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How Much Can I Borrow?

Posted by [email protected] on 11/18/2024 12:00 am  

Richard Hendee
Silver Fox Advisor
November 2024



“HOW MUCH CAN I BORROW”?

                                   

In my 45 years of being in the financial services business most of my career was spent loaning the Bank’s money to business owners. Loaning money is kind of an art in that a lender is accessing historical information and data, analyzing a set of financial projections, then looking essentially into a crystal ball for future trends and market conditions. Armed with all this material the lender makes a decision.  

 One of the questions that I hated to hear from a customer or potential client was, “How much can I borrow?” That question told me more about the business owner’s situation than all the facts and figures I could ever gather about the loan request. When confronted with that type of application, I rarely spent much time on it because it typically led to a declined loan request. Why, because it told me a lot about the borrower:

  1. The borrower generally had no idea what caused the need to borrow.
  2. There was little, if any, analysis done by the borrower regarding how the loan would be paid back.
  3. There was no real explanation of how the loan proceeds would be used.
  4. What if the amount I told the borrower was less that what was actually needed? Then, where was the rest of the money coming from?
  5. Conversely, what if the amount I approved was more than what was actually needed? Was the extra money going to be used on a trip to Vegas?

As I tell my clients today, “You only get one chance to make a positive first impression on your Banker.” Bankers typically have a number of loan requests that they are analyzing at any point in time. Loan requests that are well-detailed and contain all the supporting documents typically get most Bankers’ attention because they have the best chance of getting approved.  Think about your own business, do you like spending time with clients who know want they want and make the buying decision quickly, or, clients who ask a million questions, lead you on for days, weeks or even months, and then don’t buy anything from you? That is called “lost opportunity costs.” 

If you have a need to borrow money or are planning to do so in the future, before you contact your Banker and ask, “How much can I borrow?”, I would recommend  you seek an experienced business advisor, coach, consultant or mentor with a financial or business background for your Company: Contact a Silver Fox Advisor. Remember, having experience on your side always helps.

We encourage you to visit our Website at www.silverfox.org or www.silverfoxadvisors.com to select a Silver Fox Advisor and also to learn more about the Silver Fox Advisors, our Associates and their businesses, as well as our great programs and community outreach endeavors.

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