Economic Development Finance

Transcription

1 Economic Development Finance Gregory Smith & Company, LLC Northwest Economic Development Course

2 Economic Development Finance Mr. Greg Smith, MBA 2

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4 Agenda You can lead a lender to water Does it really make sense cents? Lending with your heart is a recipe for heartburn. The answer is yes. What s the question? Best practices (Does anyone like this term?) Remember who brought you to the dance! 4

5 You can lead a lender to water State Economic and Community Development Programs United States Department of Agriculture Small Business Administration Economic Development Administration Housing and Urban Development Department of Treasury Foundations Others It is imperative that Economic Development Professionals know the tools of their trade! 5

6 Does it really make sense cents for the community? For the borrower? for the bank? For your partners? For your loan portfolio? If it sounds too good to be true 6

7 Lending with your heart is a recipe for heartburn 5 C s of Finance Character Credit Cash Flow Collateral Contribution The 5 C s never fail so don t turn your back on them! 7

8 Why Do Small Business Owners Struggle? Bank Presidents offer a thought A survey of 20 top bank executives in Oregon demonstrates that entrepreneurs who struggle most in business do so because they lack a realistic understanding of their cash generating potential; their KSA s are not commiserate with their proposed business concept; and/or, their business concept is not well defined. 100% 80% 60% 40% 20% 0% 67% 20% 13% Cash Flow KSA'S Concept Credit No Customer Other Source: Gregory Smith Survey of 20 Bank Presidents November 21,

9 Entrepreneurs weigh in In a survey of 55 established entrepreneurs throughout Eastern Oregon, 59% of the respondents stated that their number one barrier to business start-up and growth was an inadequate supply of capital; 25% had a personal reason; 8% stated that securing a paying customer or technical assistance was their greatest barrier to growth. 100% 80% 60% 40% 20% 0% 59% 25% 8% 8% 0 Accessing Capital Personal Issues Customers Regulation Obtaining T.A. Source: Gregory Smith Survey of 55 Entrepreneurs November 21,

10 The Answer is yes. Now what s the question? Deadlines must be met; All problems are your problems; Follow through, follow through, follow through; and, Always be straight forward and honest in your dealings. "There will never be honesty in the business world, in the schools, in the home, or anyplace else until there is honesty in the heart. - Richard C. Edgley 10

11 Best practices (Does any one like this term?) Credit Analysis: Sure you make the best ribs in town, but who is going to buy them? Cash is always king! Can I really get out of this deal? Be on time every time. Deal Structuring: If the Borrower is ornery when they want your money, just wait until they have your money. Learn how to say NO. If you say OK put them on auto pay. 11

12 Best practices (Does any one like this term?) Portfolio Management: If your loan committee doesn t grill you, you re going to get burned. Always remember the 80/20 rule. Without the bank you walk the plank. Borrower Relations: Monitor your loans for the banks. Loaning additional money on a bad loan does not make the loan any better. Compassion is better than pressure. 12

13 Remember who brought you to the dance! Invite your partners to the table when appropriate. Spread the credit hold the blame. Help your partners look good. Never breach a confidence. 13

14 Let s visit: Gregory Smith & Company, LLC Greg Smith P.O. Box 219 Heppner, Oregon (541) Office (541) Cellular GREGORYSMITHANDCOMPANY@GMAIL.COM 14