Credit Policy & Documentation Standards. For Mintaka Financial, LLC. October 15, 2012

Transcription

1 Credit Policy & Documentation Standards For Mintaka Financial, LLC October 15, 2012 Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 1

2 Credit Underwriting Guidelines and Minimum Standards For Mintaka Financial, LLC Effective October 15, 2012 for use with Credit Matrix. Mintaka Financial, LLC underwrites transactions using a combination of credit scoring and business rules to determine an applicant s eligibility for approval, rank order risk and assign appropriate pricing to individual transactions. The automatic scoring process is known as QuickScore. QuickScore provides guidance as to qualified candidates but is not to be used as an indicator of a business, guarantor or vendor s validity or the reasonableness of a transaction. Using QuickScore requires that standard underwriting practices, good common sense business practices and full disclosure are used to make final decisions as to the quality of an application. All credit decisions are governed by the Credit Authority Levels as published by the Mintaka Credit Committee. Credit Approvals are valid for 60 days from the original approval date. An extension may be granted when updated credit information is submitted for review. Transactions received for funding and expire during the funding process will require full updates and re-approval prior to funding. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 2

3 Mintaka Financial, LLC Application Submission Guidelines Applications are submitted to Mintaka online utilizing Vision Commerce technology which houses the QuickScore product. Application information should include complete company information with ownership breakdown, complete guarantor information, last 3 months of bank statements, trade references if available, vendor and equipment information. A brief summary narrative should also be included describing the customer s business operations and justification for the equipment acquisition. Due diligence validating the application information should be included as part of the submission package. Applications submitted via other means (fax, ) should include all the aforementioned information. Personal Guarantees The personal guarantee of any individual with 25% or greater ownership interest is required. Disclosure of 100% ownership is required. In situations where there are more then two (2) guarantors, score in QuickScore as follows: Equal ownership of guarantors: The best two will be scored. Unequal ownership of guarantors: The two guarantors totaling the highest % of ownership will be scored. Married guarantors: In the case where we have a husband and wife with the same credit, any exceptions will be counted only once for common accounts and characteristics. Separate exceptions will be noted on separate accounts or characteristics. Minimum Credit Bureau Characteristics Delinquency Scores: To qualify for Tier 1A or 1B, Beacon or FICO score of 680 or greater of at least one individual with no additional scores less than 650. For Tiers 2, 3 and 4, minimum bureau score of 650 if scored on QS4.0 Consumer card or 625 if scored on QS4.0 Commercial card is required. Scores of 625 or less for one or more individuals may be considered if a financial statement package is supplied and at the discretion of Mintaka. Time in bureau: 5 years minimum Reporting lines: 5 active lines minimum Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 3

4 Orion First Financial QS 4.0 A QS 4.0 score will be obtained for all transactions. Refer to the current Credit Matrix for minimum risk scores and tier assignments. Lowest scoring guarantor: Out of the Best Two guarantors scored (see Personal Guarantee section), the lowest score will be used when calculating the transaction Final Score. Equifax Commercial Credit Report Equifax commercial credit report- public records search is required for all transactions. This search via Equifax eport will list public records including bankruptcies, judgments and liens as well as Secretary of State Listings. Any open liens or judgments require an explanation and/or verification of satisfaction for review. Time in business & Business ownership To qualify for Mintaka s standard program (Tiers 1 through 3), two (2) years minimum time in business is required. Business must be a full time endeavor; hobby businesses are not acceptable. Confirmation of time in business under current ownership is required at time of funding and can be provided by many methods that clearly establish the starting date or age of the business. Mintaka offers a Tier 4 New Business product for strong scoring applicants who provide proof of start-up equity and supporting personal financial statements. Certain other limitations may apply and are at the discretion of Mintaka. Acceptable forms of documentation for proof of time in business Sole proprietor Filed business license IRS 1040 schedule C C-Corp IRS 1120 page 2 S-Corp IRS Schedule K1 LLC IRS Schedule K1 Partnership PayNet IRS Schedule K1 Reported SOS data, years in business, old trade date Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 4

5 D&B SOS data, UCC filings in same company name SOS Secretary of State filing Experian Business Report Equifax Small Business Credit Report Combination of commercial bank rating and at least one reputable finance company rating. Proof of business ownership Sole proprietor Filed business license Most recent IRS 1040 schedule C C-Corp Most recent IRS 1120 page 2 S-Corp Most recent IRS Schedule K1 LLC Most recent IRS Schedule K1 Partnership Most recent IRS Schedule K1 A signed credit application may be acceptable if supported by information reported by PayNet, D&B and/or SOS provided there is no other information that leads you to believe there is other ownership. Proof of time under current ownership May be required when information suggests a change in ownership; Provide appropriate year to satisfy TIB requirement. Home Ownership Home ownership may provide support for certain transactions. Each transaction will be individually underwritten and details of the home mortgage and/or property values will be taken into consideration as deemed appropriate by the credit underwriter. Prior Bankruptcy Individuals or companies that have filed bankruptcy more than 7 years prior to submission may be considered on an individual basis and will be at the sole discretion of Mintaka. No prior bankruptcy is allowed to qualify for Mintaka s New Business program. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 5

6 Bank Statements All applications should be submitted with at least 3 most recent prior consecutive months bank statements with the exception of submission for new businesses. Statements should report an acceptable depository history for the nature of business. A minimum average balance of High 4 is desired for transactions $25,000 and under. A minimum average balance of L5 is desired for transactions $25,001 and higher. New businesses should provide proof of opened business bank account. Geographic & Regional Louisiana Restricted Arizona Spouse guarantee required *Florida 5+ TIB for all submissions New Jersey No titled transactions permitted. *Standard credit matrix does not apply; each transaction will be reviewed and priced on an individual basis. Expansion Locations Financial statements are desired for all expansion requests. Lessee must have 5 years time in business with the same dba as the expansion and under the same ownership. Sale Lease-back Requests Financial statements are desired for all SLB requests and equipment must have been purchased within 60 days of the approval/review date and funded within 90 days. Private Party Sale Financial statements should be provided for all requests. Exceptions may be made for titled equipment or at Mintaka s discretion. Current photos, condition report and comps are required for asset valuation. Independent appraisals may be required. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 6

7 Refinance Refinance requests require a complete write-up detailing the reason for the refinance, payment history from the existing lender and a copy of the original equipment invoice. Current photos, condition report and comps are required for asset valuation. Independent appraisals may be required. Split Transactions All split transactions must be identified at time of submission. Disclosure of transactions you have previously placed as well as other financing the lessee is seeking in addition to the subject request is required. Minimum Transaction Size Transactions must equal or exceed $5,000 Commission Limits $5,000 - $50, points maximum $50,001 - $100, points maximum $100, points maximum Financial Statement Requirements Financial statements are required on transactions exceeding the Application Only limits as stated on the most current Credit and Pricing Matrix. Required on all Tier 1 transactions greater than $75,000 Required on all Tier 2 transactions greater than $50,000 Required on all Tier 3 transactions greater than $35,000 Required at Mintaka s discretion for any Tier 4 transaction. Desired on all Sale Leaseback requests Desired on all Refinance requests Desired on all Expansion location requests If the lessee has at risk exposure to Mintaka; the amount of the new request (including commission, taxes, delivery etc) plus the existing exposure will be used to calculate the financial statement limits. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 7

8 Financial statement package should include: Most recent year end income statement and balance sheet Current interim statements of year end is more then 6 months prior Most recent tax return if statements are not audited. Current personal financial statements (signed/dated) Most recent tax return for all guarantors Key Ratios Business financial statements will be analyzed and the following 3 key ratios will be calculated: 1. Debt to tangible net worth: Total liabilities plus the equipment cost of the proposed lease divided by the business tangible net worth. 2. Current ratio: Current assets divided by current liabilities. 3. Cash flow coverage: Adequate cash flow for the proposed expense required. Industry Generally the applicants business should be in an established industry with a proven track record. See current Credit Matrix for industry limitations and restrictions. Local Trucking- Acceptable Individual owners who haul their own goods, i.e. Sole proprietor pallet company that is acquiring a truck to transport it s product to market. (Copies of contracts to support should be provided) 5 years time in business required. Trucking companies that haul products in a local market. 5 years time in business required. (Copies of contracts to support should be provided) Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 8

9 Equipment The requested equipment must be essential and relevant to the business. Please provide a summary narrative with your submission that includes details on the equipment, its use and justification for the acquisition. Equipment Limitations Alarm/monitoring systems Computer hardware (new) POS Systems Software Only Rental Equipment Fixtures/HVAC Used Equipment Titled Vehicles/Equipment Lasers-Medical/Aesthetic Limitation 36 month term and $1 residual 48 month term and $1 residual 48 month term and $1 residual 36 month term and $1 residual 36 month term and $1 residual Term not to exceed location lease term and $1 residual 36 month term and $1 residual 48 month term for hard assets EFA Only Restricted in NJ 36 month term-md s Only Used Equipment: Equipment is not to exceed 10 years in age unless approved in advance by Mintaka. Photos, condition reports and comps are required on all used equipment for review and asset valuation. Term exceptions may be made at the discretion of Mintaka and based on remaining useful life assessments determined by Mintaka. Software/Soft-costs: Software and soft-costs exceeding 25% requires 36 month maximum term unless approved in advance by Mintaka. Restricted Equipment See current Credit Matrix for equipment restrictions. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 9

10 Documentation and Funding Guidelines Documentation General standards are listed below. Any waivers must be approved by Mintaka in advance of funding. Lease Agreement OR Equipment Finance Agreement (EFA) Personal Guarantee of all owners with 25% or greater ownership Signature Verification (Clear, valid Drivers License copy or Notarized) Delivery and Acceptance (Date should be left blank in order to be completed at time of verbal verification call) Pay Proceeds (EFA) Signed and dated credit application Secretary of State (SOS) print out showing business is Active and in Good Standing (For Corp, LLC or Partnership) Advance Rentals check drawn on lessee s business account (or a copy of the check if deducting from proceeds) Originator s commission/fee invoice Vendor Invoice Vendor Validation Certificate and supporting information Proof of UCC Filing (see below for detailed instructions) Documents that may be required based on transaction/equipment type: Borrowing Resolution- Corporate, Partnership or LLC Resolution of Authority- required if the lease is not signed by all 100% owners of the company or if the total exposure exceeds $50k. Site Inspection Reports- Required on all transactions exceeding $35,000 or combined exposure exceeding $35,000, All Private Party Sales, Sale Leasebacks. Landlord Waiver- Required if the leased equipment could be considered a fixture to the real property and any equipment located in FL. UCC Fixture Filing- Required if the leased equipment could be considered a fixture to real property. A complete legal description with complete property owner s information and parcel number will be required to complete a fixture filing UCC Search- Required for all sale-leaseback transactions of non-titled equipment and on ALL Rental equipment, must be run prior to delivery of subject equipment. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 10

11 Purchase Agreement- Required when a guaranteed residual is desired or required as a condition of the credit approval. Medical Addendum- Required when equipment is considered invasive Rental Addendum- Required when equipment is rented out. Location Addendum- Required if equipment is not located on the business property. Delivery and Acceptance at Vendors Location- Required when lessee requests full payment to vendor in advance of equipment delivery. Must be approved by Mintaka. Delivery and Acceptance Certificate- Partial Funding- Required when lessee requests partial payment to vendor in advance of equipment delivery. Must be approved by Mintaka. Disclaimer of Ownership- Required when down payments exceed 20% Lessee Verification Call A verbal verification call with the lessee, as evidenced by a completed Lease Verification Certificate, will be completed with an authorized lease signer or authorized delegate by Mintaka unless otherwise authorized by Mintaka to be completed by the Originator. Guarantor Validation To maintain compliance with the Patriot Act, legal name, address, date of birth and social security number must be validated for all guarantors. Mintaka will complete this validation using OFAC via eport. This function will validate the accuracy of the personal information supplied by the guarantor to ensure there is no conflicting information. Interim Rental Interim rent will be charged on all transactions when applicable. Interim rental is calculated as follows: Multiply the daily rental rate (monthly rental divided by 30 days) by the number of days between date of funding and first payment due date of the lease. Interim rental is subject to applicable sales tax. Mintaka due dates are the 1 st or 15 th. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 11

12 Vendor Validation A signed Vendor Validation Certificate must be submitted with each transaction. In the event the Originator has funded transactions for a vendor previously with Mintaka, a copy of the original Vendor Validation Certificate is acceptable provided the information is less then a year old. RE-validation of all vendor information is required after one year. Vendor s must be authorized re-sellers, sell equipment in their normal course of business and have a minimum of (2) two years time in business. Vendors selling software require (3) years time in business. The following minimum requirements must also be met prior to submitting a transaction for funding. SOS Active and in Good Standing, current business license or permit Verification of at least one year time in business Active business listing verified by two sources (Yellow Pages, D&B, Info USA, various Internet search sites.) Vendor Invoice A vendor invoice must be generated by each vendor and include the following: Sold To: Mintaka Financial, LLC or Originator and assigned to Mintaka OR Sold To: Customer; name & address if EFA Ship To: Lessee; name & address Complete description of equipment including quantity, make, model, year of manufacture and all applicable serial numbers. Complete vendor information including company name, address and phone number. Invoice date and invoice number must be included on the invoice. Mintaka will not fund off a quote or proposal. Vendor Payments Vendor payments will be made by issuing a check or through the Automated Clearing House ACH. If an ACH is requested, please provide the following: Bank Name & Address Complete Routing & Account Number Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 12

13 Advance payments to Vendors Advancing funds to a vendor prior to delivery is strongly discouraged. Any transactions requiring advance funding must be reviewed and approved by a Mintaka Financial, LLC Credit Analyst and will be reviewed on a case by case basis. Prefunding to facilitate the manufacture of equipment or for custom equipment is not acceptable. Partial Delivery and Acceptance In the event a vendor requires partial (50%) funding in advance of shipping equipment; the following will be required: Delivery and Acceptance Certificate- partial funding document Standard Vendor validation requirements must be met SBCR or PayNet to be pulled and reviewed for vendor by Mintaka Partial fund fee of $125 Verbal at initial funding, lease commences and 2 nd verbal at final funding Hold commission for site inspection after final funding if 35k or greater Delivery and Acceptance at Vendors Location; 100% Prefund In the event a vendor requires 100% funding in advance of shipping equipment the following will be required: Delivery and Acceptance at Vendors Location Certificate Standard Vendor validation requirements must be met SBCR or PayNet to be pulled and reviewed for Vendor by Mintaka Prefund Fee of $125 Verbal at funding; lease commences Site inspection of equipment at vendor s location and/or a general site at the lessee location may be required prior to payment being issued at Mintaka s discretion. Hold commission for site inspection after delivery if 35k or greater In either case a time frame for final equipment delivery shall be provided; time frames in excess of 30 days may not be acceptable. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 13

14 Originator Invoice An invoice will be supplied by the originator with each transaction. Each invoice should clearly define transaction terms and fee structure to include the following: Lessee information Lease term and residual Administrative and other fees due to Mintaka Amount due to Originator Payment instructions Prepayment checks Prepayment checks must be made from an established business account in the lessee s business name. Checks should be made payable to the originator or to Mintaka. Prepayments may be deducted from the originator s proceeds; a copy of the check, payable to the originator must be provided with the documentation package. Prepayments may be made to the Vendor on a case by case basis and must be approved by Mintaka. A copy of the check made payable to the vendor must be provided for review. If approved, the vendor may pass the prepayments to Mintaka by deducting the prepayments from the invoice total. Administrative Fees All administrative fees associated with a new lease must be included in the Lessee s prepayments. Affiliate Fee Schedule Administrative Fee $175 Partial/Prefund Fee $125 (in addition to admin fee) Title Fee $200 (first title) $150 (each additional title) NON-Affiliate Fee Schedule Administrative Fee $200 Partial/Prefund Fee $125 (in addition to admin fee) Title Fee $200 (first title) $150 (each additional title NO Mintaka fees may be financed or included as part of the lease amount Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 14

15 If an originator would like to finance fees they are collecting to cover costs directly associated with their own office, they may do so under the following conditions: Maximum fees financed by Lessee $500 Financed Fees are to be included in the total soft-cost calculation and shall not exceed the maximum 25% allowed in the Credit Guidelines. Fees are not to be included in the commission calculation. Lease Documents Approved lease documents provided by Mintaka and in the Originator s or Mintaka s name are the only acceptable documents. Use of any other documents must be approved in advance by Mintaka. Equipment Finance Agreements Approved EFA documents provided by Mintaka and in the Originator s or Mintaka s name are the only acceptable documents. Use of any other documents must be approved in advance by Mintaka. EFA documents are required for all titled equipment or vehicle transactions. Payment Due Dates Mintaka offers payment due dates of the 1 st, 5 th, 15 th or 20 th of each month. Requests for days other then the 1 st or 15 th will be reviewed on a case by case basis. Mintaka will also confirm this during the Lessee verification call. (Verbal) Sales Tax Sales tax will be collected and remitted to each state by Mintaka. It is the responsibility of the Originator to investigate fully and accurately determine the appropriate sales tax rate and handling of each transaction. Mintaka may, at their discretion, adjust tax rates or amend tax handling if necessary. Mintaka will bill any adjustments made to the customer. Personal Property Tax (PPT) Mintaka will be responsible for the billing, collecting and reporting of any Personal Property Taxes. Any fees associated with this service will be billed directly to the customer. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 15

16 Site Inspections It is the responsibility of the originator to provide a completed inspection form and photos with the documentation package for funding. It is acceptable for the Originator to conduct the site inspection and provide documentation and photos confirming the inspection. Mintaka requires site inspections under the following circumstances Transactions $35,000 or greater or $35,000 combined at risk exposure All private party sale transactions All Refinance transactions All Sale Leaseback transactions See advance payments to vendor/prefunding for details Insurance Requirements Mintaka Financial requires insurance coverage for all equipment. Mintaka offers coverage via Great American Insurance Company GAIC for non-titled equipment. GAIC will contact the customer directly after funding to offer insurance or request verification of coverage. ( Proof of insurance is only required prior to funding for titled equipment). In the event the lessee would like to provide their own insurance the following requirements must be met: Non-Titled Equipment General Liability: $500,000 combined single limit Physical Damage: Covering fire, extended coverage, vandalism, theft or All Risk Loss Payee: Mintaka Financial and/or assigns Additional Insured Mintaka Financial and/or assigns Certificate must include carrier name, policy number, effective date of coverage, and expiration date. Policy must be a commercial policy in customers name with correct address and detailed equipment description. Titled- Vehicles, trailers and equipment (restricted in NJ) Liability: $500,000 combined single limit Physical Damage: $250,000 Collision: $250 Deductable Comprehensive: Full coverage; including fire & theft Loss Payee: Mintaka Financial and/or assigns Additional Insured Mintaka Financial and/or assigns (Continued) Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 16

17 Certificate must include carrier name, policy number, effective date of coverage, and expiration date. Policy must be a commercial policy in customers name with correct address and detailed equipment description Landlord Waiver Requirements (Waiver and Consent) Required on all transactions where the equipment is considered a fixture to the real property. Landlord waivers will not be required for phone systems or security systems under $25,000. Confirmation of property ownership with validation of authorized signer of the land lord waiver is required. Landlord waivers are required on ALL transactions in the state of Florida. UCC and Fixture Filing Requirements UCC-1 financing statements will be filed by the originator on each transaction. UCC s must be filed within 20 days of the Delivery and Acceptance date. A valid organization number when provided by the Secretary of State is required on all Corporations, Limited Liability Companies and Partnerships. Sole Proprietor-Filed under the debtor name as appears on their current driver's license using the residence address. Other entities-filed under entity name with the address being the principle place of business. To ensure the correct name is being filed it would be most accurate to refer to the formation documents such as the Articles of Incorporation. Mintaka Financial LLC will be named as the Secured Party. PO Box 2149 Gig Harbor, WA No listing of an Additional Secured Party will be allowed nor will any company other then Mintaka be listed as Secured Party. In the state of Texas, filed articles of incorporation must be verified for the accurate filing of the business name. SOS listing cannot be used as acceptable verification of the business name. A Fixture Filing will be filed any time the leased equipment could be considered a fixture to the real property. Fixture filings will not be required for phone systems or security systems under $25,000 Fixture Filings are required on ALL transactions in the state of Florida. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 17

18 UCC Search for Rental inventory transactions 1. Complete UCC search on Lessee prior to equipment delivery 2. File UCC on leased equipment prior to equipment delivery 3. A PMSI notice must be sent prior to equipment delivery to all creditors of the rental company who show in the UCC search as holding security interest in the equipment. In the event the equipment to be leased has been delivered, a UCC search is required and subordination of the leased equipment will be required from all creditors with security interest. Titling Requirements (EFA s Only) (No titled equipment in NJ) All titled transactions must be documented as Equipment Finance Agreements. Mintaka Financial, LLC will ensure that clear title is being passed and ensure all taxes are charged as required by each state. All taxes are to be treated as upfront tax. Invoice must be sold to/ship to customer. In cases where the vendor is an authorized dealer, the vendor may be responsible for preparing title documents as well as facilitate the title transfer. The originator may prepare title documents if they are experienced with the preparation of such documentation, otherwise the original signed-off title and original Power of Attorney must be forwarded to Mintaka for the title transfer to be completed and commission to be released. The title must read as follows: Registered Owner Lien Holder Customer s Business Name Mintaka Financial, LLC Customer s Mailing address PO Box 2149 Gig Harbor WA Additional documents and information required for titled transactions: Clear and legible copies of the front and back of the existing title or Manufacturers Statement of Origin (MSO) Properly completed title application Original notarized Power of Attorney signed by the customer with the appointment left blank- 2 POA s required for customer. Original notarized Power of Attorney signed by seller if transaction is a Private Party Sale. Title audit will be completed by Mintaka to confirm fees and DMV requirements so all needed information is communicated and/or received prior to funding. Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 18

19 Sale Leaseback Sale Leaseback (SLB) transactions must be approved in advance by Mintaka Credit. Documents required for Sale Leaseback transactions are as follows: Proof of Sellers Ownership; Invoice or Bill of Sale evidencing seller has paid for equipment in full within the last 60 days and has clear title to the equipment (Must fund within 90 days of purchase) Clear UCC Search; UCC 3 termination required for blanket filings and/or filings against the equipment to be financed Site inspection required on all SLB regardless of transaction size Photos and condition report for asset review may be required SLB requests in CA or NC must be completed on EFA. Private Party Sellers Private Party Sale transactions must be approved in advance by Mintaka Credit. Documents and information required for PPS are as follows: Original notarized Bill of Sale from Seller Complete information on seller: Name, address, phone #, Social Security Number or date of birth if individual, active SOS if Corporation Proof of Sellers Ownership; Invoice or Bill of Sale evidencing seller has paid for equipment in full and has clear title to the equipment Clear UCC Search; UCC 3 termination required for blanket filings and/or filings against the equipment to be financed Site inspection required on all SLB regardless of transaction size Photos and condition report for asset review to be completed Mintaka Financial, LLC Credit Policy & Doc Standards Oct 15, 2012 Page 19