Business Lending at Self Help Credit Union


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  • Good morning it’s very exciting to be talking with creative folks about funding your efforts to improve your operations with renewables and energy efficiency.
    Self-Help is a mission-driven community development lender. We have over a 30 year track record in North Carolina, and now we also work nationally.
    We’ve built up a track record in lending to sustainable projects and businesses in lots of sectors: from small recycling businesses to multifamily housing to large solar farms. Here’s a organic food distribution hub in Durham.
  • The way we provide financing is through business loans. We’ve learned in our energy lending over the past years about what seems to work for different types of borrowers
    Today we’ll share with you what the Self-Help loan application process looks like and what makes a project “lendable” from our perspective
    We’ll talk about how renewable energy and energy efficiency fit in & share some examples
  • We look at good loans from for profits, non profits, congregations, and real estate project developers.
  • Our clients use financing for a wide range of commercial purposes
  • Jennifer
  • Note: Best for loans between $15K and $25K
    Start up loans usually fall into this category.
  • Good solid experience in the business industry
    Personal investment in the business
    Collateral to help secure the loan
    Relatively good credit
    Solid business plan with good historical and/or projected cash flow
    Term and interest rate vary based on project
  • SBA Guarantee
    Must meet Lender’s basic criteria
    50% to 85% guarantee, depending on product
    Must be US citizen – and for profit
    USDA Guarantee
    Up to 90% guarantee
    Must be in a rural community w/ population of 50K or less
    Can be non profit or for profit.
  • We will not base this loan on the future cash flow of the start up – we will look at
  • Historical and projected DSCR should be 1.2
  • DSCR of 1.2
  • DSCR: For every dollar you owe, you make $1.20.
    SBA 504 – for some situations, we may refer you up to the SBA 504 team. You have experience, you have another bank willing to come in. We will refer you to the 504 program. If you qualify, may entitle you to a lower down payment.
  • Business Lending at Self Help Credit Union

    1. 1. Presented by Jennifer Sherwin Business Lending at Self-Help
    2. 2. Who is Self-Help?  Community Development Financial Institution (CDFI).  Mission: provide ownership and economic opportunity for all, especially people of color, women, rural residents, and low-wealth families and communities.
    3. 3. What will be covered  Overview of our loan products  Loan Examples
    4. 4. Who we fund  For Profit Businesses  Non Profit Businesses  Religious Institutions  Supportive Housing  And more
    5. 5. What purposes we fund  Working capital  New and used vehicles  Equipment purchase  Business space up-fit  Real Estate Purchase
    6. 6. What loan programs does Self-Help offer?  Simple Business Loans for business vehicles and loans up to $15,000  Micro Business Loans $15K-$35K  Business loans > $35,000
    7. 7. Simple loans for vehicles and operational loans ≤ $15,000  Loans can be secured with cash, vehicle, equipment.  Unsecured loans available up to $7,500 for qualified borrowers.
    8. 8. Criteria for simple business loans  Will be looking that your current source of income can cover this loan payment.  Businesses with 2-year track record.  Start-ups w/secondary source of income.  Must have good personal debt to income.  Credit will determine the interest rate.
    9. 9. Micro business loans up to $35K.  Looks at current source of income as means to pay for this loan.  Must have relatively good credit  Must be well secured with real estate or cash  If a start-up - need another source of income  Existing business - need 2 years tax returns w/profit in last year  Fixed, 9.75% interest rate – over 3-5 year term
    10. 10. Criteria for loans > $35K The five “Cs” – Character/Management experience – Capital/Owner’s investment – Cash Flow – Credit History – Collateral  Other: Personal Debt to Income and Secondary Source of Income
    11. 11. SBA loans Must be US citizen Can only be used on For-Profit Businesses
    12. 12. SBA 7A  Must be lender’s basic underwriting criteria  SBA provides lender a 75%-85% guarantee  Interest and term – varies based on loan purpose  In addition to lender fees, borrower pays 2%- 3% fee on the SBA’s guaranteed portion.
    13. 13. SBA 504 loans  Large capital purchases only, usually real estate.  Requires partnership with another lender  Less down payment than traditional loans – 10% if existing business – 15%-20% if new business  Structure: bank will do 50%; borrower 10%-20% and SBA 504 30%-40%  Rates: fixed interest rate over 10-20 year term
    14. 14. $7K working capital for a barber  Borrower’s spouse will co-sign and has secondary source of income.  Borrowers have minimal personal and business debt.  Borrowers have decent credit.  Borrowers qualify for unsecured simple business loan.
    15. 15. $20K for a small delivery van for existing caterer  Owner has 2 yrs. of tax returns showing a profit  Owner has good credit and low debt/income  Vehicle qualifies for our Simple Loan product  Interest and term will depend on age of vehicle and personal credit.
    16. 16. $75K for equipment for existing computer consulting business  Borrower has fairly good credit.  Business has been profitable and cash flow shows can handle this additional debt.  Has $30K of real estate collateral to pledge.  Lender uses SBA 7a to guarantee loan.  Rate: Prime + 2 variable rate over 5 years.
    17. 17. $800K to purchase and renovate space for an existing restaurant.  Borrower meets lender and SBA 504 underwriting criteria.  Borrower puts down $80K (10%).  Other lender does loan for $400K (50%)  SBA does loan for $320K (40%)
    18. 18. Contact Information Center for Community Self-Help