Getting a loan to Start your Business What do you need? What does a lender look for?

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1 Getting a loan to Start your Business What do you need? What does a lender look for?

2 Small Business Lending and Support Program Ø Community Capital New York is the leading not-for-profit small business lender in the Hudson Valley. Ø Our lending process is timely, personalized and intended to help those small businesses that need financing to launch or grow their business but cannot meet the credit and/or collateral requirements of Banks. Ø Our rates are low, we accept a broad range of credit scores (600 +) and alternative forms of collateral. Ø Our lending decisions are made locally by our loan committee comprised of lenders and entrepreneurs. 2

3 Ø CCNY lends $1,000-$50,000 to start-ups and existing businesses that banks are unable to consider Ø Loans may be used for equipment, inventory, marketing, working capital, permits, licenses, energy savings upgrades and business acquisition Ø CCNY provides term loans with a maximum repayment period of 6 years Ø CCNY borrows money to loan to YOU so we have to get paid back or we can t help others 3

4 Business Sectors Funded

5 General Requirements Ø Applicants need a Business Plan Ø Must be the principal and effective owner of the business Ø Must be 21 years of age Ø Own a business in Westchester, Rockland, Orange, Dutchess, Putnam, or Ulster counties Ø Meet CCNY s minimum credit criteria 5

6 What Do We Look For? Ø Creditworthiness Ø Business Viability Ø Financial Capacity 6

7 Credit History Minimum Requirements: Ø FICO 600 or higher Ø All payments in the past six months must have been made on time, every month Ø No more than $1,000 in collections, charge offs, tax liens or judgments Ø No personal bankruptcy in the last 36 months 7

8 Creditworthiness Ø Obtain one free credit report from each of the 3 credit agencies once every twelve months at: Ø Buy your FICO score at: Ø Watch out for the VANTAGE score Ø 3 credit agencies: Equifax, Experian, TransUnion 8

9 Loan Application Ø We provide a list of required documents. The list includes: Ø Business Plan Ø Detailed Loan Budget Ø Cashflow Projections Ø Two years business tax returns (where applicable) Ø Interim financial statements (where applicable) Ø Two years personal tax returns for all principals who have 20% or more ownership share and any co-signers. Ø Bank statements: business and personal Ø Recent proof of income Ø Small application fee and 2% origination fee 9

10 Loan Application timing Ø Loan requests are on a monthly time table: Ø Loan application packages are received in the beginning of the month Ø Staff underwrites the loan request and does a site visit with the applicants Ø If basic criteria are met, applicants meet with the loan committee who makes the final decision on the loan request at the end of the month Ø Closing can take place about 5 10 business days after approval 10

11 Business Viability Ø Strong business plan: Ø Does your plan demonstrate an opportunity to succeed? Ø Does it show that you have carefully researched your market, the competition, costs and prices? Ø Do your projections make sense given the type of business and location? Ø Location, Location, Location: Does the location fit with the type of business and the business target market? Ø Niche Market: Are you in a niche market? 11

12 Business Viability and the Business Owner Ø Industry experience and product knowledge: The number of years of experience you have in the sector increases your likelihood of success Ø Drive to succeed: Are you ambitious, enthusiastic, do you work hard, do you have a vision of where you want your business to go, will you leave no stone unturned to solve problems and create success? Ø Adaptability: Do you demonstrate the ability to learn from, understand and deal with new situations in your business and business environment? Ø Financial and general management skills: Do you have the general and financial management skills to run a business? 12

13 Financial Capacity Will you be able to repay the loan? CCNY looks at Global Cash Flow: Ø What is your total household income and expenditure? Ø What do you spend each month on your existing personal debt? Ø What is your existing or projected business income and expenditure? Ø What is your existing business debt? Ø Will your household income and business income combined cover existing household expenditure and existing personal debt plus business expenditure and business debt? 13

14 Collateral Value of Collateral not equal to loan size. Ø Microloans are typically under-collateralized Typical types of Collateral: Ø Business Equipment or general UCC financing statement on the business and its assets; will consider being in second position Ø Fully owned personal and/or business vehicles Ø Cash collateral held in a CD Ø Co-signers to strengthen a loan request if financial capacity is insufficient 14

15 Technical Assistance we are with you through the life of your loan! CCNY annually provides about 2500 hours of assistance, training, mentoring and coaching to small businesses Provide guidance to all inquiries Referrals to support organizations QuickBooks Simple Start Webinars on a variety of business subjects Access to Capital and Entrepreneurship presentations Seminars/Workshops Business coaching and mentoring to loan clients 15

16 Success Stories $25,000 to startup a Hair salon $50,000 to grow a milk delivery company $30,000 to start a daycare $50,000 to a young taxi business 16

17 Community Capital New York 7 W Cross Street Hawthorne, NY Phone: Fax: Simone Obermaier: sobermaier@ccrhv.org x10 Holly Perlowitz: hperlowitz@ccrhv.org x14 17