Clearly, bankers are scrutinizing more carefully the loans they make. Systematic "loan grading" is becoming the norm at medium to large banks. Regulators are demanding it.

There's no universal scoring system that bankers use. But regardless, they will undoubtedly examine your business from several key angles, assigning points for such things as credit history, collateral, cash-flow coverage, the quality of your financial reports, and the strength of your management. The goal: to have a reliable and consistent method for determining (and tracking) the level of risk they think they're taking with a given business. Publicly traded banks also see grading systems as a step toward ensuring healthier returns on equity.

"The rating drives all sorts of things," says Keith LaRose, a vice-president in the small-business-lending area at Premier Bank, in Baton Rouge, La. "Everything from how much you'll be allowed to borrow, to the interest rate, to whether the bank will cover your overdrafts." The rating will change over time, based on performance of the company and the industry.

Given the potential impact, what's a prudent borrower to do? Ask your banker to fill you in on your score. Few are apt to tell you, say lenders, but you should press them by asking: How does the bank go about its scoring? What would it take to move up a notch in the bank's rating system? Would audited statements help? What else would the bank like to see? What benefits might a borrower expect to receive from a higher rating?

Bankers may not be able to answer all the questions with precision, but you'll have a focus for discussion. Says LaRose, "The better you understand how bankers evaluate your business, the more successful you can be in getting what you need." -- Bruce G. Posner

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