Ken Altena has 35 years experience as a banker and lender to out of home companies.  Today he talks about what your out of home lender wants to see.

Preparation and organization are key to obtaining a loan for any project, including your next billboard.  There are two kinds of information your lender wants to see: financial information and operating information.

Financial information

First is your loan request. State exactly how much money you want and for what. “I want $60,000 to erect a steel monopole and $250,000 for a two sided 14 by 48 billboard…” Itemize your construction budget. And please don’t say “I want as much money as you can give me.” Your banker won’t see the humor.

Second, comes a history of the performance of your billboards. This includes a Profit and Loss Statement, also known as an Income Statement, and a Balance Sheet covering the last 36 months. A good out of home banker will focus on trailing twelve months to remove seasonality from the business (e.g. a strong second and fourth quarter and a slow first quarter). Banks, in particular, rely heavily on past financial results to predict future performance.

Third come projections. Without a prior track record, it may be difficult to get bank financing, and it puts even more importance on the preparation of a detailed projection or budget which show that you can repay debt over the next 7-10 years. You need to defend key assumptions like revenue growth and expense growth.

The final piece is a personal financial statement. Almost all lenders will require your personal guarantee. Lenders want to know you have resources to make the financial plan work. Rarely will they provide 100% financing, unless you have other assets (i.e. billboards or real estate) to pledge as collateral. Lenders will also want to see your personal income tax return to verify your income.

Operating information.

The most important operating asset of the company is you.  Write a one page management bio highlighting the skills you’ve acquired to make your out of some company thrive.  Put in dates and company names so your lender can see where you’ve been and what you’ve done.

Next comes information about your billboards and permits.  Prepare an excel spreadsheet.  What is each structure’s address.  What size.  Digital or static.  Steel or wood.  Lighted or not.  Are the boards conforming or non-conforming.  What are the permit numbers.  Be prepared to show copies of permits to your lender during due diligence.  Is the board occupied. Who is the client.  How much are they paying.

Then come leases.  When do they expire?  What’s the rent?  Are there inflators?  Are there special clauses in the lease the lender should know about?  A lender will not want to make a loan with an amortization which exceeds the weighted average remaining term of your leases so you better know what the weighted average remaining term of your leases is.

You can contact Ken Altena at 206-636-8478 or by emailing Kenaltena@billboardloans.com 

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