S.E.C. Real Estate Observer

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Editor’s Note: This article first appeared in the February 1972 issue of the Real Estate News Observer.

When you or your client tackles properties out of an area where you are known it generally requires some sort of capital – and if possible you will probably want to borrow it. Now, lenders are funny people. They have their regulations and Boards to live with plus their own problems – and understanding their daily problems will help you finesse a loan where others fail. Planned program as follows:

1. Have a very current financial statement, within 90 days. Don’t leave anything blank. If your statement includes stock in a corporation, your own, have the corporate financial statement also. Try to have a projected loss statement on your operation, it helps.
2. Have a letter from several of your local lenders that they have had so many loans with you and all are as agreed – dating from 1960 to 1972 or so. Have your banker pen a letter also stating amount of credit and number of loans you have had.
3. Have a planned course of action. Exactly what you want to do; how long it will take; how much money you need; why you need it; how you intend to pay it back, and if that payback method fails, other possible ways you can retire the debt. Have this in writing if you want to speed up his decision.
4. Call the lender and make a definite appointment. That will allow him to be clear and ready to think about your problem. ALWAYS ask for the head man – no junior executives please. If you get stuck with a subordinate officer tell him you had personal reasons to see Mr. _____, and that you will call back again.
5. After you have chit chatted for several minutes explain carefully to him why you have come there and why to his particular institution and how he may help you. They love to make money helping you. Lay a little background on him verbally and then hand over your prepared package and let him read it at his speed. You be quiet except to answer questions he may ask. When he has finished reading go over it orally and run through your other documents-financial statements, P&L, etc.
6. Find out by asking him what their current rates and terms are for the type of loan you are asking for and write that down in front of him. If you want their loan ask to make out an application. Offer to pay for a call to your banker or S&L officer to give him some background. He will thank you but pay for the calls himself and will probably call because lenders like to have other lenders’ opinions of you.
7. Get a time commitment from him as to when he will know on the loan. Then be business-like and take your leave. Don’t lay your favorite jokes on him or other unrelated items the first time.
8. Think positively that you will get the loan. But, think back over your request and see if there are any holes in it and think of alternate plans you may put into effect to offset any holes the lender may find.
9. Good luck on your next loan away from home.