Financing Small Business- Bank Financing

1. Asian Women In Business
Bank Financing for Small Business
Presented by Anna Xiaodan Zheng
Business Banking Manager, Chase Business Banking
xiaodan.x.zheng@jpmchase.com

2. Business Line of Credit
• For business that needs to borrow on a revolving credit line basis for
working capital (normally use it for short-term or immediate capital
needs), Ex: Seasonality, Immediate cash flow needs, business expansion,
time frame for account receivables, etc.
The Benefits of Line of Credit:
o Using other people money to invest for your own business (Leverage)
o Access the money when you need it ( funds available immediately)
o Ease the pressure for short-term cash flow, more capitals to manage
o Low cost, tax deductible (expenses for the interests & fee).
o It is an umbrella for unexpected rain

3. Features of line of credit:
• Interest rate is Variable
• Available Credit Line Amount: $10,000-$250,000
• Rate Pricing may base on credit history, collateral type,
business relationship & business categories, also refer to
revolving rate.
• Collateral Options- can be secured or Unsecured
• Monthly minimum payments are required and
repayment replenishes line availability as long as
revolving status continues in good standing
• Is supported by the personal guarantees of the owners /
principals, or other Business

4. How to Access to line of credit:
• access card with cash back rewards
• Line of credit checks
• Phone transfers to Business Checking account
• Website
• Transfer in any branch locations

5. Business Term Loan
Borrowing over a specified period of time, (normally use it for
specific needs in specified time), such as purchase equipment,
renovation, consolidating existing loans.
Features of Term Loan:
• Fixed or variable rates of interest
• Variable, indexed to prime rate, pricing based on the credit
history and business banking relationship
• Range of terms: 12 months – 84 months
• Loan Amount $5,000-$250,000
• Principal and interest payments are repayable in convenient
monthly installments
• Fixed monthly payments of Principal and interest

6. Other type loans
Owner Occupied Commercial Real Estate Loan:
For purchase or refinance of a commercial property that is at
least 51% occupied by borrower.
• Minimum Amount $50,000- $3,000,000
• Maximum Loan to value is 80% of property types
• Fixed rate fully amortizing loan available for up to 15 years,
Balloon Loans may have an amortization up to 25 years
• Adjustable rate loan typically adjust every 3, 5, 7 years at a
margin over the US Treasury Constant Maturity Yield

7. Equipment Financing
• Get money to buy business’s equipments.
Benefits of financing
- No down payment or minimum down payment
- Financing through all the costs, examples of shipping, installation, training
- 2-5 years terms, ( fixed monthly)
- Saving money on start-up capitals
- Tax advantage ( depreciation, maintenance expenses)

8. SBA- Small Business Administration
SBA Express:
• Loan amounts: $10,000-$350,000
• SBA will guarantee 50%
SBA 7 (A):
• Loan amounts: $250,000-$500,000.
• SBA will guarantee up to 75%
• Working capital, inventory purchasing, Account receivable cash flow cycle,
Business expansion, debt refinance, real estate improvement, or business
acquisition, etc.
SBA 504:
• Up to 40% or $5,000,000.
• Real estate financing( land and building)
• Construction and improvement
• Heavy Machinery

9. 5 C’s – Evaluate Risks
• Character- The willingness of the customer to
repay. The principal of Character is honorable and
trustworthy.
Observed in the way relationship are handled with
-Suppliers
-Customers
-Employees
-Creditors

10. 5 C’s – Evaluate Risks
• Capacity- the Ability of the customer to repay
The point of financial analysis is to determine
whether or not a borrower is able to repay the
obligation
Measured by calculation- debt service, debt to
income ratio,
The source of repayment

11. 5 C’s – Evaluate Risks
• Capital- the Funds that support the assets and
operations of a company
 Sources of funds – sufficient to support
 Normal Operations, Economic Downturns, Potential Losses, expected
growth
 Funds from Owners (Personal, Investors, or Creditors)
Preserved cash VS Liquidity & Leverage

12. 5 C’s – Evaluate Risks
• Collateral – The assets which provide a
Secondary Source
• Collateral types
 Account receivable 70%
 Inventory 40%
 Equipment 50%
 Marketable Securities 65%
 Cash 100%

13. 5 C’s – Evaluate Risks
• Conditions- The Operating Environment of the
company
• Measure by various conditions:
o Government regulations
o Economic Cycles
o Competition
o Consumer Preferences
o Labor Challenges
o Industry dynamics

14. The Sixth C- Common Sense
• Business owner who can’t explain how they
make money
• Does their business make sense to you
• Should it be..
 Reasonable
 Logical
 Defensible

15. How Credit Score Computed

16. Tips to Improve your credit score
• Use two or three credit cards each month and make payments on
time.
• Do not max out your credit cards. Attempt to keep your balances
below 30% of your credit limit. This will present a healthy debt-to-credit
ratio to lenders.
• Do not cancel old credit cards b/c they carry the longest length of
your credit history.
• Do not apply for new credit on a whim. Each time you submit an
application to a lender or credit card company they pull a copy of
your credit report. This is called an inquiry. Too many inquiries in a
short period of time can lower your credit score.

17. Credit Bureaus
• www. Annualcreditreport.com
• Equifax 1800-685-1111
www.equifax.com
• Experian 1888-397-3742
www.experian.com
• Trans Union 1800-916-8800
www.transunion.com

18. Banking Document Requirement
• Business Certification, Federal Tax ID Number
• Government- issued Photo ID
For Loan or Line
Business Tax Return
Personal Tax Return
Personal Financial Statement
Interim Balance Sheet and Income Statement

19. Residential Mortgage required
documents
• 2012 &2013 tax return (Personal & Business);
W2s/or 1099
• Signed year to date profit & loss statement
• Most recent two months bank statements
• Recent one month paystubs (if applicable)
• ID copy
• Executed sale of contract (For purchase)

20. Exclusive benefits for residential
mortgage
• 1% Mortgage Cash back on annual principle +
interest payment (up to $500)
$2,000/month * 12=$24,000/ year
$240 per year
* Set up mortgage payment automatically deducted from a Chase personal Checking
account within 60 days after closing to qualify.
• LMI (low-to-moderate income)
up to $1,500 for Purchase only

21. Asian Women In Business
42 Broadway, Suite 1748
New York, New York 10004
Tel: 212.868.1368 - Fax: 877.686.6870
Email: info@awib.org