Utilize ACCION USA's online resources to craft a business plan. While a formal business plan may not always be required, ACCION USA does recommend having a plan in place - especially for start-up businesses that have not yet achieved profitability. ACCION USA's website contains helpful templates and articles that can guide Alejandro in developing an initial business plan to strengthen his loan application.

1. Community and Partner Outreach Part 2 How We Lend.

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119. Social Security Number or ITIN

120. All required business licenses and permits

121. Commitment to the business

122. Credit history that shows responsible financial behavior

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146. Have not declared bankruptcy in the past 12 months or foreclosure in the past 24 months

147. Have not had any late rent or mortgage payments in the past 12 months,

148. Be up-to-date on all bills

149. Not have more than $3,000 in past due debt, generally acquired under emergency circumstances (such as layoff or illness)

150. Exhibit steady cash flow and the ability to support monthly loan payments

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185. Late on rent or mortgage in last 12 months

186. Unpaid judgments, liens, collections accounts, or past due accounts above $3,000

187. Bankruptcy in last 12 months

188. Foreclosure or short-sell in last 2 years

189. Paying mortgages on more than 3 properties

191. Some borrowers with adjustable rate mortgages (ARM) can be considered if terms adjust at least 12 months after the ACCION USA loan term matures

193. Non-profit organizations (unless they have non-grant revenue)

194. Adult entertainment, firearms, real estate, and other related industries

195. Multi-level marketing except Mary Kay and Avon

197. 2 forms of government-issued ID

198. All necessary permits and licenses

199. Detailed description of how loan money will be used in the business

200. Most recent utility bill from home and business

201. Personal and landlord references

203. ACCION USA requires a co-signer for start-up businesses, transition businesses, and some established businesses.

205. Minimum of 6 months of consistent, reliable employment

206. Not a co-owner of the business

207. Submit proof of income or recent year’s tax records (if business owner)

208. Borrowers with established businesses can substitute co-signer qualification by choosing to pay a 5% nonrefundable fee upon disbursal

211. Loan Application Process – Start-Up Business Let’s Get Started: Example Entrepreneur: Rose Montini Business: Handbag Designer and Manufacturer Time in Business: 6 months Requested Loan Amount: $10,000 Purpose: Inventory and Marketing

213. Personal Credit Information

214. Mortgage details

215. Tax and legal questions

216. Business-specific Information

217. Type of business

218. Investments

222. Both the borrower and the co-signer need to fill out the credit application.

226. The loan consultant will represent Rose and negotiate loan details on her behalf.

227. The underwriter will analyze and give final approval on the loan.

228. If declined, the loan consultant will explain the reason for the decline.

229. If declined, the loan consultant will help the borrower make an action plan to resolve the issues so that he/she may reapply in 3 months.

231. If the loan is approved, the client must do the following to receive the loan:

232. Electronically sign the disbursement documents (sent via secure email) or sign the documents with a notary

234. Loan Application Process – Established BusinessFunding an Established Business - Example Michael Killian Business: Restaurant Time in Business: 5 years Requested Loan Amount: $30,000 Purpose: Update restaurant with new kitchen equipment, furniture, and signage.

238. Examples of non-mortgage lines of credit:

239. credit accounts with business suppliers.

240. credit card statements verifying a larger lending limit.

242. Must provide proof of all necessary operational licenses and certificates.

243. Limited credit history can be strengthened by proof of other credit lines, such as suppliers.

244. Income statements must show a 2:1 coverage.

246. Transitional Businesses can seek loans for the purchase of an existing business or change of business locationfor up to $30,000

248. Closing fees vary between 3% and 6%

249. $30 application fee for disbursed loans

252. ACCION USA’s website has a variety of financial education resources including articles, worksheets and online webinars to help our clients help themselves. www.accionusa.org

254. The online course will walk you through the basics of reading a credit report, managing credit, and improving credit if it has been damaged.

255. Play out different scenarios by answering questions throughout the course to see how much you know about credit, and learn what works best in various situations. Take the Credit E-Learning course Access it at www.accionusa.org in the “Managing Credit” section of the website

257. Revolving Debt: up to $10,000 if debt has a higher interest than an ACCION USA loan. Only one credit card may be refinanced per loan.

259. Case Examples Let’s Practice!

260. Question 1: Alejandro Let's Practice! Alejandro Diaz has a used clothing sales business that has eight months in operation and is not yet profitable. Alejandro is aware of the co-signer requirement. Which of the following individuals would make the best co-signer? His cousin who is also a partner in the business. His actively employed aunt. His uncle who is currently unemployed and living with Michael’s grandmother.

261. Question 1: AlejandroLet's Practice! If You Chose #1: His cousin who is also a co-owner of the business. Not the best choice… The co-signer needs to be someone outside of the business. The cousin will already be required to sign on as a co-borrower. If You Chose #3: His unemployed uncle who is currently living with Alejandro’s grandmother. Not the best choice… Co-signers must demonstrate that they have the capability to cover the loan payment should the borrower be unable to pay. Additionally, co-signers must be able to demonstrate a minimum of 6 months of stable employment.

262. Question 1: Alejandro Let's Practice! If You Chose #2: His actively employed aunt. This is the best choice! Alejandro’s actively employed aunt could be an ideal candidate to serve as a co-signer on this loan.

263. Question 2: AlejandroLet's Practice! Alejandro hasn’t created a formal business plan for his used clothing sales business. What are his options? Business plans are unnecessary for small businesses. Create a list of reasons for which he wants the money and how he will use it. Utilize ACCION USA’s online resources to craft a business plan.

264. Question 2: AlejandroLet's Practice! If You Chose #1: Business plans are unnecessary for small businesses. Not the best choice… Business plans play an important role in the documents necessary to gain an approval for a loan. If You Chose #2: Create a list of reasons for which he wants the money and how he will use it. Not the best choice… This is a good start, but what Alejandro needs to do is assemble a business plan.

265. Question 2: AlejandroLet's Practice! If You Chose #3: Utilize ACCION USA’s online resources to craft a business plan. This is the best choice! This is an important document that ACCION USA will want to see prior to approving the loan. ACCION USA’s online resources are very helpful for new borrowers.

267. He has two partners in the business and each of the partners owns an equal share in the business.

268. The loan is for $12,000.

270. Question 1: EmekaLet’s Practice! If You Chose #1: Only Emeka as long as he securitizes the loan. Not the best choice… Since the business is established, Emeka does not require a co-signer to securitize the loan. Any partner in the business who owns 20% or more must apply. If You Chose #2: Emeka and one cousin, because only one co-borrower is required. Not the best choice…… ACCION USA stipulates that all partners with more than a 20% interest must apply as a co-borrower. There is no limit to the number of co-borrowers.

271. Question 1: EmekaLet’s Practice! If You Chose #3: Emeka and both cousins. This is the right choice! Since each cousin owns 1/3 of the business, they must each apply as co-borrowers and meet all of the credit qualifications.

272. Question 2: EmekaLet’s Practice! Emeka’s business has had cash flow issues. Revenue and expenses have been inconsistent and the business has reported a loss in certain months. Can he get the loan? He has no chance. Cash flow must be spotless. Yes, if he can demonstrate a current 2:1 ratio of covering the monthly loan payment.

275. Knowledge Check Which of the following will automatically disqualify potential borrowers from receiving an ACCION USA loan? A. Credit Score of less than 575 B. Late payment on rent or mortgage in last 12 months C. An adjustable rate mortgage (ARM) that will adjust during the term of the loan D. All of the above will disqualify potential borrowers

276. Knowledge Check What is the first step you will take with your borrower? A. Examine financial documents for credit worthiness B. Prepare a business plan and financial projections C. Complete the first page of the loan application to determine if borrower is eligible for a loan

277. Knowledge Check How many days does a borrower have to submit their documentation before they will need to reapply? 30 45 60 90

278. Congratulations! Now you are ready to begin ACCION USA community outreach!