1. Small Business Loans Kim Pope, Vice President, Regional Manager Business Banking Group

2. 2 The Foundations of a Business  What type of legal entity will you be?  How many owners involved?  Do you have a building? Will real estate be involved?  Identify your market, mission statement  Register with the state and professional board(s) if applicable

3. 3 Key to a Successful Start-up  Raising Capital - basic of all business activities  Can you handle a few bad months to start?  Develop a banking relationship  Develop a financial reporting system (balance sheet & P&L)

4. 4 Business Financing Options  Personal savings  Personal borrowing  Friends & family  Credit cards  Business borrowing

5. 5 Personal Savings  Personal Savings - primary source of capital for new businesses  Look to your assets for opportunity 401K whole life insurance etc.

6. 6 Borrow Against Your Home  Refinance your existing mortgage with a new one  Take out a line of credit against equity in your home

7. 7 Friends and Family  Get an agreement in writing  Emphasize debt (loan) rather than equity (ownership)  Pay back nominal interest at regular intervals (quarterly)

8. 8 Credit Cards  Quick and easy  Keep borrowings separate from personal use (separate card for the business)  Can be inexpensive and flexible when considering monthly payments

9. 9 Business Borrowing  Do your homework – be prepared!  Know your business:  balance sheet  income statement (profit & loss)  seasonality  We want to understand your business

10. 10 Applying For a Business Loan General Information  Business name, legal structure of business, and names and SS# of principals  Purpose of loan - what loan is being used for and why it is needed  Amount required - the amount you need to achieve your purpose

11. 11 Applying For a Business Loan Management Profile  Short statement on each principal in your business  Provide background  Education  Experience, skills and accomplishments

12. 12 Applying For a Business Loan Market Information  Clearly define your company’s market  Identify your competition and explain how your business will compete in the marketplace  Profile your customers and explain how your business will satisfy their needs

13. 13 Applying For a Business Loan Financial Statements  Personal tax returns (2 years)  Business tax returns (2 years)  Interim financial statements (as needed) balance sheet income statement  Personal Financial Statements – PFS (as needed)

14. 14 How Will Your Loan Be Evaluated? The Five “C’s” of Credit

15. 15 Five “C’s” of Credit Character (credit history):  Will look at personal and business credit report to look at repayment trends Do you pay your bills? Do you pay your bills on time? Are there explanations for any blemishes?

16. 16 Five “C’s” of Credit Cash Flow:  Historical and projected cash flow analysis to determine if you will be able to repay loan and have enough money to run the business

17. 17 Five “C’s” of Credit Collateral (an asset, something you own ):  A lender can claim to satisfy a loan in the event the loan is not repaid according to required terms  Assets purchased with loan proceeds may serve as collateral  If business does not have enough collateral - the bank will look to personal assets

18. 18 Five “C’s” of Credit Capitalization (basic resources of the company):  Owner Equity  Retained Earnings  Fixed Assets

19. 19 Five “C’s” of Credit Conditions (factors that affect the success of the company ):  Government regulations  Competition  Industry Trends

20. 20 Make it Happen! Resources are available to help you:  Professional service partners: your local banker your accountant/CPA  Business counseling organizations: SBA Small Business Development Center Center for Women’s Business Advancement SCORE