Running a business requires more than passion and a great idea. It requires strong financial decision-making. In recognition of Financial Literacy Month this April, the Chamber is launching a special blog series designed to help business owners strengthen the financial foundations of their companies. Throughout the month, we’ll share insights from financial service Chamber members on strategies that help businesses manage cash flow, plan for taxes, access capital and build financial resilience.

Guest post by Madison Keeffe, Branch Manager & Ag/Commercial Lender at Mountain Valley Bank

While loans take many shapes and sizes, a few universal truths exist as north stars between all the financial jargon and scary bank offices.

Organization

The more time you have, the better. Reach out to a lender before you start the shopping process, be it for a house, car, or even if you are buying an existing business.

Know where your financials are stored and how to access them, including current paystubs and prior years’ tax returns.

Finding the right fit

Talk to one or two lenders to ensure you are finding the right fit for you. Different lenders offer different products, just like Steamboat Ski Resort and Howelsen Hill. One has East Face, and one has a ski jump.

Money in - money out = money left?

Understand your current and future earnings. What is your current take-home pay or income? Do you have existing debt? How much total, and what are the monthly and annual costs?

Try to predict expenses ahead of time that might change with the new debt. For example, a monthly mortgage payment may replace rent. On the flip side, car registration and insurance may increase with the purchase of a new car. Utilities may change when you buy a new house or commercial property.

Start saving. Having money on hand for down payments for homes, cars, and business loans allows for the flexibility to act when the time is right.

Understand the risk

Before you get excited, test driving a new car with the new car smell, picturing how your furniture would fit into that new house, or imagining all the snow that skid steer could move in a good winter (we are all human after all), spend time to consider the pros, cons, and your budget.

At any point in the future, will the car, house, or equipment be worth less than when you bought it? Is there a point in time when the loan will be more than the car, house or equipment will be worth? 

What is the return on your investment? Does the math math?

Modern-day tools

Payment calculators can give you the chance to play with cost, term, rate, and down payment to understand the monthly implications for your budget.

Monitoring your credit score has never been easier. Take advantage of these tools to know where you are. Additionally, reach out to a local bank or United Way if you need additional resources on ways to improve your credit score or financial health.

Growing up in endurance sports, I was always told that proper preparation prevents poor performance. While chatting with a lender may seem less fun than ski jumping at Howelsen Hill, preparing for a loan is worth your time and can make all the difference when the right opportunity comes along.

This post was prepared by Madison Keeffe, a commercial lender, branch manager, and assistant vice president at Mountain Valley Bank, Member FDIC. Equal Housing Lender NMLS #2191541.