Lending environment has gone through a dramatic change Less money and it has become harder to access that money Forced to find other ways to fund a business W HERE THE L ENDING W ORLD IS T ODAY

The U.S. is experiencing a $100 billion small business credit gap. Since the recession, small business lending and small dollar lending have shrunk dramatically – 14.7% and 17.9%, respectively. While SBA total lending dollars may be up, the number of loans is down 16%. T IGHT C REDIT IS A N ATIONAL P ROBLEM

SBA L ENDING H AS F OCUSED ON L ARGER L OANS

Ask family S O N OW W HAT ???

Ask family Win the lottery S O N OW W HAT ???

Ask family Win the lottery Go to a loan shark S O N OW W HAT ???

SBA Loans 401(k)/IRA Rollover Funding Equipment Leasing Securities Backed Loans O THER T YPES OF F UNDING

Most common for business start-ups and existing businesses Maximum loan amount raised from 2 million dollars to 5 million dollars Currently, the maximum rate is 6% Typical loan amount is from $100k to $2 Million Loan can take 30 to 60 days T HE SBA 7A L OAN P ROGRAM

Funding Start Up Costs of New Business Construction of a New Building Refinance of Business Debt Purchase of an Existing Business Working Capital Purchase of Commercial Real Estate Tenant Improvements Equipment Financing Inventory W HAT THE 7A L OAN P ROGRAM IS U SED F OR

Strong personal credit Industry experience of 2 years May need to provide collateral Usually 20% to 30% down Written Business Plan Provide 3 years of tax returns Personal financial statement A Resume 7A L OAN P ROGRAM E LIGIBILITY R EQUIREMENTS

Less common than 7A Loans Some key differences: The business loan must include real-estate or equipment The bank takes a first mortgage of 50% You typically put down 10% Most 504 projects are in the $200k to $5 million plus range Longer terms/amortizations are available The SBA guarantees 40% SBA 504 L OAN P ROGRAM

Designed to increase the number of loans under $350K Replaces the Community Express Loan Guarantee: 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000. T HE SBA SLA L OAN P ROGRAM

One of the more popular funding strategies to purchase a new business 10% of the franchises sold in the U.S. utilized retirement plan rollovers as part of the funding Why was this created? How does this work? What are the benefits? 401 ( K ) - IRA R OLLOVER F UNDING

1974 Congress creates IRA’s allowing Americans to save for their retirement tax deferred (k)’s were established increasing the amount Americans could save tax deferred Most Americans have the bulk of their savings in their Retirement Plan Withdrawal of savings incurs taxes and penalties W HY R ETIREMENT P LAN F UNDING IS N EEDED

Here is an example of the tax implications for someone withdrawing $200,000 from their retirement plan 10% early withdrawal penalty 30% state and federal taxes Leaves the individual with $120,000 of the $200,000 W HAT IF I WANT TO W ITHDRAW THE MONEY ?

Roth IRAs do not qualify – Most Employers require employment termination prior to using retirement funds. *Other plans may qualify 401(k) Plans 407 Plans (Government agencies) Cash Balance Plans Employee Stock Ownership Money Purchase Plans SEPs 403(b) Plans Annuity Plans Defined Benefits Plans IRAs Rollover Plans SIMPLE Plans T YPES OF P LANS T HAT Q UALIFY

H OW IT WORKS

No Loan payments Current credit score not a factor Does not affect one’s debt ratio or credit rating Can be used as capital injection for SBA Saves money Builds wealth Reduces emotional and financial concerns Can take a salary W HAT ARE THE B ENEFITS ?

Uses your current investment portfolio as collateral for a loan Investments Remain in your name Interest rate, currently around 4% Usually lower than an SBA or Home Equity Loan Keep all the appreciation and dividends from your portfolio You are borrowing money at say 4% and earning 9% on your investments Borrow approximately 70% of the value of your equity portfolio and as much as 80% of a fixed income or bond portfolio S ECURITIES B ACKED L INES OF C REDIT

Cash flow Assets may include: Office Furniture Computer equipment Company vehicles Printers Fitness Equipment E QUIPMENT L EASING If you’re contemplating purchasing a product whose technology and capabilities could quickly become obsolete, leasing may be a better, option. Some advantages to leasing: 100% financing No down payments Cash flow Potential tax advantages Up to $90K for start-ups

Many different ways to get the funding you need We have almost 30 years of experience helping visionary entrepreneurs launch their dreams! Please contact us at Benetrends.com