Don’t Tell Your Lender Everything

Don’t Tell Your Lender Everything

See Also:
The Relationship with Your Lender
The Dilemma of Financing a Start-up Company
Finding the Right Lender
Every Business has a Funding Source, Few have a Lender
Mezzanine Debt Financing

Don’t Tell Your Lender Everything

I have been talking about communication and developing a relationship with your lender. A reader wrote me, “If I told my lender everything, they would never give me money.” I agree, so I am writing today on what not to tell your lender.
I want to say again, that your lender can be a friend, ally, and consultant. But don’t view the lender as someone with whom you necessarily confide, specifically about things that don’t directly affect the lender’s interest.

Examples Of Lending Decisions Gone Bad

After thinking about what the reader stated to me, I started calling some of my lending associates, and asked them what statement people had told them, that adversely affected their lending decisions.
I talked with Elliott Lewis of Access Capital, who specializes in large home mortgages for borrowers with weak credit. One situation that came right to his mind was a prospect told him “As soon as I get this house refinanced, I am going to file bankruptcy.”
Larry Tyler, a commercial lender with Metro Bank, told me about the man who was up for a loan renewal. The prospect told Larry that his marriage was on the rocks, and his wife was going to take him for everything.
My favorite one is when I asked a prospect about his personal credit, and he told me it was great. Upon review, there was a lien for back child support. If the individual is not going to pay his children, why should I think they would pay me back?
Needless to say, all of these comments stopped the lending process cold.
You must remember, when something bad happens in your business, determine the cause and develop a plan for remedying the situation before talking to your lender. No business or business owner is perfect, so it’s unrealistic for a lender to want to know everything that is happening. But if the lender has information, it will be considered.
We all have committed sins in a corporate sense. The lender is not our priest. Don’t tell your lender everything! Download our three best tools to take your business to the next level (includes cash flow, profitability, and leadership tools). 
don't tell your lender everything
[box]Strategic CFO Lab Member Extra
Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.
Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]
don't tell your lender everything

ARTICLES YOU MIGHT LIKE

The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »

IN CRISIS? GET A STRATEGIC CFO! – CEO Blindspots Podcast

Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

SHARE THIS ARTICLE

JOIN THE NEXT STRATEGIC CFO™ SERIES

Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®

Days
Hours
Min
Sec

September 12-15th 2022