SBA: Projecting Cash Flow - Best Practices and Evaluation Techniques

Why Should You Attend:

This webinar will provide useful information to SBA lenders about the analysis of revenue and cash flow projections of loan applicants consistent with the SBA SOP. It will review the important components lenders should be aware of when reviewing client forecasts.

The discussion will teach lenders about some unfortunate consequences that can occur when the lender does not use all of the information at hand, and offers some common sense context around which lenders should evaluate the financial information provided to support a business loan application.

Learning Objectives:

• Recognize the risks of failing to thoroughly vet the information received from a business loan applicant that project future revenues, profits and cash flows
• Identify the principal components that provide essential information needed to determine the viability of the operating forecasts, which play a vital role in loan decisions
• Track cash through a business operation and dissect the cash cycle of the operation, separate from the flat numbers typically offered by applicants
• Understand the role of financial projections in loan decisions and the environmental factors that can affect the validity of the numbers
• Comply with SBA standards concerning expected cash flow attributes of loan applicants

Areas Covered in the Webinar:

• Brief case study of Banco Popular’s outcome when failing to use information on hand to test cash flow projections prepared by a third-party loan originator for several loans to same franchise
• A review discussion about how cash flows through a business and the importance of identifying the ‘cash cycle’ ahead of reviewing the financial projections
• Best practices to break down the applicant’s projection numbers and systematically review them line-by-line to look for flaws or reasoning gaps that can distort results
• Identification of some practical axioms applicable to financial forecasts that will strengthen the context of the numbers for the reviewer
• Suggestions on tools lenders can create and use to accelerate the development of deeper analysis of financial projections
• How to deal with inadequate models that do not add up and a dose of skepticism that should be applied when a third-party is involved in developing the information lenders review
• SBA’s view and policy on the importance of cash flow projections, and the lender’s responsibility to analyze the applicant’s ability to repay the proposed financing

Who Will Benefit:

• Loan officers
• BDOs
• Relationship managers
• Credit analysts
• Loan underwriters
• Loan processors
• Chief credit officers (CCOs)
• Senior loan officers (SLOs)
• Loan committee members and other direct lending staff

Charles H Green
Charles Green and Company, Principal

Charles Green is a seasoned commercial lender with more than 35 years’ focus on funding the small business sector. He founded and served as president/CEO of Sunrise Bank of Atlanta, and in addition has served as a director for several companies, including Chair of Atlanta Medical Center.

His previous teaching experience includes the Stonier Graduate School of Banking, Graduate School of Banking at Wisconsin, Graduate Commercial Lending School, as well as online programs for several private enterprises.

He has written extensively about business financing, including the Banker’s Guide to New Small Business Finance (John Wiley & Sons, 2014), Get Financing Now (McGraw-Hill, 2012) and the bestselling The SBA Loan Book, 3rd Edition (Adams Media, 2011). Mr. Green earned a B.S. in Finance from the University of Alabama, diploma from the Stonier Graduate School of Banking, and completed Executive Education at Harvard Business School.

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