The document discusses small business lending options and alternatives in the context of a credit crunch, highlighting various types of loans available such as bank loans, SBA/USDA loans, and alternative financing methods. It emphasizes the importance of collateral, cash flow, credit score, and understanding costs when seeking funding, as well as provides examples of successful financing solutions for businesses. Additionally, it encourages engagement with the Small Business Majority organization for support and resources for small business owners.

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. MULTIFUNDING
Understanding Debt Alternatives in
Today’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