I have had the privilege of working with Patrick Jones in my previous job, and when the opportunity arose to interview someone in the financial field my thoughts immediately turned to him. Pat, as I like to call him, is the branch manager of North State Acceptance, a finance company that focuses on consumer loans in the Eastern part of North Carolina. His friendly demeanor and ever smiling face are attributes that I’m sure have benefited
him greatly in his career, however he is an individual who genuinely cares about people and businesses and has always strived to do the right thing in an industry whose reputation has been marred by those who have not had the same strong character.
When I asked about his past experience with the finance industry he told me that he had previously worked for Wachovia Bank for 23 years managing both consumer and commercial lending. He worked with automobile, RV, and yacht loans with the largest credit underwritten at $3.5M. He later managed a portfolio of automobile dealers by lending them credit and managing wholesale lines of credit. In his career with North State Acceptance, Pat states that currently the biggest challenge is irrational competition. “Many new lenders are entering the market and have forgotten the sins of the past. There is very little discipline that I compete with daily.”
Pat discussed some things to do if an individual is looking to secure a loan in the next 6-12 months. Pat said that you should have a demonstrated need for financing and included the following scenario. “For instance, an auto dealer wishes to increase their inventory line of credit. The financial information presented should demonstrate a need by an increase over historical sales calculated in inventory turns. Requirements for submittal where at a minimumtwo years tax return or CPA prepared statements on the business along with internal prepared company financial. Also an updated personal financial statement would be required of any capital stockholder of the company.” Pat also reminded that the bank he worked for didn’t lend to startups and a minimum of 2 years experience was required in the business requesting the loan. For new startups Pat stated that a resume,business plan, and personal financial statement for the previous 2 years were essential to get the ball rolling. For those looking to acquire large lines of credit, Pat noted that they can take weeks to underwrite and days to close based on the complexity of the loan.
The specifics of the loan will always vary based on an individual’s circumstance. Pat stated that loan to value requirements are dependent on the individual’s collateral and credit quality. His maximum debt capacity ration is 45% of net monthly income. For larger loans, a cash flow analysis is performed with large expense assumptions similar to those we are creating in ENT 640. Pat also stated that a business plan was absolutely essential to a start up seeking a loan, and with reputable financial institutions the loan would not be considered without the plan.
Relationships were a main topic of discussion when interviewing Pat. He mentioned that a prior relationship with a lending institution is very important. They do consider a deposit and previous consumer loans with the bank in a positive light. When I asked him about his suggestions for those of us seeking to get funding for our entrepreneurial ventures he concluded by saying, “Build a solid relationship with a bank. Save. Protect your credit. Plan and time your market. Put this plan together thoughtfully on paper and present it to the bank.”
