The Credit Process for Business Loans

The credit process is a review of your business loan package by a Bank of Ann Arbor commercial banking officer. Bank of Ann Arbor has a legal and moral responsibility to make sound loans. Since the source of loan funds is depositor money and we are required to repay that money when requested, the credit review process helps Bank of Ann Arbor make wise loans.

Your commercial banking officer will review your business loan package based on criteria known as the "Five C's of Credit."
  1. Character - It involves a review of your personal honesty, integrity, trustworthiness and management skills. A banking officer also makes a judgment of character based on your business plan, credit history and the quality of your presentation.
  2. Capitalization - The capital structure of your company is important to Bank of Ann Arbor because it helps determine the level of risk associated with your loan request. An analysis of capitalization includes a review of equity, total debt, the value of assets and permanent working capital.
  3. Cash Flow - This is the cash your business has to pay the debt. A cash flow analysis helps us determine if you have the ability to repay the loan.
  4. Collateral - This provides a secondary source of repayment, thereby minimizing the risk for Bank of Ann Arbor. The amount and type of collateral required depends on the type and purpose of the loan.
  5. Conditions - This refers to outside conditions that may affect the ability of your business to repay the loan. Factors such as general economic conditions or a large concentration of sales to a single customer are evaluated during our review of your loan application.
You'll want to make sure all of these items are evident in your loan package to ensure a thorough review.

Once our commercial banking officer determines that your loan request has potential, he or she will turn it over to our Credit Team. Here a qualified credit analyst will conduct a thorough review of the loan package. Working together with you, our credit analysts and your commercial banking officer will structure a loan that meets your business needs. The loan package will then be presented to our locally-based loan committee for final approval. Our loan committee meets weekly to provide quick turnarounds on loan requests.

When you are ready to apply for a business loan at Bank of Ann Arbor, our loan application checklist will help you gather the needed information.

To arrange a meeting with one of our experienced commercial banking officers, please contact us at 734-662-1600.
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