Business Loan Basics (3 hrs)

Business Loan Basics

Business loans are a vital source of funding for cash flow management. The course begins with ratio analysis and cash flow projections to determine whether loan funding is needed. Next is a discussion of how leverage (the use of borrowed funds) magnifies returns but increases risk.

We’ll then explore key loan components like different ways interest is calculated, types of fees, and the multiple terms that can be structured into a loan.  Basic accounting entries and financial statement presentation, including footnote disclosure, are explained. You’ll discover ways to reduce the interest rate on your loan. An overview of the application process and the documents lenders frequently request is presented.

The course explains the factors and ratios banks used to decide whether to approve a loan. Key documents that are signed at loan closing are described, and the importance of each is explained. Important clauses included in these documents are pointed out.

The author has 20 years of banking experience, including being CFO of two banks, sitting on loan committees, and having a collections department report to him. He provides insights into how banks operate, key terms borrower miss, and tips to protect you or your client’s business.