Small Business Financing ©

LaSalle Bank Points of Contact  Charles Parker  Relationship Manager/ Commercial Lending   namro.com  Teresa Grace  Branch Manager   amro.com

Business Plans  Sources SBA  ning/writingplan.html ning/writingplan.html State of Michigan  7, ,00.html 7, ,00.html Software

Business Plans, cont.  Sections The Business Management Marketing Finance Production

Business Plans, cont.  Sections of interest Marketing  Target market  How you will be reaching them Projections  Income statement  Usually for the next two years Realistic  Unrealistic projections may lead to business failure

Business Plans, cont.  Why pertinent? Sets a roadmap for the business  May plan for future company events  Examples Expansion or move to a larger facility Allows the business to check on its progress and financial operations  Example-company can check on the actual results of operations versus the forecasted financial projections

Important Contacts  Attorney May set up the LLC or corporation Able to answer liability and legal questions  CPA May set up accounting/bookkeeping record system May assist with projections May do payroll and other business functions for you

Financing  Conventional  SBA The SBA guaranties the loan. The bank is your lender, not the SBA. May use for start-up business or a newer business. Please call for details.

Financing, cont.  Alternatives HELOC REM

What Banks Look At  Collateral Types  Accounts receivable  Inventory  Equipment  Machinery

What Banks Look At, cont. Collateral, cont.  Gross value Generally this is the purchase price  Authenticated by an invoice or receipt Trade Value  Check with your CPA for the current GAAP on this topic

What Banks Look At, cont. Collateral, cont.  Discounted value Banks use this amount for analysis Why banks use this versus the gross value  If the loan goes bad, the bank liquidates the collateral  The bank does not hold the collateral indefinitely.  The discounted value estimates what the collateral may sell for.

What Banks Look At, cont.  LTV=loan amount / discounted value Conventional  Maximum generally is 75% - 80% SBA  Maximum is 90% Lower LTV=Lower risk for the bank

What Banks Look At, cont.  Cash Flow Business  Start up-use projections  New or newer business-historical financial operating results from business federal tax returns Personal  Review personal federal tax return  Analyze cash flow from federal tax return versus the payments for personal debt

What Banks Look At, cont. Cash Flow, cont.  Global Combine business and personal cash flows Gives a picture of the overall, combined cash flow

What Banks Look At, cont.  Personal credit Score  Average is 675  Higher the score the better  Higher score = lower risk for the bank Past dues  day past dues  Difference between a REM and credit card past due Public History  Civil actions, lawsuits, and bankruptcies

What Banks Look At, cont.  Experience Want to see experience in the industry If person has no experience, person may not know of potential issues May aid in the business failing  Overdrafts Personal Business

Small Business Lending  Please call with any and all questions.  When you contact us, please let us know that you saw us at the conference.  Thank you for your attendance.