1. Lend For America Summit November 15, 2014 Protecting Your Portfolio Christopher Mendezona Executive Director Alex GeweckeDirector of Finance Connor BaskinExecutive Director (2015-2016) AJ Farr Director of Finance (2015-2016)

2. Why should I care? Collections, Contract, and Clients

3. Collections Some keys to having “control” of your collections: 1 Empathy 2 Know your client 3 Be organized 4 KNOW YOUR CONTRACT 5 Innovation Source: Small Business Administration -- Arizona Profile

4. Contract o Know the vital aspects of the contract o Late fees o When do they take affect? o What is the penalty (flat fee or percentage of balance)? o Principal Amount o Principal due o Principal remaining o Interest Amount o Interest due o Interest remaining o Make sure the client knows too Source: Small Business Administration -- Arizona Profile

5. Client Empathy: What is it?

6. Client o Know the vital aspects your Client and who they are o Preferred communication channel o Personal info (phone, email, business address, personal address) o Who are they? o What are their interests? o What do you have in common?(sports, food, community, etc.) Source: Small Business Administration -- Arizona Profile

7. 3 Client categories of AMI: IdealAVERAGEHIGH RISK

8. Communication Poor/inconsistent Inconsistent Payments Late Payments Late FeesDelinquency Default Split/multiple payments Cash Check Payment plan

9. AVERAGE Communication More than 1 Channel Last Minute Consistent Payments Late Payments On occasion Multiple Methods for Payment Cash Check

10. IDEAL Communication Very responsive Consistent channel Contacts you directly Payments On-time Payments Pays full amount Does not pay fees

11. Case Studies

12. High-Risk Client: Delinquent Client Problems: No communication channels or consistent meetings established No specific payment method Weak late fee structure Absence of structured payment schedule and loan budget Example:

13. What was the result of these problems?

14. Innovation

15. High-Risk Client: Addendum to Loan Agreement Implemented Changes: Borrower must pay with a cashier’s check Included a detailed payment schedule Harsher late fee penalties Overdue balance callable at anytime, once delinquent Example:

16. Lesson Learned Solve the problem before it arises

17. Ideal Client: Farmers’ Market Seasonings Contract Improvements & Client Management: Due to seasonality of farmers’ markets, reduced payments during “Summer” months while boosting payments during peak months Highly responsive and flexible to the client’s requests Organized multi-communication channels In-depth “Use of Funds” budget breakdown

18. Ideal Client: Farmers’ Market Seasonings

19. Average Client: Bus Transportation Services Contract Improvements: Required proof of vehicle insurance and title Agreement to share current tax returns upon completion Frequent follow-ups and consistent meetings Liabilities clause – loan cannot pay other outstanding liabilities Loan budget and payment schedule Two AMI (lender) and two company representatives (borrower) signatures required

20. Average Client: Bus Transportation Services Example:

21. Questionable Client: Oil Retention System Contract Improvements & Client Management: Multi-channel communication Stemming from an inconsistent revenue stream, implemented a revenue hurdle Provisional extension of loan capital contingent upon revenue hurdle Analyzed both business and personal bank statements Reactive and attentive to client needs

22. Future Innovations 1.Uniform Commercial Code (UCC) – 1 Lien 2.Security Agreement 3.Confidentiality Clause

23. Questions?

24. Christopher Mendezona Chris@azmicrocredit Alex GeweckeAlex@azmicrocredit Connor BaskinConnor@azmicrocredit AJ Farr Aj@azmicrocredit Contact Information Azmicrocredit.org

25. Christopher Mendezona Chris@azmicrocredit Alex GeweckeAlex@azmicrocredit Connor BaskinConnor@azmicrocredit AJ Farr Aj@azmicrocredit Azmicrocredit.org