1. MANAGING RLF ** RISK **

2. WHAT IS RISK?

3. HOW IS RISK IDENTIFIED?

9. “IF IT DOESN’T KILL YOU, IT MAKES YOU STRONGER”

10. HOW IS RISK IDENTIFIED? 1.OBSERVATION 2.EXPERIENCE

11. 3 TYPES OF RLF RISK 1.UNDERWRITING RISKS 2.SERVICING RISKS 3.FUNDING RISKS

12. UNDERWRITING RISKS! KEY AREAS OF REVIEW IN THE UNDERWRITING PROCESSKEY AREAS OF REVIEW IN THE UNDERWRITING PROCESS INFORMATION VITAL TO SOUND UNDERWRITINGINFORMATION VITAL TO SOUND UNDERWRITING

13. KEY AREAS OF REVIEW 1.CASHFLOW 2.MANAGEMENT 3.CHARACTER

14. CASHFLOW Cash pays the bills not Profits Look a little Deeper If it is Good can they do it Again? If it is Bad can they correct it?

15. CASH IF KING!

16. MANAGEMENT How Do You Know If Someone is a Good Manager? What are the Signs of a Good Manager?

17. The Two Most Common Reasons for Business Failure LACK OF CASHFLOWLACK OF CASHFLOW POOR MANAGEMENTPOOR MANAGEMENT

18. CHARACTER Most Difficult to Quantify! Importance of Honoring Debts Providing What you Need

19. INFORMATION VITAL TO SOUND UNDERWRITING Credible Financial Statements Credit History Try to Get Your Arms Around Character

20. Servicing Risk 1.Key Areas of Review 2.Red Flags

21. Key Areas of Review Performance of the Business Competition Trying to Stay Ahead of the Curve

22. Red Flags Late payments Poor record keeping Failure to provide financials Significant increase in sales Increases in current liabilities

23. Red Flags Stale inventory Significant changes in Balance sheet composition Decreasing sales Loss of major customers – concentration

24. Funding Risks Compliance with Funding Agencies Inadequate Program Income Loan Losses

25. Compliance with Funding Agencies Understand the REGS When in Doubt – Get in Touch Keep Them in the Loop

26. Inadequate Program Income Do You Generate enough Income to Keep it Going? Can you Sustain Losses?

27. Loan Losses Poor Documentation Loan Servicing

29. Poor Documentation If You are Unsure – Find a Partner Talk To Your Helpful Banker Shame an Attorney in to Helping

30. Loan Servicing Find a Partner Outsource for Better Effectiveness

32. WHY DO WE PUT OURSELVES THROUGH THIS ???

33. YOUR LOCAL ECONOMY BENEFITS FROM RLF’S

34. YOUR LOCAL BUSINESSES NEED RLF’S