Transcript Slide 1

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?

Welcome to the last few years

2010 - 2013 was an economic mess & 2014 ?

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

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

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

33% Applied for Credit (62% were successful)

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

21% Have Sufficient Financing – Did Not Apply

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

This is who we serve -

ManufacturersDistributorsImport/ExportWholesale/Retail/Gas StationsTransportation – Trucking, Bus Service, Auto DealersService Companies (Law & Accounting Firms)Doctors/Dentists/Offices/ClinicsNot-for-Profits (Churches, Schools, Organizations)

Work with all types of businesses

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Types of Loans

This is what we offer -

Construction LoansPermanent MortgagesLines of CreditCapital/Equipment Financing Loans/LeasesTax Exempt LoansTax Exempt Bonds (NJEDA)

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Your Bank

What to look for -

Approach the decision as a long-term investment

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

Hours/Locations/Convenience/Funds Availability

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

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

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

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

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 –

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

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

ll Need From The Owners, Due Diligence and Timing -

For Each Guarantor -

Completed Personal Financial Statement

At Least One Year Personal Tax Return Due Diligence –

Site Visit to the Company

Analyze Financial Information (Company & Guarantors)

Business/Credit Reports (Company & Guarantors)

Lien, Suit & Judgment Searches (Company & Guarantors)

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

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

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.

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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