A man is judged by the company he keeps. Clothes maketh man. A person wearing a suit and arriving in a Mercedes Benz car or a Lexus is given a more respected reception than another who arrives in less prestigious car and wearing a plain tie and shirt. A person who arrives in a badly crushed shirt and dirty jeans is given no reception at all.The presumptions here are that the man in a suit is an important, moneyed person and the man in a tie is a junior or middle level executive. The man in a badly crushed shirt is an unemployed person or of no consequence whatsoever. Impressions are made on sight (however right or wrong they may be). It is because of this that in order to create a favorable opinion, care is taken before a meeting in dressing correctly and creating the right look. Presentation is extremely important. First impressions count enormously and can very often determine the fate of the proposal. One tends to be favorably impressed and more inclined to view a person or proposal favorably if thefirst sighting of the person/ proposal is good.
A well presented, well researched credit application inspires confidence. A credit application that addresses all the issues and concerns that a banker may have will usually go a long way in convincing the banker of the professionalism and competence of the intending borrower and on the borrower's ability and intention to repay. On the other hand if it is badly presented the impression that the banker would have is that the prospective borrower does not know his business, is confused, is disorganised and may be unable to repay. Such an impression could result in the loan proposal being rejected.
The presentation must be direct.
It must detail the risks and the strengths of the project/company that seeks the facility and explain how the loans will be serviced and repaid. It must convince the banker of the integrity of the management and its competence and the management's desire to repay and honor its commitments. It must financiallyprove the viability of the purpose the facilities have been sought with a sensitivity analysis to prove that all concerns are addressed. It must also convey to the banker that the management is aware of the environment it operates in and knows the business it is in. It must communicate forcefully and unambiguously. It must not meander or be verbose.It must be remembered that the banker who reads the proposal is a busy man. He has several proposals to read and the last thing he wants is a badly presented report that has several gaps. He has to make a decision quickly and if there are issues that have not been addressed his initial reaction would be to place it aside to be looked at when he has time. More often than not he will forget it. If there are several gaps he can get irritated. If there are delays in getting the information required doubts could arise on the company/ project.
On the other hand, if all the issues are addressed he will be inclined to look at the proposal favorably.
Itmust however be remembered that a well-presented well-structured application cannot make an unviable project viable or a bad loan good.The presenter will therefore be wise to detail all the possible risks as this will underline the prospective borrower's integrity and transparency. A banker is also aware that often a badly-intentioned prospective borrower would present a proposal that is perfect in all respects in order to get approved facilities. This is why the banker has to go beyond the report and read between and into the lines in order to convince himself about the integrity of the borrower and the viability of the proposal itself before he sanctions the facilities sought. The cost of a bad loan is very high.In short a well presented and well thought out credit proposal has a better chance of being approved quickly than one which is otherwise. It also inspires confidence.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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