Your SlideShare is downloading. ×
Credit Crunch: Small Business Lending
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

Credit Crunch: Small Business Lending

455
views

Published on

1. Learn about the small business credit landscape …

1. Learn about the small business credit landscape
2. Hear a lending expert's tips on ways to access capital
3. Get your questions answered

Published in: Economy & Finance, Business

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
455
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
12
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Credit Crunch: Small Business Lending June 28, 2012
  • 2. Today’s Speakers•  Ami Kassar –  CEO and Founder, Multifunding LLC•  Ben Geyerhahn –  Special Projects Director, Small Business Majority
  • 3. About Small Business Majority•  Small business advocacy organization – founded and run by small business owners•  National – offices in California, Washington, DC, New York, Ohio, Colorado, and Missouri•  Research and advocacy on issues of top importance to small businesses (<100 employees) and the self-employed•  Very focused on healthcare over the past 6 years – becoming more involved in energy and access to credit
  • 4. MULTIFUNDINGUnderstanding Debt Alternatives inToday’s Economy   June 29, 2012
  • 5. WHO IS MULTIFUNDING ?  •  Helping Small Business Owners Figure Out The Best Possible Loans For Their Unique Situations•  Reuters calls us –  “Loan Doctors for Business”•  Twi%er  calls  us   –  “The People’s Loan Broker”
  • 6. EXAMPLE CLIENTS (funding completed)
  • 7. MULTIFUNDING IN THE PRESS
  • 8. GEOGRAPHICALLY DIVERSE
  • 9. WHAT’S OUT THERE?•  Regular  Bank  Loans   •  Asset  Based  Lenders  •  SBA  /  USDA  Loans   •  Equipment  Leasing  •  A/R  Financing   •  Sale  Lease  Back  Loans  •  Purchase  Order  Financing   •  Merchant  Cash  Advance  •  Inventory  Financing   Loans        
  • 10. TYPES OF LOAN PROGRAMS Source : MultiFunding Quarterly Lending Survey
  • 11. ANNUAL INTEREST RATES BEING CHARGED Source : MultiFunding Quarterly Lending Survey
  • 12. LENDER’S VALUATIONS Discounted  (%)   LTV  (%)  Business  Assets  Real  Estate   25     75  Equipment   50   50  Receivables   20   80  Inventory   50   50  Personal  Assets  Real  Estate   20   80  Stock   30   70  Cash   5   95  
  • 13. THE FOUR QUESTIONS•  Collateral   –  Do  you  have  something  a  bank  can  liquidate?    The  easier  to   liquidate,  the  cheaper  your  rate.  •  Cash  Flow   –  How  was  business  last  year;  this  year?  •  Credit  Score   –  680  or  above  (for  best  terms)  •  Cost  of  Funds     –  What  interest  rate  you  can  get?   –  What  can  you  afford?  
  • 14. GOOD OLD FASHIONED BANK LOANS•  Bank  loans  today  require  profitability,  cash  flow,   good  credit,  and  good  collateral.  •  If  you  think  you  have  all  of  these  ingredients,  try  a   local  community  bank  first.  •  Visit  www.bankinggrades.com  to  find  a  bank  in  your   neighborhood  that  is  ac^vely  lending  to  small   business.  
  • 15. SBA and USDA LOANS•  Many  banks  will  be  a  bit  more  lenient  when  lending  through   the  SBA  and  USDA  programs.    The  government  offers  them   insurance  to  be  more  aggressive  when  lending  to  small   business.  •  The  USDA  program  works  well  in  rural  communi^es  and  the   SBA  program  is  na^onwide.  •  When  considering  these  programs,  always  look  for  a  lender   who  is  aggressive  and  has  a  lot  of  experience.      •  If  one  lender  says  no,  always  try  another  one.  
  • 16. SBA EXAMPLE ONE•  Glass  contractor  in  Oregon  approached  us  to   consolidate  debts,  term  out  payables,  and  gain   access  to  working  capital.  •  We  managed  to  refinance  their  debts  into  an  18  year   term  SBA  loan,  secured  by  real  estate.  •  Interest  rates  went  down  from  18  %  to  6  %  and  client   will  save  $100,000  of  finance  charges  per  year.  
  • 17. SBA EXAMPLE TWO•  Fire  Restora^on  company  in  Tennessee  approached   us  to  gain  access  to  working  capital.  •  Through  an  SBA  loan  (secured  by  her  home)  we   achieved  her  goal  and  refinanced  several  equipment   leases  and  credit  cards.  •  Clients  monthly  finance  fees  reduced  by  $3,000  a   month.  
  • 18. IF THE BANKS AND SBA LENDERS SAY NO•  Don’t  despair,  there  are  plenty  of  alterna^ves  to   consider.  •  The  key  issue  is  what  collateral  you  have  to  offer  the   lender.  
  • 19. ACCOUNTS RECEIVABLE FINANCING•  If  you  have  completed  work  for  other  businesses,  have   invoiced  them  and  are  wai^ng  to  be  paid  for  it,  these  invoices   are  collateral.  •  Many  lenders  will  advance  you  money  against  the  invoices  so   that  you  can  get  paid  faster  and  improve  your  cash  flow.  •  Key  issues  that  they  will  consider  are  the  quality  of  your   contract  with  your  client,  and  the  quality  of  the  client.  •  They  are  underwri^ng  your  client  first,  and  your  business   second.  
  • 20. A/R FINANCING EXAMPLS•  We  were  approached  by  a  logis^cs  company  in   Pennsylvania  who  was  struggling  with  cash  flow   issues.  •  This  company  had  an  exis^ng  line  of  credit  with  their   local  bank.  •  We  put  them  on  the  Receivables  Exchange  and  they   were  able  to  keep  their  line  of  credit  and  trade  their   receivables.  
  • 21. PURCHASE ORDER FINANCING•  Some^mes  a  company  doesn’t  have  receivables  yet,  but   has  a  purchase  order  from  a  credible  business.  •  A  loan  is  needed  to  advance  money  to  their  suppliers  to   they  can  fulfill  the  order.  •  Purchase  order  financing  op^ons  are  available  where  the   lender  will  advance  money  to  the  supplier.  •  These  loans  are  not  cheap  but  can  make  sense  in  high   margin  situa^ons.  
  • 22. INVENTORY FINANCING•  There  are  lenders  who  will  finance  your  inventory.  •  Some  will  finance  your  inventory  purchases.  •  Others  will  provide  an  ongoing  line  of  credit  against   your  inventory.  
  • 23. INVENTORY PURCHASE LOAN•  A  ligh^ng  distributor  in  Colorado  approached  us  and   needed  to  buy  inventory  quickly  to  meet  an  order.  •  Their  supplier  was  not  willing  to  extend  terms.  •  Our  lender  cuts  the  check  to  the  supplier,  adds  a   fifeen  percent  fees,  and  then  debited  the  money   from  the  client  over  90  days  in  equal  payments.  •  It’s  expensive  money  but  can  be  done  in  a  week  and   makes  sense  if  no  other  alterna^ves  and  there  is   good  profit  in  a  job.  
  • 24. ASSET BASED LENDERS•  Some^mes  companies  have  accounts  receivable,   inventory,  and  equipment  on  their  balance  sheets.  •  There  are  Asset  Based  Lenders  who  will  lend  against   all  of  these  categories.  •  They  can  make  sense  vs.  going  to  an  individual  A/R  ,   Inventory,  or  Equipment  Lender.  
  • 25. EQUIPMENT LEASING•  If  you’re  in  the  market  for  a  new  piece  of  equipment   or  sofware,  leasing  is  an  ac^ve  and  viable  op^on.  •  There  are  many  tax  advantages  to  leasing.  •  Always  consider  a  $1  buy  back  at  the  end  of  the  term   vs.  a  residual  equipment  value.  
  • 26. EQUIPMENT SALES LEASE BACK•  Some^mes  the  only  collateral  a  company  has  is   equipment  that  they  own  that  is  free  and  clear.  •  In  some  cases  it  is  possible  to  sell  this  equipment  to   the  leasing  company,  who  will  then  lease  it  back  to   you.  •  The  lender  will  want  to  see  and  understand  what  you   intend  to  use  the  funds  for.  
  • 27. EQUIPMENT SALES LEASE BACK EXAMPLE•  A  car  wash  in  Dallas  reached  out  to  us  and  needed   cash  quickly  to  pay  off  a  creditor.  •  His  only  collateral  available  was  his  equipment.  •  We  managed  to  find  a  lender  to  buy  his  equipment   from  him  at  50%  of  liquida^on  value,  and  sell  it  back   to  him  for  $1  at  end  of  term.  •  Interest  rate  was  14  %  per  annum.  
  • 28. MERCHANT CASH ADVANCE LOANS•  Unfortunately,  many  companies  today  have  no  collateral  that   a  lender  is  interested  in.  •  If  the  company  takes  credit  cards,  there  are  lenders  who  will   advance  them  money  today  and  take  a  future  daily   percentage  of  their  credit  card  receipts  un^l  their  principle   and  fees  are  paid  back.  •  Other  lenders  will  do  the  same  in  the  form  of  a  term  loan   from  a  checking  account.  •  Pay  a%en^on  to  the  term  of  the  loan  when  considering  these   op^ons.  
  • 29. WHAT IS AN ANNUAL DEBT REVIEW ?•  An  opportunity  to  sit  down  with  a  client  on  an  annual   review  and  determine  if  their  current  loans  s^ll  make   sense.  •  Look  for  savings  opportuni^es   –  Loan  Markets  Change   –  Business  Condi^ons  Change    
  • 30. MANY OPPORTUNITES TO WORK TOGETHER Ami  Kassar   Chief  Execu^ve  Officer   www.mul^funding.com   akassar@mul^funding.com   1-­‐800-­‐276-­‐0690  x  11  
  • 31. Join Our Network Contact •  Erica Dowell, Network Coordinator •  Email: edowell@smallbusinessmajority.org •  Direct: (202) 535-3244 Ways to Get Involved: Connect with us! •  Receive a monthly newsletter •  Share your story for media requests @SmlBizMajority •  Letters to the editor/Op-eds Small Business Majority •  State events/Roundtables •  Fly-ins •  Webinars for business organizations