Getting the Credit You Deserve A Banking Perspective

October 15, 2014 Brad

Thomson

Points to Cover -

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The Imperfect Storm Current Banking Environment Who we serve What we offer Your Bank – What to look for What a Bank Looks For – It Isn’t Rocket Science Mundo on the Move What we’ll need from the Business What we’ll need from the Owners, Due Diligence & Timing Lines of Credit Term Loan/Lease Mortgage Free Money – Not-for-Profits

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Imperfect Storm

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Recession of Confidence –

Feeling Glum?

Unsure of the Future?

Putting Plans on Hold?

Hoarding Cash and Buying Gold?

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Welcome to the last few years

2010 - 2013 was an economic mess & 2014 ?

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Companies may find themselves pinched, especially in a down economy: trying to meet payments, providing increased service/products and sustaining or upgrading technology and facilities

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You may feel that banks have decreased lending and you can’t get the credit you need.

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Corporate earnings are down so they are not purchasing as much and are laying off people Government funding for programs is not as readily available

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Individuals concerned about their financial well-being/future – Do not purchase as much as in previous years

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Current Banking Environment NY Fed polled almost 1,000 Tri-State Small Businesses

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33% Applied for Credit (62% were successful)

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27% Discouraged – Did Not Apply (Thought they wouldn’t be approved)

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21% Have Sufficient Financing – Did Not Apply

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19% - Deleveraging - Paying Down Debt – Did Not Apply

Thomas Edison said – “Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time.”

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Companies

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This is who we serve -

•Manufacturers •Distributors •Import/Export •Wholesale/Retail/Gas Stations •Transportation – Trucking, Bus Service, Auto Dealers •Service Companies (Law & Accounting Firms) •Doctors/Dentists/Offices/Clinics •Not-for-Profits (Churches, Schools, Organizations)

Work with all types of businesses

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Types of Loans

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This is what we offer -

•Construction Loans •Permanent Mortgages •Lines of Credit •Capital/Equipment Financing Loans/Leases •Tax Exempt Loans •Tax Exempt Bonds (NJEDA)

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Your Bank

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What to look for -

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Approach the decision as a long-term investment

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Ask your accountant/lawyer to introduce you to bankers they know and are comfortable with.

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Hours/Locations/Convenience/Funds Availability

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Personality of Staff (Complimentary). Employee morale is a reflection of how the bank will treat you.

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Introduce yourself, meet the manager. If looking for a loan, meet the lending officer. How long have they been there?

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Tell them about your business so they can tell you about special products, services or restrictions.

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Look for a relationship but do compare rates and fees on Loans and Deposits.

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Look for a bank that is a SBA & EDA Preferred Lender

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What a Bank Looks For -

Credit is Not Rocket Science – Still love the 5 C’s Capacity/Cash Flow sufficient cash flow is one of the biggest obstacles for a business seeking a loan.

– Can you repay the loan? Proving a reliable and Collateral – How can the bank repaid if cash flow is insufficient? Accounts Receivable, Inventory, Machinery & Equipment, Real Estate.

Capital – The level of equity in the business. Sufficient to support operations and growth. Want you to have “Skin in the Game”.

Character – How long have you been in operation? Payment history? Background and experience of employees? Liens, suits, judgments?

Conditions used for – bridge financing, equipment, mortgage? Local/national economic conditions. – Focus on the intended purpose of the loan. What will it be 6 th C – Connections – Who you know can help!

Disclaimer -

Every Deal is Different and Requires Credit Approval Only General Guidelines/Indicative Pricing in this presentation

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Mundo on the Move -

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Mundo’s management knew what the bank would want to see and had it ready –

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Business Plan & Three years of tax returns statements are appreciated).

(CPA prepared reviewed/audited

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History of Company ups and downs. – When founded – Older businesses have survived many Prior Loan History – Loan repayment history Collateral – Composition & Value

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Mundo Industries is a manufacturer, but has a hit new product.

Sales were $7,000,000 last year, but are going to $14,000,000 in 2011 Owners have found an office/warehouse perfect for their growing company – Needs a $5,000,000 mortgage.

Knows that banks pay very close attention when lending into growing businesses with real estate collateral.

Sales/Earnings/Employee Trends growth, maturity and decline.

– Companies go through stages of start-up, Demonstrated the request made sense are planned.

as business is growing and new products Emphasized the quality/experience of the staff – Years of service, his background, # of employees, and success/growth of the company.

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What We

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ll Need From the Business -

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Purpose of the loan –What needs are you seeking to be financed?

Three years of financial statements (requests < $50,000 may not require statements). Most recent Interim Statement.

History of the business Details on current management/bios Payment History Account Receivable and Accounts Payable aging. Inventory listing Business plan (if available) For Machinery/Equipment/Technology and soft costs).

– Copy of invoice (hard costs For Construction/Permanent Mortgage assignment of P&C insurance.

– Plans/Specs/Costs will need to be reviewed. Construction draws will be monitored. Will need appraisal, environmental study, possibly flood insurance and

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What We

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ll Need From The Owners, Due Diligence and Timing -

For Each Guarantor -

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Completed Personal Financial Statement

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At Least One Year Personal Tax Return Due Diligence –

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Site Visit to the Company

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Analyze Financial Information (Company & Guarantors)

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Business/Credit Reports (Company & Guarantors)

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Lien, Suit & Judgment Searches (Company & Guarantors)

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With Mortgage – Appraisal, Environmental, Title Search, etc.

Timing – As Quickly as Possible

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Lines of Credit -

Purpose Minimum History Maximum Term Amount Prepayment Rate Guarantors Collateral Advance Rates Covenants Insurance Working Capital or Bridge Situations Three years of Operation Generally one year $50,000 - ?

None Based on WSJ Prime Personal Guaranty of the Owners First security interest in all business assets Up to 80% of Accounts Receivable Up to 50% of Raw Materials/Finished Goods Cash Flow Coverage – Preferred minimum or 1.20:1 Loss payee on Property & Casualty Insurance

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Term Loans/Leases -

Purpose Minimum History Maximum Term Amount Prepayment Fees Rate Guarantors Collateral LTV/Advance Rates Covenants Insurance Financing of equipment, technology Three years of Operation Seven years or life of the equipment (possible six-month draw period) $50,000 - ?

Yes – Not if paid off by the borrower’s own $’s Floating or Fixed Personal Guaranty of Owners Full Floating Lien, PMSI, liquid collateral and/or real estate New Equipment – 80% of Invoice Used Equipment – 60% of Orderly Liquidation Value Leases may go to 100% financing Cash Flow Coverage – Preferred minimum of 1.20:1 Others as required Loss payee on P & C, Flood Insurance (if required)

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Mortgage

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Purpose Minimum History Maximum Term Amount Prepayment Fees Rate Guarantors Collateral LTV/Advance Rates Covenants Insurance Purchase, Construction or Refinance Three years of Operation 10/25 $125,000 - ?

Yes – 5%, 4%, 3%, 2%, 1% (with caveats) Generally Fixed Personal guaranty of owners First mortgage, assignment of leases and rents (where appropriate) 80% Owner-occupied Property 75% Investment Property Cash Flow Coverage – Preferred minimum of 1.25:1 Maximum Leverage Maintenance LTV Loss payee on P & C, Flood Insurance (if required), Title

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$ Free Money $ - Not-for-Profits -

Affinity Membership Program way.

– Open an account at TD and the bank will make an annual contribution to your organization based on the average balance in members’ accounts – Checking, Savings, Money Market, CD and IRA. Totally confidential – members’ accounts not affected in any

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TD Charitable Foundation in grants/contributions.

( www.tdbank.com

) - $119,000,000

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Non-Profit Training Resource Fund - $200,000 for community based organizations to have employees attend classes/courses to enhance job performance.

Housing for Everyone Grant Competition - $2,500,000 to be awarded to local non-profit organizations that make a meaningful difference in meeting affordable housing needs.

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In 2013, $200,000 donated to the Garden State Episcopal Community Development Corp – Housing and Neighborhood Development Services (HANDS)

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Questions or Additional Information Brad Thomson 201-236-2738 (office) 973-445-2913 (cell) [email protected]

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