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Yes indeed, I love my banker |
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This is a column
about banks. When I sat down to begin writing, it reminded me of my debut
column many moons ago in which I blasted banks and bankers for their
insensitive, plodding ways.
I had written the column long before it
ever appeared in the paper, and it so happened I had an appointment that
very same week with my banker, Jack, who does not live in Marin and is not
an IJ reader.
As always, I needed financing. I sat down
across the table from Jack and outlined my request.
He listened carefully, making notes, and then
sat back, hands behind his head. So, he said casually, "I see you’re
a columnist now."
It had never crossed my mind that a San
Francisco banker who lived in the East Bay would see my column.
Changing gears, I got ready for a
pleasant discussion on my new part-time career. Then, to my horror, I
remembered the subject of the column was the frustrations of dealing with
banks. Oops.
I looked sheepishly at Jack, who was
acting rather smug. And I’ll never forget his only comment on my new
career: "Bad Timing."
Even though I didn’t get the loan
that morning, I learned a couple of valuable lessons: (1) the IJ gets
around, and (2) I had better learn to love bankers, at least in print.
I especially need to love my banker lately,
since I have a $100,000 revolving line of credit that came up for renewal
last month.
I should clarify by noting that I was
the one who said it came up for renewal. Jack said it became due. And
therein lies the problem – a simple case of semantics.
A line of credit, in my mind, is very
different from a term loan. When the due dates rolls around, which is
usually at the end of a 12-month period, the bank should check to see if I’m
still in business, and if so, gleefully give me another 12 months.
Jack doesn’t see it that way, which
explains why Jack is a big honcho at the bank. It also explains why every
loan I’ve ever made to a friend or relative has gone uncollected.
A line of credit is generally designed
for cyclical businesses, where extra cash is needed to increase inventory
for a particular season. It’s called a revolving line of credit because
the borrower theoretically pays it down when the inventory is sold, and
then repeats the process as necessary – drawing up, then paying down.
Perhaps I made Jack a little nervous
when I drew the entire $100,000 about an hour or so after signing the loan
papers. By the end of the 12-month period, I had paid down, let’s see. .
Yep, absolutely nothing.
Fortunately, Jack never required me to
clear the line for 30 days in order to have it renewed, which is a
requirement on many business credit lines. Nevertheless, he did expect a
little movement. "That’s why it’s called a revolving line of
credit," he said, as patiently as possible. "Except yours is not
revolving."
"It’ll revolve," I
promised. "My cycle’s just a little longer than most businesses.
This 12-month stuff is for amateurs. I’m on a three-year plan."
He wasn’t impressed. "The line
is due. I’ll see what I can do about a renewal, but the bank is not keen
about extending evergreen financing."
Evergreen financing, I was told, is a
bankers’ term for interest-only loans to deadbeats like me who never get
around to paying back any of the principal. They wanted some leaves back,
and I wasn’t about to drop.
Jack sighed heavily. "Send me your
financial statements for the last quarter. We have to do something
fast."
I liked the sound of that. Renewing the
line would be much faster than going through the lengthy and weary process
of default. Unfortunately, because of some turnover problems in my
bookkeeping department, I had no financial statements to give him. That
did not make him very happy.
"Would it help if I told you
business is really great?" I asked. "We’re really doing
well."
For some reason bankers never rely on
words. He steadfastly refused to renew the line until he could review my
overall financial condition.
In a couple of weeks, I’ll be able to
get him the statements, and in all likelihood, he’ll extend my line of
credit.
I admire his demands for documentation.
In fact, I admire everything about Jack. I love Jack. He’s a wonderful
guy. Jack? Jack? Are you there, Jack? Hello, Jack? |
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