Business Networking Breakfast featuring Financing Your Business Growth

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1 Business Networking Breakfast featuring Financing Your Business Growth

2 Financing Business Growth 1

3 Overview of Discussion Topics Comerica s Focus Our Objective Benefits of an SBA Loan Top Ten Identifiers Eligible Use of Proceeds SBA Basics Product Profile Scenarios Q&A 3

4 Leading Bank for Business 4

5 Our Objective Provide loan solutions that help business succeed Offer consultative team approach through knowledgeable bankers Be effective, efficient and response through the process 5

6 Benefits of an SBA Loan Capitalize upon your growth opportunities with an SBA Loan that has: Longer amortizations Lower down payments Options for companies that may lack collateral coverage, yet generate sufficient cash flow Solutions for long-term survivors with short-term challenges SBA Loan is to help business get the financing they need when a conventional loan is not an option 6

7 Identifying when an SBA Loan is an option Top Ten Identifiers (Assumes a viable business with sufficient cash flow and solid management) 1. Conventional structure does not cash flow need a longer term 2. Collateral shortfall 3. Recent turnaround in business financials 4. Collateral is special use 5. Conventional down payment is too high 6. Need working capital but unavailable under LOC 7. Partner buy-out / Acquisitions 8. Short track record in business (not start ups) 9. Financing need is based on a new large contract/project 10. Business expansion 7

8 Eligible Use of Proceeds SBA 7a Businesses who need to: Purchase machinery, equipment, fixtures, inventory Expand or renovate facilities Purchase or Construct commercial buildings Finance receivables and working capital Refinance eligible business debt Finance eligible change of ownership Purchase an existing business 8

9 SBA Basics All 20% or more owners must guarantee Tax Returns on the Company and Personally Need financial/tax return information on any other companies the guarantors own to asses SBA eligibility If request lacks collateral then the SBA requires us to see if there is other collateral available such as equity available in a rent house. SBA Guarantee Fees (based on guarantee portion) can be financed 3% on loans $150,001-$700, % on loans $700,000- $1 million 3.75% on loans > $1 million 9

10 SBA 504 Loan Product Profiles SBA 7(a) Loan Typical Project Size $1,000,000 to $21,,000,000 $250,000 to $5,000,000 Interest Rate Below-market rates Long-term fixed rates Competitive market rates Qualification Criteria Including its affiliates, tangible net worth not in excess of $15,000,000 and average net income after Federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years not in excess of $5,000,000. Including its affiliates, tangible net worth not in excess of $15,000,000 and average net income after Federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years not in excess of $5,000,000. Term/ Amortization 20 years fully amortized for real estate 10 years fully amortized for M&E Q & A 25 years Real Estate years Equipment 10 years Business Acquisition All loans are fully amortized No balloon payment Loan Purpose Purchase, construct or expand a real estate facility (51% owner occupancy on existing and 67% for new construction) Purchase Equipment Purchase, construct or expand a real estate facility (51% owner occupancy on existing and 67% for new construction) Purchase Equipment Refinance Provide working capital Construct leasehold improvements Inventory Down Payment/ Loan-to Value Minimum Down Payment: 10% of eligible project costs for established business in multi-purpose property 15% of eligible project costs for special use property 10% minimum injection for M&E Third party closing cost (i.e. appraisal) included in loan proceeds Minimum Down Payment: 10% for business acquisition Up to 100% financing for expansion or refinance 10% of eligible project costs for multi or special purpose properties Third party closing cost (i.e. appraisal) included in loan proceeds 10

11 Scenario 1: SBA 7a Loan Your company was just awarded a contract or business that will require new equipment at a cost of $1,000,000. This great opportunity will increase revenue by 30% but historically the company does not show the cash flow to repay a 5-7 year conventional loan structure. Also, the company really needs to keep its cash on hand for its growing working capital needs. Conventional loan is not an option. SBA 7a solution: 10 year loan term cash flow is acceptable now No minimum equity required cash freed up for working capital needs 11

12 Scenario 2: SBA 7a Loan Baby Boomers are now selling there companies. To who: employees, partners, and other similar business How: seller notes or combination bank loan + seller note Conventional loan are hard to get approved because their is usually not enough collateral to support the loan. SBA 7a solution: 10 year loan term Collateral short fall is acceptable on a SBA loan 10% minimum equity required (option 5% buyer & seller) 12

13 Scenario: SBA 504 Loan Company is acquiring commercial owner occupied real estate. Low down payment : 10% (unless special use) 25 year loan amortization: lower payments Fixed Rate: 25 years on 504 portion Conventional loan would require around 20% SBA 504 solution: Less cash down 90% Loan to Value Conventional Loan for 50%, SBA 504 Loan 40%, & 10% cash 13

14 Question and Answer

15 You built your business, we ll help you grow it.

16 Creating synergy through collaboration connecting resources Who We Are The Network MBDA Goals Procurement Access to Capital MBDA Business Center, Dallas, TX More than 40 MBDA Business Centers throughout the United States To foster the growth and global competitiveness of U.S. businesses that are minority-owned Identify procurement opportunities through the resources of the U.S. Dept. of Commerce Identify appropriate capital through conventional and non-conventional sources

17 Procurement Tools

18 BidSync Links Plus is the nation s largest bid notification company. Most city and county governments contracted BidSync to post their bid solicitations. Govpurchase is a comprehensive government contracting database, with a large amount of federal, state, and local bids available online. The database contains over 900,000 potential and existing government contractors. D&B Hoover s has a comprehensive database of more than 120 million business records where you can perform public and private company research for sales prospecting. Target companies based on size, location, industry, competitors and contact information. ArcGis Online is an online application which provides marketing studies to businesses in order to identify potential markets and support funding decisions.

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20 Commercial/SBA Guarantee Loan Packaging Alternative Lending Financing Bonding Assistance

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22 Ray Cervantes Project Director Website Financial Resources AR Ruiz Mike Mora Glenn Lauter Access to Markets/Contracts Nicole Reeves