Finance Roll

Listen to the chickens in the media and you will hear that the sky is falling! Unfortunately, this time they seem to be right. With the economy in the tank and banks running for their lives, one has to wonder if it is still possible to get a loan from a bank.

When you picture the President of your bank, what comes to mind? A portly gentlemen smoking a cigar with a leering grin on his face? Well, not any more. The banking executive of today is more likely to be found curled up in the corner whimpering about subprime loans and government takeovers. The banking industry is simply in the middle of a financial tsunami of its own making.

For many, seeing the fat cats of finance get their comeuppance is more than a bit satisfying. This feeling of satisfaction quickly becomes heartburn, however, when we realize that financial hardship in the banking industry rolls downhill. The banks may be getting a $700 billion dollar bailout, but does that mean they will be issuing loans?

The answer is banks will be giving loans...if you meet very strict requirements. The theme with banks now is avoiding risk at all costs. Tailor all your borrowing efforts towards this. Let's take a closer look.

First off, you better have absolutely stellar credit. I mean it better be so perfect that you can barely look at the credit score because of the lights of heaven shining off of it. If you show late payments or defaults, you are going to have a tough time. Banks have historically looked back two years at your credit, but count on them becoming far more interested in years farther back.

Secondly, you better need the loan for something that is viewed as low risk by the banker. If you are looking for financing to develop a project in an area that is seeing property values decline, then the banker is not going to be lending you dollar one. Remember, banks are risk adverse. This means they are looking for slam dunk financing opportunities.

Third, you better be prepared to put down a sizable chunk of coin and perhaps a first born child as a down payment. Banks are risk adverse at the moment, so they will look for you to put something on the line as well. 20 percent down should make most of them happy. On commercial projects, you can expect to put even more down.

How tight are the banks being with money these days? The White House had to issue a statement "encouraging" banks to start loaning money. I doubt the order of an unpopular, lame duck president had much influence, but it gives you a snapshot of the current situation. If you are going for financing, make sure to have all your ducks in a row.