The Lending Process

Here's how the billboard lending process works.  I tell clients to expect the process to take approximately one month for the introductory phone call to funding.  It can take as short as two weeks when the borrower is extremely organized and the credit is clean and as long as several months when the borrower isn't organized or the credit is more difficult.

Introductory Phone Call or Email - When you approach a lender be concise and direct.  Say your name, your company's name and what you want.  It helps if you can say that you've been referred by someone the lender knows.  I'm surprised how many people call me without introducing themselves or saying who they are.  It is unprofessional.    Here is a short script of an effective introductory phone call or email.  " Hello, I'm ____ and my company is _____.  I own __________ billboards with monthly gross revenue of $________ in and around ____________.  I want to borrow $____________ to ______________.  Is this a loan which might interest you?" When you are asked how much money you want to borrow don't say "I don't know" or "As much as you can lend me." You will sound like an unfocused bad credit risk.

Initial Due Diligence - The lender will respond with a request for information and will take a few weeks to review the information.  The info will include business financials, a personal financial statement, a billboard inventory spreadsheet, a management bio and a description of how much money you want to borrow and for what.

 Discussion Term Sheet - The lender will send you a summary of loan terms.  Amount, interest rate, fees, amortization, collateral and loan covenants.  The discussion term sheet is not a commitment.  It is a document designed for more discussion.  I send someone a discussion term sheet within a day or two of an original phone conversation.  Banks often delay their discussion term sheet until after a few weeks due diligence.

Loan Approval - Once you reach agreement on terms, the lender will prepare a loan application to submit for approval.  You should ask about the loan approval process.  Is it based on individual signatures or is there a loan committee?  It usually takes about a week to write a loan application and to get approvals.

Commitment Letter - This is a term sheet along with legal language which makes the agreement a commitment.  It puts a placeholder on the loan until legal documents get signs and the loan is funded.  I ask borrowers to send me a transaction fee along with the commitment letter because I'm going to have to start paying expenses (legal fees and travel) from this point on and I want them reimbursed if the loan never closes).

Site Visit -  During a site visit and a lender will view your signs, verify permits and leases and verify your financial statements against bank statements.  The site visit allows the lender to make a personal evaluation of your business skills.

Documents - The lender will send loan documents for you to sign.

Funding - Occurs after the documents are back in the lender's hands and the closing conditions of the Borrowing Agreement are met.