Susan Jensen

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Susan Jensen

• Vice President
• SBA Loan Officer

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Financing a Small Business

• BEG
• BORROW
• Or ? ? ? ?

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What are Commercial Loan Officers???

• Commercial Loan Officers are in business to help
  your business SUCCEED
• When YOU succeed, WE succeed!

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Conventional Bank Loans

• Short-term
• Demand loans
• Seasonal lines of credit
• Single-purpose loans for machinery and equipment.
• Banks generally are reluctant to offer long-term
  loans to smaller firms.

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Whats a Lender to Do????

• Lenders can
• Approve your Loan Request
• Seek a guarantee from SBA to support their loan
  to you
• Decline your application all together

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US Small Business Administration

• The SBA guaranteed lending program encourages
  banks and non-bank lenders to make long-term
  loans to small firms by reducing their risk and
  leveraging the funds they have available.

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SBA Loan Guarantee Programs

• SBA 7(a) Program
• Term loans for various purposes
• SBA will guarantee up to 85 of the banks loan
• The SBA guarantee helps shoulder the risk for the
  bank

• SBA 504 Program
• Real Estate, Construction, Long- Term Asset
  purchases
• 50 Bank loan, 40 SBA financing through CDC, 10
  down payment

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SBA 7(a) Loans

• Loan Proceeds can be used for
• Inventory
• Equipment
• Machinery
• Start-Up Costs
• Working Capital
• Real Estate

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SBA 504 Loans
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Why go SBA??? By GUARANTEEING a large portion
of the loan, SBA helps shoulder the risk of the
loan and enables the bank to make a loan that
it otherwise would not.
WHOOPEE!!! FREE MONEY!!!!
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NOT EXACTLY!!!

• Applicant must be Credit Worthy
• 5 Cs of Credit
• Applicant MUST be able to demonstrate the ability
  to re-pay the loan even with the SBA guarantee

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What Solano Bank and SBA Look For in Analyzing a
Loan Application

• ABILITY TO REPAY
• CREDIT HISTORY
• EQUITY INVESTMENT
• SECONDARY SOURCE OF REPAYMENT
• EXPERIENCE/ABILITY TO MANAGE BUSINESS
• PERSONAL OBLIGATIONS

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1 Ability to Repay!!!

• Financial Statements
• P Ls
• CASH FLOW remember, bills are paid with CASH,
  not profits!
• NEW BUSINESSES Bus Plan is KEY

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2. Credit History

• Pull your Credit Report BEFORE you go to the
  bank!
• Mistakes take 3-6 weeks to correct
• Detailed information explaining credit issues

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3. Equity

• MUST be enough equity in the business to leverage
  the loan
• General Rule Debt to Equity no higher than 4
• Start-up Businesses expect 25

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4. Collateral

• Secondary Source of Repayment
• Personal and Business Assets that can be sold to
  pay back the loan in the event of default
• Co-Signers can pledge collateral

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COLLATERAL VALUE
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5. EXPERIENCE

• Experience COUNTS!!!
• Industry Knowledge
• Industry CONTACTS
• Competition
• Target Market
• Product/Service Niche

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6. Personal Obligations

• Outside sources of income to support personal
  living expenses a PLUS
• Low Personal Debt a PLUS
• Excess Outside Income can offset lack of
  collateral

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Build a Banking Relationship

• Banks LIKE lending to businesses/people they
  KNOW!
• Community Banks LIKE investing in their
  communities
• Banks WANT you to be SUCCESSFUL!

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Susan Jensen SBA Loan Officer Solano Bank P.O.
Box 2200 Napa, CA 94558-0298 (707)
252-5100 sjensen_at_northbaybancorp.com