1. Small Business Loans We Deserve the Money, See our Business Plan!

2. Citizens Bank: Primary Lending Services http://www.citizensbank.com/small-business/default.aspx http://www.citizensbank.com/small-business/default.aspx 1. Small Business Mortgages You will own your property, not rent You will own your property, not rent Terms of Loan 1. Amount:_________ Between $100,000 and $500,000 Between $100,000 and $500,000 2. Interest Rate (APR): ____% Between 4.29 and 8.03% Between 4.29 and 8.03% 3. Length of Loan:_____ 2. Line of Credit Liquidity to acquire short- term assets and prepare for long-term success. Terms of Loan 1.Amount:__________ Between $100,000 and $500,000 2.Interest Rate (APR): ____% Between 4.29 and 8.03% 3.Length of Loan:_____

3. Understanding the Terms of a Business Loan 1. Higher the APR, the more you pay for the money you are borrowing 2. Longer the loan, the more you pay for the money you are borrowing 3. Excellent credit score = lower APR 4. Poor credit score = higher APR 1. You pose a greater RISK to the bank

4. What is Credit? derived from the Latin word “credo” meaning “I believe.” derived from the Latin word “credo” meaning “I believe.” Credit is when goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date. Credit is when goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date.

5. Lender and Borrowers A lender is the person or organization who has the resources to provide the individual with a loan. A lender is the person or organization who has the resources to provide the individual with a loan. The lender “trusts” the borrower to repay the money. The lender “trusts” the borrower to repay the money. banks, mortgage companies, car manufacturers banks, mortgage companies, car manufacturers A borrower is the person or organization that is receiving the money from the lender A borrower is the person or organization that is receiving the money from the lender When the privilege of borrowing has been extended, the borrower is usually expected to pay interest or some fees, such as processing. When the privilege of borrowing has been extended, the borrower is usually expected to pay interest or some fees, such as processing.

6. Credit Worthiness When a lender is considering granting credit to the borrower, he/she needs to believe the prospective borrower has both the When a lender is considering granting credit to the borrower, he/she needs to believe the prospective borrower has both the willingness and ability to pay the money back. willingness and ability to pay the money back. When a person applies for credit, there are 5 C’s of credit. When a person applies for credit, there are 5 C’s of credit. When evaluating an individual’s credit rating, lenders look at a person’s character, capital, capacity, collateral, and conditions. When evaluating an individual’s credit rating, lenders look at a person’s character, capital, capacity, collateral, and conditions.

7. CREDIT WORTHINESS IS DETERMINED BY ANALYZING YOUR 5 C’s CREDIT WORTHINESS IS DETERMINED BY ANALYZING YOUR 5 C’s

8. 1. Character is a person’s honesty and reliability determined by their history of repaying bills on time. 2. Capital is an evaluation of a person’s net worth. 3. Capacity is the income a person has available to repay the loan determined by job longevity and having few other loans. 4. Collateral is property and assets which can be seized if a person does not repay the loan. 5. Conditions refer to the general state of the economy. If an individual has these qualities, he/she is more likely to be perceived as having the ability and willingness to pay back a loan and will be granted one by a lender. The 5‘S

9. Loan Calculator http://www.bankrate.com/calculators/business/business-calculator.aspx http://www.bankrate.com/calculators/business/business-calculator.aspx http://www.bankrate.com/calculators/business/business-calculator.aspx 1. Complete these scenarios: Person #1: Person #1: Loan: $250,000 Loan: $250,000 APR: 5.03% APR: 5.03% 15 years 15 years Monthly Payment =_______________ Monthly Payment =_______________ Total cost of loan = __________ (payment *12)*15 Total cost of loan = __________ (payment *12)*15 Person #2: Person #2: Loan: $250,000 Loan: $250,000 APR: 8.03% APR: 8.03% 15 years 15 years Monthly Payment =_______________ Monthly Payment =_______________ Total cost of loan = __________ (payment *12)*15 Total cost of loan = __________ (payment *12)*15 Person #3: Person #3: Loan: $250,000 Loan: $250,000 APR: 8.03% APR: 8.03% 30 years 30 years Monthly Payment =_______________ Monthly Payment =_______________ Total cost of loan = __________ (payment *12)*30 Total cost of loan = __________ (payment *12)*30

10. Part 11: Write a Memo to a Citizen’s Bank Loan Officer – 20 pts Find a Commercial Property to Buy in your desired business location Find a Commercial Property to Buy in your desired business location http://www.homes.com/Real_Estate/Counties /PA/Type-COMMERCIAL/#stay http://www.homes.com/Real_Estate/Counties /PA/Type-COMMERCIAL/#stay http://www.homes.com/Real_Estate/Counties /PA/Type-COMMERCIAL/#stay http://www.homes.com/Real_Estate/Counties /PA/Type-COMMERCIAL/#stay Find a Commercial Property for Sale! Find a Commercial Property for Sale! Borrow the full amount of property Borrow the full amount of property But see how 3 different interest rates (APRs) will greatly affect your Monthly Loan payment and overall loan amount But see how 3 different interest rates (APRs) will greatly affect your Monthly Loan payment and overall loan amount

11. The Assignment Download the Memo template from Chapter 19 on website Download the Memo template from Chapter 19 on website Find a property – no more than $600,000 Find a property – no more than $600,000 Here are the interest rates (APRs) assigned to 3 different credit scores Here are the interest rates (APRs) assigned to 3 different credit scores Person with Excellent credit: 4.03% Person with Excellent credit: 4.03% Person with Average credit: 6.15% Person with Average credit: 6.15% Person with Poor credit: 9.35% Person with Poor credit: 9.35% Calculate the different loan terms using this financial calculator: Calculate the different loan terms using this financial calculator: http://www.bankrate.com/calculators/business/business- calculator.aspx http://www.bankrate.com/calculators/business/business- calculator.aspx http://www.bankrate.com/calculators/business/business- calculator.aspx http://www.bankrate.com/calculators/business/business- calculator.aspx