CNF Exchange Assists with Students' Higher Education

In November 2012, CNF Exchange introduced the CNF Exchange Business Finance Scholarship. There were over 150 applicants, located from across the country, with all types of educational backgrounds and goals. On December 31, 2012, CNF Exchange announced the winners of the scholarship: Kadesha Miller of Englewood, CO and Arlene Reyes of Lincoln, AR, both high school seniors.

Scholarship Essay

The scholarship asked the applicants to submit an essay of 750 words or less in response to the following question:

“After the Financial Crisis of 2008, many businesses found it difficult to obtain business loans from banks and other traditional financing sources. What information is important for commercial bank lenders to analyze and receive from small businesses in order to grant them a business loan?”

Focus on Cash Flow and Repayment Ability

All too often borrowers do not focus on their primary source of repayment when presenting their financing request to commercial lenders. While there are many different sources of repayment depending on the type of commercial loan requested, the ability of the borrower to repay must be thoroughly communicated and well understood. For most operating entities, the cash flow from operations is their primary source of repayment; borrowers who focus on their company’s stability, predictability, diversity, and magnitude of cash flow when requesting their business loan, will undoubtedly have better results.

Below are excerpts from Kadesha Miller’s and Arlene Reyes’ essay submission. You will find both have a common theme and include a focus on cash flow and the ability to repay:

• Kadesha Miller:

“Past performance is used to predict future performance. A bank should examine a business’ credit history and past financial statements, specifically, monthly cash flows, and net income, to see if there are sufficient funds remaining after their expenses to cover loan payments. Banks should also analyze the business cycle so as to identify slow months and periods with decreased revenues. It is important to identify these periods because the bank should be satisfied that the business will still be able to make the loan payments during these times. The bank should be assured that in the event there is some unforeseen circumstance or event, the business would still be in a position to make the loan payments.”

• Arlene Reyes

“Small businesses are essential in the success of this country’s economical status. This is why all the pieces must fall into perfect place in order for a commercial bank lender to even consider granting a loan to these easily overlooked businesses. Certainty of money being repaid is a crucial factor in the decision process. Banks want to make sure a small business has ‘cash flow’, money coming in and going out. They judge the business prowess to repay a loan by its historical earnings and its prospective income. Financial statements over the past 3 years and an explanation of the business’s year-to-year income should be a requirement. A bank wants complete assurance they will receive their money back in full, regardless of the circumstances.”

CNF Exchange is proud to assist in furthering the education of ambitious and driven individuals. We believe there is no better investment than investing in yourself.