Lincoln Opportunity Fund

Transcription

1 Lincoln Opportunity Fund 1

2 Lincoln Opportunity Fund (LOF) LOF is a not-for-profit Certified Community Development Financial Institution (CDFI), wholly owned by WBDFC. LOF provides direct loans to small businesses throughout Wisconsin with a focus on low income communities. LOF Products & Services: Community Advantage SBA Loan SBA Microloan Program LOF Small Business Loan Capital Access Program (CAP) 2

3 LOF Community Advantage SBA Community Advantage Loan Primarily for defined census tracts throughout the State; call LOF to see if need qualifies. Purpose Fill a need in underserved market areas. Eligible Use of Funds Working Capital, Leaseholds, Equipment, Refinance. Business Size In line with SBA size standards. Loan Amount - Typically $150,000 or less. Term Up to 10 Years; monthly payments, fully amortizing. Rates Prime % to Prime + 6.0%. Collateral Typically all business assets. Guarantees Unlimited personal & other corporate if necessary. Fees: o No SBA guaranty fee for loans $150,000 or less o 3% for loans less than $50M; 2% for loans more than $50M; plus out of pocket expenses. o Source of Funds LOF capital; Grants. *SBA provides a loan guaranty of 85% on loans up to $150,000 3

4 LOF SBA Microloans SBA Microloan Available in 8 Counties: Milwaukee, Waukesha, Ozaukee, Racine, Kenosha, Brown, Winnebago and Outagamie. Purpose Single Proposed Loan. Eligible Use of Funds Working Capital, Equipment, Short Term Debt. Business Size Generally sales less than $1MM. Maximum Loan Amount - $50,000. Term 30 days to 6 years; single pay up to 6 months, or monthly payments fully amortized for the term of the loan. Rates loans < $10M, up to LOF Cost of Funds + 8.5% ; loans > $10M, up to LOF Cost of Funds % Collateral As available and deemed necessary. Guarantees Unlimited personal; other corporate if necessary. Fees Up to 2% of loan amount. Source of Funds SBA Funding. 4

5 LOF - Small Business Loan LOF RLF Available in the City of Milwaukee, Other Areas on an Exception Basis Purpose Fill a need where conventional resources are not available. Eligible Use of Funds Typically working capital & equipment Business Size Generally sales less than $1MM Max Loan Amount Typically less than $50,000 Term 12 to 60 months; monthly payments, fully amortizing Rates Prime % to Prime % Prepayment No Penalty Collateral Typically all business assets Guarantees Unlimited personal; other corporate if necessary Fees 1% to 3% of loan amount Source of Funds LOF Internal RLF 5

6 Capital Access Program (CAP) Operates as a loan loss reserve: Borrower pays to a Reserve Fund no less than 1.5% and no greater than 3.5% of the loan amount (determined by lender) Lenders pays an equal amount as the Borrower (may be reimbursed by Borrower) WBD shall deposit into the Reserve Fund at least 100% but not greater than 150% (determined by WBD) of the combined amounts paid by the Borrower and Lender Reserve Fund Example: Borrower Fee: Lender Fee: WBD Deposit: Total 2.0% (determined by Lender) 2.0% (100% match) 4.0% - 6.0% (100% - 150% match) 8.0% % to Lender Reserve Account Note: Lender may use Reserve Fund to offset losses on any loan enrolled in the program 6

7 LOF Case Study #1 XYZ Insurance Agency (SBA Community Advantage) Amount & Purpose: $76,500 to purchase an office building for the agency Solution & Structure: Uses Amount Sources Amount Percent Land & Building $ SBA Community Advantage $ % Equity $ % Total $ Total $ % 7

8 LOF Case Study #2 PQR Construction (Lincoln/Micro/CDBG) Amount & Purpose: $140,000 to pay off a land contract and provide working capital Solution & Structure: Uses Amount Sources Amount Percent Payoff Land Contract $ SBA Microloan $ % Working Capital $ LOF $ % CDBG $ % Total $ Total $ % Equity already paid in land contract $70,000 8

9 LOF Case Study #3 M E S, a franchise (Use of Multiple Funding Sources) Amount & Purpose: $140,000 assist in debt restructure Solution & Structure: Uses Amount Sources Amount Percent Payoff Credit Cards $ LOF $ % Working Capital $ Milwaukee Economic Development Corp. $ % Legacy Redevelopment Corp. $ % African American Chamber of Commerce $ % Total $ Total $ % 9

10 LOF Case Study #4 Special Purpose Manufacturing Facility, Unique Case (SBA Community Advantage Companion to SBA 504 & Utilization of Regional Funds) Amount & Purpose: $150,000 for permanent working capital Issues: Per SBA regulations, project was deemed a start-up and special purpose. As a result, the client was required to inject an additional 5% into the building & equipment 504 projects. In addition, cash resources were not available for sufficient working capital. Positives: Ownership & management had experience in the industry. Restructuring the debt did not increase leverage, as the amount of debt included in the 504 projects were reduced and re-allocated to the Community Advantage term loan. Projected cash flow was not adversely affected. Meeting Policy Goals (filling the gaps): Assisting rural community development / creation of manufacturing jobs Assisting a new business (Per SBA guidelines, less than 2 years in operation) 10

11 LOF Case Study #4 Solution & Structure: Proposed/Revised - RE Project 504 Uses of Funds: 504 Sources of Funds: Real Estate $115,000 Bank Financing $950, % Construction Contingency $1,519,000 WBD/SBA 504 $570, % Soft Costs and Contingency $266,000 Borrower Contribution * $380, % Total $1,900,000 Total $1,900, % Proposed/Revised - Equipment 504 Uses of Funds: 504 Sources of Funds: Equipment $1,720,000 Bank Financing $860, % WBD/SBA 504 $602, % Borrower Contribution ** $258, % Total $1,720,000 Total $1,720, % Source of Borrower Contribution (Equity) Real Estate Project * Equipment Project ** RE Equity ($115M value less $113,000 Cash out REFI of Non Project CRE $258,000 $2M price via TIF) and/or guarantor/affiliate cash Regional Business Fund $150,000 Cash out REFI of Non Project CRE $117,000 and/or guarantor/affiliate cash Total $380,000 Non-504 Project - Uses Non-504 Project - Sources: Temporary Working Capital (Bank) $100,000 Bank line of credit $100,000 Permanent Work/Capital (Lincoln CA) $150,000 SBA Community Advantage $150,000 Total $250,000 Total $250,000 11

12 LOF Contact Information Lincoln Opportunity Fund Address: 1301 West Canal Street, Suite 100 Milwaukee, WI Website: Phone: (414) Fax: (414) WBD Finance Corp. Address: W229N1433 West Wood Drive Suite 206 Waukesha, WI Website: Phone: (262) Fax: (262) WBD Finance Corp. Address: 100 River Pl. Ste 1 Monona, WI Website: Phone: (608) Fax: (608) David Kircher Sr. VP & Loan Officer dkircher@wbd.org Rolando Hernandez Program Manager rhernandez@wbd.org David Kircher Sr. VP & Loan Officer dkircher@wbd.org Wenda Roycraft President of LOF wroycraft@wbd.org Tim Belter Senior Credit Analyst tbelter@wbd.org 12