMEONE TO WHOM YOU WOULD REFER YOUR MOST VALUED BUSINESS RELATIONSHIPS?

  15. QUESTIONS? How Comerica Bank can help. SBA loans offer great options for working capital, equipment purchases, real estate purchase and business acquisition.

  16. Thank YouMichigan Montessori Society Best Practice WorkshopOctober 12, 2019Karen Gladneykogladney@comerica.com 734-930-2433

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