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   ARTICLE   |   From Scotsman Guide Residential Edition   |   May 2015

The Art of the Business-Loan Package

Developing a profitable banking relationship begins with a compelling story

Relationships are the foundation of any successful business, and this is especially true in the mortgage industry. You need motivated employees, good system support, satisfied customers — ideally, repeat satisfied customers — and a funding source you can rely on consistently, deal after deal.

The ability to access reliable sources of capital is fundamental to the continued progress and success of a mortgage banker. Yet finding a reliable warehouse line may be one of the biggest challenges. The key is to establish and maintain a reliable, long-term relationship.

Business-loan package

If you’re looking for a consistent and reliable source of capital to help you remain competitive and offer the best terms available in your market, then be ready to present your company in a highly professional manner when negotiating or renegotiating your credit line. You must convince funding sources that your company is well-managed, prepared to stay in business for the long run and a prize client.

To accomplish this task in today’s business climate, you need to build a compelling story about your company. Put it in writing and use graphs, pictures, charts, color — anything that will help tell an impactful story.

This is your business loan package, and it should contain everything a lender will want to know about your company and its plans. You don’t have to write a novel. About 10 to 15 pages plus your financial information should present a convincing story. Here are some suggestions to help you prepare a loan package:

  • Make it brief and easy to read.
  • Point out the strengths of your management.
  • Emphasize your team has the “right stuff”  to be successful.
  • Make your financial projections realistic.
  • Support projections with pragmatic assumptions.
  • Explain how your company will pay its debts.
  • Proofread and then proofread again!

A good business loan package should contain: a general statement about the loan request; a review of your business structure; the loan products you offer; your marketing and sales strategies; a review of your competition; the resumes of your management; your business location; your financial statements; related services you may require and your exit strategy. Let’s look at each section in more detail.

Loan request statement

This statement should list the purpose of the loan, the amount needed, the repayment terms and the dwell time. Explain how the credit line will be employed and be specific. The bank will have a general understanding but needs to hear your needs and plan. Specify how big a loan you need and identify your anticipated loan volume per month, by product. Never ask how much you can borrow.

There is no such thing as a ‘perfect plan.’ Sometimes execution
is more important than a Pulitzer Prize-winning loan package.

When discussing terms, specify the period of time the credit line is needed. Twelve months is normal; however, if you have a strong relationship and perform according to the terms and conditions of the agreement, the bank will probably be willing to negotiate a renewal. Also make sure this general statement describes the needed or typical duration that loans will be held on the warehouse line before the sale and delivery of the transaction is completed.

Business structure and objectives

This section should describe the legal structure your business uses and why it was chosen. Provide needed supporting documents such as partnership agreements, articles of incorporation, by-laws or any other appropriate documentation. Make sure you list all principals and owners, along with their respective ownership percentages and level of active involvement in day-to-day activities.

In addition, state the company’s mission and management’s vision. List objectives, strategies and tactics used in pursuit of that mission, as well as measurable and quantifiable financial goals — short-term and long-term — of the company. Be specific. Where will the company be in one to five years?

What are your sales expectations and expense levels? What employees will you need? What new markets and market share will you try to capture?

Lastly, this section should identify key staff members and their respective roles. Mortgage bankers are responsible for loan underwriting, and thereby assume a major financial responsibility in the overall performance of the loans they originate. Emphasize that the management team has the skills and qualifications to professionally underwrite all types of loans.

Products, marketing and competitors

One section of your loan package should describe each loan product you plan to offer. Be descriptive, but brief. Describe the strengths and weaknesses of each loan product in the current market environment, and list the benefits of your products versus alternatives relative to your market and potential customer base.

You also will want a section that explains how each product will be marketed and your sales approach. Will you use sales associates on the street, telemarketing, direct mail or e-commerce? Define your trade area and market. What geographic area are you targeting? Will you just sell in your neighborhood, across the city, in the entire state or will you go national? You will want to describe the anticipated loan volume as it relates to each product per month.

Lastly, there is always competition, and you and your bank should know who they are. This section should list the strengths and weaknesses of your competition and how you plan to develop market share. In addition to answering questions about your direct competitors, provide an industry overview. List the current economic conditions, trends and progress of the mortgage industry nationally, regionally and in your market area that will impact your business.

Resume and location

Key Points

Do’s and Don’ts of successful banking relationships


  1. Be on time and provide sufficient time to present your financial needs
  2. Provide all facts in writing
  3. Ask questions about bank policies and expectations
  4. Be truthful about problems with your company or its products
  5. Be flexible in your request and consider alternatives


  1. Be impatient while waiting for an answer
  2. Ask for interest rates or change banks based on rate
  3. Ask how much you can borrow
  4. Hide financial information or inflate sales projections
  5. Bluff about funding alternatives

Before giving out loans, banks want to know the relevant backgrounds of the people in charge of that money. List all experience, training, skills and knowledge that adds to management’s operating expertise. Also describe the specific roles and responsibilities of each manager.

It may seem obvious to list the location of your business, but this section is more than a simple address. In addition to a brief description of the facility, you will want to explain the desirability of your location as it pertains to your business goals, and any relocation plans you may have or alternative locations you have considered should conditions change in your area.

Financial statements

Your business loan package should include detailed financial statements to prove to the bank that your company is a good credit risk. Include three years’ worth (if available) of the following forms: company balance sheets, profit-and-loss statement and tax returns.

The balance sheets should list all debt lenders, amounts, terms, payment amounts, interest rates and collateral, and should also provide a detailed list of capital assets. In addition, you will need a pro forma statement that goes back a minimum of one year, month by month, as well as personal financial statements and tax returns for all principals.

Other businesses and exit plans

Describe any related businesses you may need from the lender. List any deposit services, other loans or credit facilities you may require. Also explain any noncredit services you are looking for, such as cash management,  insurance, investment, trust or other advisory services.

The last section in your business-loan package is your exit strategy. Describe in detail what you plan to do if business revenue is not sufficient to repay your debt as programmed. How will all parties get out, unharmed?

Be sure to consider several alternatives.

•  •  •

Once you have your business loan package, you will be ready to present it to potential funding sources. If your specific needs properly match with the terms and conditions of the credit facility, it will be a comfortable fit for both parties and will result in a successful relationship.

One last thought: There is no such thing as a “perfect plan.” Sometimes execution is more important than a Pulitzer Prize-winning loan package. The ideal plan is the one that best describes the unique strengths of your operation, accurately portrays your company’s culture and explains why your banking relationship will be a great value to the bank. That story may or may not be best written by following the suggestions here, but hopefully these guidelines will help get you started.


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