Small Business Startup & Survival The Credit Process

Agenda Who am I The five “Cs” of credit Apply for a loan; Important Factors Types of Loans Loan Costs The SBA’s role After Loan Closing Helpful Links

Who am I SVP and Manager of Commercial Banking for Genesee Regional Bank 16 years of banking experience, most on the commercial lending side

The Five “Cs” of Credit Capacity – to repay the loan; Most critical Capital – your investment; “skin in the game” Collateral – security for loan Conditions – purpose of loan Character – background; experience; trustworthy

The Credit Process – Loan Application Information Needed: Loan application; business plan; financial information Timeline: Varies – weeks to months Advisors of the applicant: who your team is can influence the outcome

The Credit Process – Types of Loans Line of Credit – Short term working capital use Term Loan – Equipment; Leasehold Improvements; Permanent working capital Mortgage – Long term fixed asset acquisition (i.e., building) Lease - Equipment Letters of Credit – International use

The Credit Process – Loan Costs Direct Costs –Interest rate: fixed or variable –Origination fees; processing fees –Loan guaranty fees (i.e., SBA fee) –Appraisal and environmental fees –Attorney and other closing costs Indirect Costs –Periodic financial reporting –Covenants

Credit Process – The Role of the SBA Provide the Bank additional comfort to mitigate some weakness of the credit request such as insufficient collateral, new business or no historical cash flow, etc. The SBA guaranty does not mean the Bank has zero risk in the transaction.

The Credit Process – Post Loan Closing Communicate, communicate, communicate!!!!!!! Be open to your banker with good and bad news. If your banker does not know about an issue, he or she can not assist you! Use your banker as a business tool – Networking, advice, leads for your business

Helpful Links edit.htmlwww.newyorkfed.org/education/addpub/cr edit.html Other bank websites