WHAT EVERY BORROWER SHOULD KNOW?
Before starting a dialogue with the Lender, the Borrower must make sure that all the required paper work has been duly prepared by the finance department of his company:
What aspects should be paid attention to before making a decision on further cooperation and what will the Lender focus upon during your first contact?
- There will be a search for relevant information on the internet. They say “If you are not on the internet, you do not exist”. We will be interested in every detail.
- Do not assume that your message sent from any of the social e-mail addresses (gmail, mail, yandex, inbox and the like) will be taken exactly as you expect.
- If you decided to contact via Skype, your Skype data should contain links to your Company site and your valid name and photo.
- You will be asked to provide the contact details of the Company’s executives and your relation to the Company.
- The contacts you have provided will be verified at least on the Internet. The Lender rule is “if someone is trying to hide information, just turn around and leave”. An honest applicant for funding has nothing to hide and any additional advertising will only be to the advantage of his Company. An applicant for funding will need to prove his legitimacy and competence.
In communication with you, the Lender will pay attention to the following things which he considers important:
- Chancellery style and manner of communication;
- The document package you provide:
- There are the same common rules and the same financial laws for all;
- The Lender needs full information about the Borrower and its business;
- The package must include a description of the project, high quality marketing research and financial business plan.
- The Lender will show interest in the details of the project. No expert will ever forget about the legal component or tax payments.
- Making appointments and carrying out negotiations are only possible with the top management;
Before you decide to start discussing the issue with the Lender, you should make sure the following work has been done within your Company:
1.Your Company addressed your Bank with a request for valuation of the Company’s assets which should be performed with the assistance of the Bank valuator.
2.After completion of the valuation process and adoption of the asset prices the Bank that provides services to your enterprise should decide on the possibility of issuing a bank guarantee to your Company (BG) to back its loan. In case of a positive decision, the Bank should inform you of the same with an RWA letter. (!!!) Such letter will be the basis for the beginning of negotiations to attract funding.
This is a regular procedure and it must be strictly followed. There are no other options.
If you receive any offers to issue you a bank guarantee against someone’s assets or sell you a bank guarantee for “for cheap”, be sure they are 100% fraud. You will not get anything but big problems as a result of involvement in such arrangements.
Having performed the asset valuation process with your Bank and having received the RWA letter from the Bank, you should be prepared for the next procedure — Due Diligence.
Due Diligence is an investigation of a business or person prior to signing an contract for the purpose of formation of a fair presentation of the object of which includes evaluation of risks, independent assessment of the object and a number of other factors. First of all, Due Diligence is aimed at a comprehensive investigation of legality and commercial appeal of the project.
Completeness of information received in the course of such investigation allows the Lender to weigh all pros and cons of the future cooperation more deeply.
The purpose of Due Diligence procedure is to avoid or minimize the existing risks.
Both parties, the Lender and the party that attracts Long-term Loan , are equally interested in the objective and competent performance of this procedure.
If you carefully read and understood the foregoing and comply with all the requirements set out, there will be no problems with funding and the Lender will make a positive decision.
Special aspects of long-term loan provision
Financing that may be provided by the Lender will have a legal origin.
To document funding, an Agreement of Joint Implementation of Project will be signed between two legal entities.
The Lender does not practice visits or meetings with employees of banks of potential borrowers, since it does not have any relations with the borrower’s bank before the issuance of a financial guarantee.
It is you that is a customer of your bank on the basis of contracts concluded between your Company and the bank, and if the credit committee of your bank agrees with the assessed assets of your Company, it is bound to perform its contractual obligations which include provision of all banking products to its customer according to the list of such products and terms of their provision.
We wish you success!