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MANAGEMENT TOUGH Getting a Loan in Economic Times It's still challenging, but not impossible By Joseph Finora Loans are still available in this economic climate to business owners with clean, orga- nized books and good credit histories. Photo: Thinkstock, Stockbyte re you a vineyard or winery owner seeking a business loan or credit line? If so, you have a reasonable chance of obtaining one if you meet certain conditions. For starters, you'll need a good credit history and a willingness to provide exten- sive information to potential lend- ers, most of which remain vigilant in this fragile economy, yet are will- ing to extend credit to a "worthy risk." While some of the things that go into a successful loan applica- tion are standard across the lend- ing industry, other items pertain strictly to wineries and still others are unique to vineyards. The poten- tial borrower who is aware of such items stands the greatest chance of getting the loan at a manageable rate and in a reasonable time frame. In nearly every type of business environment, funds are regularly available for the "A" to "A+" types of borrowers. Those with good credit histories can expect to pay a rate between 2%-3% and receive 116 VINEYARD & WINERY MANAGEMENT JAN - FEB 2012 the best overall terms. Sometimes lenders will compete for their business, offering such perks as a fee reduction or elimination in exchange. Some of the lenders interviewed for this article have noted improve- ment for so-called B-level credit risks while admitting that this mar- AT A GLANCE Lenders are still cautious, yet are willing to take on a "worthy risk." There are usually funds avail- able for "A-level" borrowers, and things are improving for "B-level" borrowers. Proper preparation before meet- ing with a lender will increase your chances of success. Banks look for new and diversi- fied revenue sources such as agri-tourism, rental income and consulting. ket remains challenging. In addi- tion to a reliable bill-paying record, lenders like to see a record of sales growth, not an enterprise that's in decline. They also want to see an organized set of books noting assets versus liabilities, debits ver- sus credits, etc. – in other words, a clean balance sheet. This is why when it comes to borrowing, when you really need the money is almost always the time when no one will lend it. Therefore, it's imperative for poten- tial borrowers – especially new ones and those with less than stel- lar credit histories – to take basic steps to help put themselves in the best possible light for the lender. UNDER THE MICROSCOPE The most common types of loans for vineyard and winery oper- ators are equipment leases/loans, real estate refinance/acquisition, lines of credit, vineyard develop- ment and private money/real estate loans. While there are differences among them, each relies on similar fundamentals. "Be prepared to go under the microscope," said Edward Kohl- hepp Jr., a Certified Financial Plan- ner (CFP) based in Doylestown, WWW.VWM-ONLINE.COM