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March 9, 2010 TD Bank Score Presentation- Elaine Lawrence
 

March 9, 2010 TD Bank Score Presentation- Elaine Lawrence

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SCORE and O² teamed up to offer a 3-hour workshop on how to get funding for your business. Elaine Lawrence, Small Business Relationship Manager at TDBank, discussed bank financing.

SCORE and O² teamed up to offer a 3-hour workshop on how to get funding for your business. Elaine Lawrence, Small Business Relationship Manager at TDBank, discussed bank financing.

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  • <br /> This presentation can be handed out in slide format but you may have to be flexible with time and condense the presentation depending upon the SCORE facilitators. <br />
  • <br />
  • Point out that there are several sources of funds: <br /> Personal cash (The best source if available since repayment is not necessary) <br /> Private Financing <br /> Family <br /> Friends <br /> Investors <br /> Mention the risks associated with family friends and investors. The repayment of a loan by family or friends can lead to misunderstanding and issues if the loan is not clearly documented or understood. Investors want a &#x201C;piece of the action&#x201D; and some ownership may be given up. <br /> Banks <br /> Tell the participants that government agencies do not normally provide direct funding but have guarantee programs to help mitigate a weakness in an otherwise bankable deal. Credit enhancements usually used for all start up businesses. <br />
  • Point out that there are several sources of funds: <br /> Personal cash (The best source if available since repayment is not necessary) <br /> Private Financing <br /> Family <br /> Friends <br /> Investors <br /> Mention the risks associated with family friends and investors. The repayment of a loan by family or friends can lead to misunderstanding and issues if the loan is not clearly documented or understood. Investors want a &#x201C;piece of the action&#x201D; and some ownership may be given up. <br /> Banks <br /> Tell the participants that government agencies do not normally provide direct funding but have guarantee programs to help mitigate a weakness in an otherwise bankable deal. Credit enhancements usually used for all start up businesses. <br />
  • Point out that there are several sources of funds: <br /> Personal cash (The best source if available since repayment is not necessary) <br /> Private Financing <br /> Family <br /> Friends <br /> Investors <br /> Mention the risks associated with family friends and investors. The repayment of a loan by family or friends can lead to misunderstanding and issues if the loan is not clearly documented or understood. Investors want a &#x201C;piece of the action&#x201D; and some ownership may be given up. <br /> Banks <br /> Tell the participants that government agencies do not normally provide direct funding but have guarantee programs to help mitigate a weakness in an otherwise bankable deal. Credit enhancements usually used for all start up businesses. <br />
  • Point out that there are several sources of funds: <br /> Personal cash (The best source if available since repayment is not necessary) <br /> Private Financing <br /> Family <br /> Friends <br /> Investors <br /> Mention the risks associated with family friends and investors. The repayment of a loan by family or friends can lead to misunderstanding and issues if the loan is not clearly documented or understood. Investors want a &#x201C;piece of the action&#x201D; and some ownership may be given up. <br /> Banks <br /> Tell the participants that government agencies do not normally provide direct funding but have guarantee programs to help mitigate a weakness in an otherwise bankable deal. Credit enhancements usually used for all start up businesses. <br />
  • Point out that there are several sources of funds: <br /> Personal cash (The best source if available since repayment is not necessary) <br /> Private Financing <br /> Family <br /> Friends <br /> Investors <br /> Mention the risks associated with family friends and investors. The repayment of a loan by family or friends can lead to misunderstanding and issues if the loan is not clearly documented or understood. Investors want a &#x201C;piece of the action&#x201D; and some ownership may be given up. <br /> Banks <br /> Tell the participants that government agencies do not normally provide direct funding but have guarantee programs to help mitigate a weakness in an otherwise bankable deal. Credit enhancements usually used for all start up businesses. <br />
  • Point out that there are several sources of funds: <br /> Personal cash (The best source if available since repayment is not necessary) <br /> Private Financing <br /> Family <br /> Friends <br /> Investors <br /> Mention the risks associated with family friends and investors. The repayment of a loan by family or friends can lead to misunderstanding and issues if the loan is not clearly documented or understood. Investors want a &#x201C;piece of the action&#x201D; and some ownership may be given up. <br /> Banks <br /> Tell the participants that government agencies do not normally provide direct funding but have guarantee programs to help mitigate a weakness in an otherwise bankable deal. Credit enhancements usually used for all start up businesses. <br />
  • <br /> Mention that banks look at the customers past profitability and cash flow to determine if they can pay both current debt and the new loan they are applying for. The ability of the owners of a small business to meet their personal debt with the new debt is also essential. This will be discussed further in a subsequent slide dealing with CAPACITY. <br /> Financial strength is measured by the capital position of the business and net worth, as well as collateral owned, to back up the loan. <br /> Personal net worth (resources) are also a factor. This topic will be covered in 2 subsequent slides on the subjects of CAPITAL and COLLATERAL. <br /> Management experience and the personal credit of the owners account for 50% of the decision in small business and will be discussed in the following slide on CHARACTER. <br /> Emphasize that the criteria used by banks are characteristics of successful companies and the bank wants to have a high degree of certainty that their loan will be repaid. <br />
  • <br /> Mention that banks look at the customers past profitability and cash flow to determine if they can pay both current debt and the new loan they are applying for. The ability of the owners of a small business to meet their personal debt with the new debt is also essential. This will be discussed further in a subsequent slide dealing with CAPACITY. <br /> Financial strength is measured by the capital position of the business and net worth, as well as collateral owned, to back up the loan. <br /> Personal net worth (resources) are also a factor. This topic will be covered in 2 subsequent slides on the subjects of CAPITAL and COLLATERAL. <br /> Management experience and the personal credit of the owners account for 50% of the decision in small business and will be discussed in the following slide on CHARACTER. <br /> Emphasize that the criteria used by banks are characteristics of successful companies and the bank wants to have a high degree of certainty that their loan will be repaid. <br />
  • <br /> Mention that banks look at the customers past profitability and cash flow to determine if they can pay both current debt and the new loan they are applying for. The ability of the owners of a small business to meet their personal debt with the new debt is also essential. This will be discussed further in a subsequent slide dealing with CAPACITY. <br /> Financial strength is measured by the capital position of the business and net worth, as well as collateral owned, to back up the loan. <br /> Personal net worth (resources) are also a factor. This topic will be covered in 2 subsequent slides on the subjects of CAPITAL and COLLATERAL. <br /> Management experience and the personal credit of the owners account for 50% of the decision in small business and will be discussed in the following slide on CHARACTER. <br /> Emphasize that the criteria used by banks are characteristics of successful companies and the bank wants to have a high degree of certainty that their loan will be repaid. <br />
  • <br /> Mention that banks look at the customers past profitability and cash flow to determine if they can pay both current debt and the new loan they are applying for. The ability of the owners of a small business to meet their personal debt with the new debt is also essential. This will be discussed further in a subsequent slide dealing with CAPACITY. <br /> Financial strength is measured by the capital position of the business and net worth, as well as collateral owned, to back up the loan. <br /> Personal net worth (resources) are also a factor. This topic will be covered in 2 subsequent slides on the subjects of CAPITAL and COLLATERAL. <br /> Management experience and the personal credit of the owners account for 50% of the decision in small business and will be discussed in the following slide on CHARACTER. <br /> Emphasize that the criteria used by banks are characteristics of successful companies and the bank wants to have a high degree of certainty that their loan will be repaid. <br />
  • Banks generally require the owners of a small business to guarantee the business debt. In a small business the owners have complete control over the business in all day to day activities including the use cash and other assets. This is unlike larger corporations that have a Board of Directors&#x201D; representing the owners (stockholders) that review and monitor the business. <br /> The owners credit standing and credit history account for approximately 50% of the decision. Poor credit results in an inability to get a loan or if obtained it is at a high price. <br /> Banks also look at the business payment history. With limited reporting on business credit in the industry, one or two bad records can significantly effect the loan decision in a negative way. <br /> The experience of the owner is also important. If they have managed the business for a long time they have likely weathered the storm of positive and negative business cycles. If a start up business it is essential that there is some expertise in the new business being conceived. <br />
  • Banks generally require the owners of a small business to guarantee the business debt. In a small business the owners have complete control over the business in all day to day activities including the use cash and other assets. This is unlike larger corporations that have a Board of Directors&#x201D; representing the owners (stockholders) that review and monitor the business. <br /> The owners credit standing and credit history account for approximately 50% of the decision. Poor credit results in an inability to get a loan or if obtained it is at a high price. <br /> Banks also look at the business payment history. With limited reporting on business credit in the industry, one or two bad records can significantly effect the loan decision in a negative way. <br /> The experience of the owner is also important. If they have managed the business for a long time they have likely weathered the storm of positive and negative business cycles. If a start up business it is essential that there is some expertise in the new business being conceived. <br />
  • Banks generally require the owners of a small business to guarantee the business debt. In a small business the owners have complete control over the business in all day to day activities including the use cash and other assets. This is unlike larger corporations that have a Board of Directors&#x201D; representing the owners (stockholders) that review and monitor the business. <br /> The owners credit standing and credit history account for approximately 50% of the decision. Poor credit results in an inability to get a loan or if obtained it is at a high price. <br /> Banks also look at the business payment history. With limited reporting on business credit in the industry, one or two bad records can significantly effect the loan decision in a negative way. <br /> The experience of the owner is also important. If they have managed the business for a long time they have likely weathered the storm of positive and negative business cycles. If a start up business it is essential that there is some expertise in the new business being conceived. <br />
  • Banks generally require the owners of a small business to guarantee the business debt. In a small business the owners have complete control over the business in all day to day activities including the use cash and other assets. This is unlike larger corporations that have a Board of Directors&#x201D; representing the owners (stockholders) that review and monitor the business. <br /> The owners credit standing and credit history account for approximately 50% of the decision. Poor credit results in an inability to get a loan or if obtained it is at a high price. <br /> Banks also look at the business payment history. With limited reporting on business credit in the industry, one or two bad records can significantly effect the loan decision in a negative way. <br /> The experience of the owner is also important. If they have managed the business for a long time they have likely weathered the storm of positive and negative business cycles. If a start up business it is essential that there is some expertise in the new business being conceived. <br />
  • Banks generally require the owners of a small business to guarantee the business debt. In a small business the owners have complete control over the business in all day to day activities including the use cash and other assets. This is unlike larger corporations that have a Board of Directors&#x201D; representing the owners (stockholders) that review and monitor the business. <br /> The owners credit standing and credit history account for approximately 50% of the decision. Poor credit results in an inability to get a loan or if obtained it is at a high price. <br /> Banks also look at the business payment history. With limited reporting on business credit in the industry, one or two bad records can significantly effect the loan decision in a negative way. <br /> The experience of the owner is also important. If they have managed the business for a long time they have likely weathered the storm of positive and negative business cycles. If a start up business it is essential that there is some expertise in the new business being conceived. <br />
  • Point out that one of the primary reasons for business failures is the lack of capital. Capital is money and resources that do not have to be paid back, they are owned. Too much debt results in the business simply struggling to repay debt and lacks the capacity to give the owner a good return and create resources for the business to thrive and grow. <br /> This also applies to the personal financials of the business owner. If there are significant personal assets but all are heavily financed it can impact the owners business since there are no personal resources left to help the business through a negative business cycle. <br /> It is useful to mention that if the capital position is one-half the total assets of the business this means the owners in fact own half the business while the creditors own the other half. <br />
  • Point out that one of the primary reasons for business failures is the lack of capital. Capital is money and resources that do not have to be paid back, they are owned. Too much debt results in the business simply struggling to repay debt and lacks the capacity to give the owner a good return and create resources for the business to thrive and grow. <br /> This also applies to the personal financials of the business owner. If there are significant personal assets but all are heavily financed it can impact the owners business since there are no personal resources left to help the business through a negative business cycle. <br /> It is useful to mention that if the capital position is one-half the total assets of the business this means the owners in fact own half the business while the creditors own the other half. <br />
  • Point out that one of the primary reasons for business failures is the lack of capital. Capital is money and resources that do not have to be paid back, they are owned. Too much debt results in the business simply struggling to repay debt and lacks the capacity to give the owner a good return and create resources for the business to thrive and grow. <br /> This also applies to the personal financials of the business owner. If there are significant personal assets but all are heavily financed it can impact the owners business since there are no personal resources left to help the business through a negative business cycle. <br /> It is useful to mention that if the capital position is one-half the total assets of the business this means the owners in fact own half the business while the creditors own the other half. <br />
  • This slide is an expansion of the prior slide. The bank wants to know all the sources of funds and their use in a start up business. For a start up a fall back position (personal cash or other resources) is necessary to ensure the business can get through any variations from their original projections. This is usually 3-6 months of operating expenses. <br /> For any business a down payment into any asset purchase is required unless there is significant net worth or other collateral available to back up the loan. <br /> Emphasize the fact that without capital there will be no loan. <br />
  • This slide is an expansion of the prior slide. The bank wants to know all the sources of funds and their use in a start up business. For a start up a fall back position (personal cash or other resources) is necessary to ensure the business can get through any variations from their original projections. This is usually 3-6 months of operating expenses. <br /> For any business a down payment into any asset purchase is required unless there is significant net worth or other collateral available to back up the loan. <br /> Emphasize the fact that without capital there will be no loan. <br />
  • This slide is an expansion of the prior slide. The bank wants to know all the sources of funds and their use in a start up business. For a start up a fall back position (personal cash or other resources) is necessary to ensure the business can get through any variations from their original projections. This is usually 3-6 months of operating expenses. <br /> For any business a down payment into any asset purchase is required unless there is significant net worth or other collateral available to back up the loan. <br /> Emphasize the fact that without capital there will be no loan. <br />
  • Emphasize that the bank needs more than one source for repayment to reduce the risk of loss to the bank. Collateral is the second source of repayment should the business cash flow cease or becomes insufficient to repay the loan. <br /> The value of collateral is far more to an operating business than to the bank which would conduct a distressed sale. Take inventory for example: The value to the business is generally the price it can sell the inventory at or what would be known as market price or value. Book value would be the price of the inventory recorded on the financial statements of a business which commonly is the wholesale price. Liquidation value is what would be realized in an immediate sale of all the inventory which is for less than market an commonly less than wholesale. <br /> Consequently, the bank will discount the value of collateral ore require sufficient down payment on new items to approximate or get closer to the actual value in a distressed sale. <br /> Presenter can give common Loan to Value examples used in bank lending. <br />
  • Emphasize that the bank needs more than one source for repayment to reduce the risk of loss to the bank. Collateral is the second source of repayment should the business cash flow cease or becomes insufficient to repay the loan. <br /> The value of collateral is far more to an operating business than to the bank which would conduct a distressed sale. Take inventory for example: The value to the business is generally the price it can sell the inventory at or what would be known as market price or value. Book value would be the price of the inventory recorded on the financial statements of a business which commonly is the wholesale price. Liquidation value is what would be realized in an immediate sale of all the inventory which is for less than market an commonly less than wholesale. <br /> Consequently, the bank will discount the value of collateral ore require sufficient down payment on new items to approximate or get closer to the actual value in a distressed sale. <br /> Presenter can give common Loan to Value examples used in bank lending. <br />
  • Emphasize that the bank needs more than one source for repayment to reduce the risk of loss to the bank. Collateral is the second source of repayment should the business cash flow cease or becomes insufficient to repay the loan. <br /> The value of collateral is far more to an operating business than to the bank which would conduct a distressed sale. Take inventory for example: The value to the business is generally the price it can sell the inventory at or what would be known as market price or value. Book value would be the price of the inventory recorded on the financial statements of a business which commonly is the wholesale price. Liquidation value is what would be realized in an immediate sale of all the inventory which is for less than market an commonly less than wholesale. <br /> Consequently, the bank will discount the value of collateral ore require sufficient down payment on new items to approximate or get closer to the actual value in a distressed sale. <br /> Presenter can give common Loan to Value examples used in bank lending. <br />
  • Emphasize that the bank needs more than one source for repayment to reduce the risk of loss to the bank. Collateral is the second source of repayment should the business cash flow cease or becomes insufficient to repay the loan. <br /> The value of collateral is far more to an operating business than to the bank which would conduct a distressed sale. Take inventory for example: The value to the business is generally the price it can sell the inventory at or what would be known as market price or value. Book value would be the price of the inventory recorded on the financial statements of a business which commonly is the wholesale price. Liquidation value is what would be realized in an immediate sale of all the inventory which is for less than market an commonly less than wholesale. <br /> Consequently, the bank will discount the value of collateral ore require sufficient down payment on new items to approximate or get closer to the actual value in a distressed sale. <br /> Presenter can give common Loan to Value examples used in bank lending. <br />
  • Capacity is simply the ability of the business to meet all of its obligations and provide sufficient income for the owners to meet their personal obligations. <br /> Primarily the bank will look at the business&#x2019; profits and income paid to the owners. Cash flow is the most important factor in meeting obligations and in a simplified form is the business profit plus interest and other non-cash charges such as depreciation. This is measured against the debt obligations and the bank looks to the debt obligations being covered 1 1/2 times (depends on bank standard) or a debt service coverage of 1.2X. 1X debt service coverage would indicate that the debt obligations are exactly the same as cash available to pay them leaving no margin for any business fluctuation. <br /> Without capacity a loan will not be approved. <br /> For a new business that has no track record it is essential to receive a comprehensive business plan from which the projected financial information is derived. The bank will then make a judgment on this plan with their projections to see if it makes sense compared to industry data for the particular business. <br />
  • Capacity is simply the ability of the business to meet all of its obligations and provide sufficient income for the owners to meet their personal obligations. <br /> Primarily the bank will look at the business&#x2019; profits and income paid to the owners. Cash flow is the most important factor in meeting obligations and in a simplified form is the business profit plus interest and other non-cash charges such as depreciation. This is measured against the debt obligations and the bank looks to the debt obligations being covered 1 1/2 times (depends on bank standard) or a debt service coverage of 1.2X. 1X debt service coverage would indicate that the debt obligations are exactly the same as cash available to pay them leaving no margin for any business fluctuation. <br /> Without capacity a loan will not be approved. <br /> For a new business that has no track record it is essential to receive a comprehensive business plan from which the projected financial information is derived. The bank will then make a judgment on this plan with their projections to see if it makes sense compared to industry data for the particular business. <br />
  • Capacity is simply the ability of the business to meet all of its obligations and provide sufficient income for the owners to meet their personal obligations. <br /> Primarily the bank will look at the business&#x2019; profits and income paid to the owners. Cash flow is the most important factor in meeting obligations and in a simplified form is the business profit plus interest and other non-cash charges such as depreciation. This is measured against the debt obligations and the bank looks to the debt obligations being covered 1 1/2 times (depends on bank standard) or a debt service coverage of 1.2X. 1X debt service coverage would indicate that the debt obligations are exactly the same as cash available to pay them leaving no margin for any business fluctuation. <br /> Without capacity a loan will not be approved. <br /> For a new business that has no track record it is essential to receive a comprehensive business plan from which the projected financial information is derived. The bank will then make a judgment on this plan with their projections to see if it makes sense compared to industry data for the particular business. <br />
  • Capacity is simply the ability of the business to meet all of its obligations and provide sufficient income for the owners to meet their personal obligations. <br /> Primarily the bank will look at the business&#x2019; profits and income paid to the owners. Cash flow is the most important factor in meeting obligations and in a simplified form is the business profit plus interest and other non-cash charges such as depreciation. This is measured against the debt obligations and the bank looks to the debt obligations being covered 1 1/2 times (depends on bank standard) or a debt service coverage of 1.2X. 1X debt service coverage would indicate that the debt obligations are exactly the same as cash available to pay them leaving no margin for any business fluctuation. <br /> Without capacity a loan will not be approved. <br /> For a new business that has no track record it is essential to receive a comprehensive business plan from which the projected financial information is derived. The bank will then make a judgment on this plan with their projections to see if it makes sense compared to industry data for the particular business. <br />
  • Capacity is simply the ability of the business to meet all of its obligations and provide sufficient income for the owners to meet their personal obligations. <br /> Primarily the bank will look at the business&#x2019; profits and income paid to the owners. Cash flow is the most important factor in meeting obligations and in a simplified form is the business profit plus interest and other non-cash charges such as depreciation. This is measured against the debt obligations and the bank looks to the debt obligations being covered 1 1/2 times (depends on bank standard) or a debt service coverage of 1.2X. 1X debt service coverage would indicate that the debt obligations are exactly the same as cash available to pay them leaving no margin for any business fluctuation. <br /> Without capacity a loan will not be approved. <br /> For a new business that has no track record it is essential to receive a comprehensive business plan from which the projected financial information is derived. The bank will then make a judgment on this plan with their projections to see if it makes sense compared to industry data for the particular business. <br />
  • Credit enhancements are used when there is a perceived weakness in the credit. <br /> Emphasize weakness not a lack of a credit criteria. <br /> Generally employed when there were some past credit weaknesses but not to shore up consistent poor credit performance. <br /> Possibly used when there is capital but the level is slightly below what the bank normally requires. <br /> Collateral weakness occurs when the value of the collateral may again be less than bank standards but still of value sufficient to be a substantial secondary source of repayment although not completely so. <br /> Most often used when relying on projections for a new business or expanding business where historical data may not exist but the plan is perceived to be sound. <br /> Credit enhancements do not substitute for a lack of any credit criteria but allows the bank to make a loan when an otherwise sound business has a weakness in one of the criteria used to decision a bank loan. <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> e <br />
  • Credit enhancements are used when there is a perceived weakness in the credit. <br /> Emphasize weakness not a lack of a credit criteria. <br /> Generally employed when there were some past credit weaknesses but not to shore up consistent poor credit performance. <br /> Possibly used when there is capital but the level is slightly below what the bank normally requires. <br /> Collateral weakness occurs when the value of the collateral may again be less than bank standards but still of value sufficient to be a substantial secondary source of repayment although not completely so. <br /> Most often used when relying on projections for a new business or expanding business where historical data may not exist but the plan is perceived to be sound. <br /> Credit enhancements do not substitute for a lack of any credit criteria but allows the bank to make a loan when an otherwise sound business has a weakness in one of the criteria used to decision a bank loan. <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> e <br />
  • Credit enhancements are used when there is a perceived weakness in the credit. <br /> Emphasize weakness not a lack of a credit criteria. <br /> Generally employed when there were some past credit weaknesses but not to shore up consistent poor credit performance. <br /> Possibly used when there is capital but the level is slightly below what the bank normally requires. <br /> Collateral weakness occurs when the value of the collateral may again be less than bank standards but still of value sufficient to be a substantial secondary source of repayment although not completely so. <br /> Most often used when relying on projections for a new business or expanding business where historical data may not exist but the plan is perceived to be sound. <br /> Credit enhancements do not substitute for a lack of any credit criteria but allows the bank to make a loan when an otherwise sound business has a weakness in one of the criteria used to decision a bank loan. <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> e <br />
  • Credit enhancements are used when there is a perceived weakness in the credit. <br /> Emphasize weakness not a lack of a credit criteria. <br /> Generally employed when there were some past credit weaknesses but not to shore up consistent poor credit performance. <br /> Possibly used when there is capital but the level is slightly below what the bank normally requires. <br /> Collateral weakness occurs when the value of the collateral may again be less than bank standards but still of value sufficient to be a substantial secondary source of repayment although not completely so. <br /> Most often used when relying on projections for a new business or expanding business where historical data may not exist but the plan is perceived to be sound. <br /> Credit enhancements do not substitute for a lack of any credit criteria but allows the bank to make a loan when an otherwise sound business has a weakness in one of the criteria used to decision a bank loan. <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> e <br />
  • Credit enhancements are used when there is a perceived weakness in the credit. <br /> Emphasize weakness not a lack of a credit criteria. <br /> Generally employed when there were some past credit weaknesses but not to shore up consistent poor credit performance. <br /> Possibly used when there is capital but the level is slightly below what the bank normally requires. <br /> Collateral weakness occurs when the value of the collateral may again be less than bank standards but still of value sufficient to be a substantial secondary source of repayment although not completely so. <br /> Most often used when relying on projections for a new business or expanding business where historical data may not exist but the plan is perceived to be sound. <br /> Credit enhancements do not substitute for a lack of any credit criteria but allows the bank to make a loan when an otherwise sound business has a weakness in one of the criteria used to decision a bank loan. <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> e <br />
  • The presenter should emphasize in this final slide that a new or expanding business must have a well thought out business plan from which financial projections derive. SCORE is an excellent resource to help with the plan for new entrepreneurs to use since many are not familiar with the process. <br /> We often hear &#x201C;Why does the bank want this business plan?&#x201D; The answer is &#x201C;Successful businesses have a plan for every year going forward and we would like to see and evaluate yours to make an informed decision.&#x201D; <br /> The business plan is for the business and successful businesses always should have one. We do assume that if you are successful, you are working with a plan and we then look at the demonstrated performance over the years. <br />
  • The presenter should emphasize in this final slide that a new or expanding business must have a well thought out business plan from which financial projections derive. SCORE is an excellent resource to help with the plan for new entrepreneurs to use since many are not familiar with the process. <br /> We often hear &#x201C;Why does the bank want this business plan?&#x201D; The answer is &#x201C;Successful businesses have a plan for every year going forward and we would like to see and evaluate yours to make an informed decision.&#x201D; <br /> The business plan is for the business and successful businesses always should have one. We do assume that if you are successful, you are working with a plan and we then look at the demonstrated performance over the years. <br />
  • The presenter should emphasize in this final slide that a new or expanding business must have a well thought out business plan from which financial projections derive. SCORE is an excellent resource to help with the plan for new entrepreneurs to use since many are not familiar with the process. <br /> We often hear &#x201C;Why does the bank want this business plan?&#x201D; The answer is &#x201C;Successful businesses have a plan for every year going forward and we would like to see and evaluate yours to make an informed decision.&#x201D; <br /> The business plan is for the business and successful businesses always should have one. We do assume that if you are successful, you are working with a plan and we then look at the demonstrated performance over the years. <br />
  • The presenter should emphasize in this final slide that a new or expanding business must have a well thought out business plan from which financial projections derive. SCORE is an excellent resource to help with the plan for new entrepreneurs to use since many are not familiar with the process. <br /> We often hear &#x201C;Why does the bank want this business plan?&#x201D; The answer is &#x201C;Successful businesses have a plan for every year going forward and we would like to see and evaluate yours to make an informed decision.&#x201D; <br /> The business plan is for the business and successful businesses always should have one. We do assume that if you are successful, you are working with a plan and we then look at the demonstrated performance over the years. <br />
  • The presenter should emphasize in this final slide that a new or expanding business must have a well thought out business plan from which financial projections derive. SCORE is an excellent resource to help with the plan for new entrepreneurs to use since many are not familiar with the process. <br /> We often hear &#x201C;Why does the bank want this business plan?&#x201D; The answer is &#x201C;Successful businesses have a plan for every year going forward and we would like to see and evaluate yours to make an informed decision.&#x201D; <br /> The business plan is for the business and successful businesses always should have one. We do assume that if you are successful, you are working with a plan and we then look at the demonstrated performance over the years. <br />
  • Question time may be limited during the formal presentation. Make sure to make yourself available for questions after the presentation is concluded. <br />

March 9, 2010 TD Bank Score Presentation- Elaine Lawrence March 9, 2010 TD Bank Score Presentation- Elaine Lawrence Presentation Transcript

  • Small Business Financing
  • America’s Most Convenient Bank  Contact Information  Elaine Lawrence Small Business Relationship Manager TD Bank, America’s Most Convenient Bank 111 Main Street P.O. Box 409 Burlington, VT 05401 802-860-5595 elaine.lawrence@tdbanknorth.com 
  • Where do you get the money?
  • Where do you get the money?  Personal Cash
  • Where do you get the money?  Personal Cash  Private Financing
  • Where do you get the money?  Personal Cash  Private Financing  Traditional Bank Programs
  • Where do you get the money?  Personal Cash  Private Financing  Traditional Bank Programs  U. S. Small Business Administration
  • Where do you get the money?  Personal Cash  Private Financing  Traditional Bank Programs  U. S. Small Business Administration  State Agencies
  • What Banks Look For
  • What Banks Look For  Historical success of the business
  • What Banks Look For  Historical success of the business  Financial strength of the business
  • What Banks Look For  Historical success of the business  Financial strength of the business  Management experience
  • What Banks Look For  Historical success of the business  Financial strength of the business  Management experience  Owners of 20% or more of the business will guarantee the debt and need to have a good credit history
  • What Banks Look For
  • What Banks Look For Character
  • What Banks Look For Character  Has business and personal debt been paid on time in the past?
  • What Banks Look For Character  Has business and personal debt been paid on time in the past?  Credit Bureau Reports
  • What Banks Look For Character  Has business and personal debt been paid on time in the past?  Credit Bureau Reports  Trade references
  • What Banks Look For Character  Has business and personal debt been paid on time in the past?  Credit Bureau Reports  Trade references  Experience of the owner in business
  • What Banks Look For
  • What Banks Look For Capital
  • What Banks Look For Capital  The amount of cash invested in the business
  • What Banks Look For Capital  The amount of cash invested in the business  The net worth of the business
  • What Banks Look For
  • What Banks Look For Sources and Uses of Funds
  • What Banks Look For Sources and Uses of Funds Where is the cash coming from and what will it be used for?
  • What Banks Look For Sources and Uses of Funds Where is the cash coming from and what will it be used for?  Note: 100% financing is not usually an option. You should have at least 20% to 35% of your own cash invested into any financing plan. Businesses need resources to meet the unexpected.
  • What Banks Look For
  • What Banks Look For Collateral
  • What Banks Look For Collateral  Second source of repayment
  • What Banks Look For Collateral  Second source of repayment  Valuation of collateral x Book value x Market value x Liquidation value
  • What Banks Look For Collateral  Second source of repayment  Valuation of collateral x Book value x Market value x Liquidation value  Advance only % of value
  • What Banks Look For
  • What Banks Look For Capacity
  • What Banks Look For Capacity  Ability of business to meet all obligations including proposed financing
  • What Banks Look For Capacity  Ability of business to meet all obligations including proposed financing  Ability of owners to meet their personal obligations
  • What Banks Look For Capacity  Ability of business to meet all obligations including proposed financing  Ability of owners to meet their personal obligations  Measured by ratio:
  • What Banks Look For Capacity  Ability of business to meet all obligations including proposed financing  Ability of owners to meet their personal obligations  Measured by ratio: Debt Service Coverage > (1.2X)
  • When is a credit enhancement employed?
  • When is a credit enhancement employed?  Historical performance not indicative of future performance
  • When is a credit enhancement employed?  Historical performance not indicative of future performance  Past credit issues
  • When is a credit enhancement employed?  Historical performance not indicative of future performance  Past credit issues  Collateral weakness
  • When is a credit enhancement employed?  Historical performance not indicative of future performance  Past credit issues  Collateral weakness  Capital weakness
  • When is a credit enhancement employed?  Historical performance not indicative of future performance  Past credit issues  Collateral weakness  Capital weakness  Credit enhancements are there to shore up weakness not substitute for non creditworthy applicant
  • What Banks Look For
  • What Banks Look For Start ups and major expansions
  • What Banks Look For Start ups and major expansions  A well thought out business plan
  • What Banks Look For Start ups and major expansions  A well thought out business plan  Financial projections with written assumptions
  • What Banks Look For Start ups and major expansions  A well thought out business plan  Financial projections with written assumptions  Seek professional assistance when necessary
  • What Banks Look For Start ups and major expansions  A well thought out business plan  Financial projections with written assumptions  Seek professional assistance when necessary (SCORE can help with business plans)
  • Any Questions?