Making the Play: Sunbelt Brokers and Transamerica Small Business Capital

Transcription

1 Making the Play: Sunbelt Brokers and Transamerica Small Business Capital

2 Today s Agenda 1. The Lending Obstacle Course and the Transamerica Special Team Obstacles Brokers face when finding financing How we can help 2. The Pre-Qual Hand-off Pre-qualifying your deal on the Internet 3. In the Red Zone: Getting a deal done Types of deals Credit policy

3 1. The Lending Obstacle Course Collateral-based lending Business brokers are competing for loan $$ at banks Distrust of start-ups High cash infusion/down payment

4 The Transamerica Team Can Help Flexible loan structure specifically targeted towards business acquisition Cash flow lender Nationwide coverage PLP in most major markets..esp. Near sunbelt office locations Financing pre-qualification makes it easier for you to close more deals Fast approvals and funding

5 Why Get a Pre-qualification? Time kills all deals.(and listing contracts!) It s your road map to structuring the deal for sale It qualifies your lender It qualifies potential buyers quickly

6 2. The Pre-Qual Hand-off! Harnessing the Power of the Internet to Help You Pre-qualify and Close More Deals.

7 1. Create a New Listing

8 2. Select Prequalify for a loan. Be sure to select prequalify to let Transamerica review the listing.

9 3. Enter Prequalify Financial Info if available. If not, fax statements to Transamerica Regional Account Manager.

10 Go have a Coke. Talk to Regional Account Manager. 4. Check prequalify status.

11 Find your listing.

12 5. Look at Transamerica s Response Click here to see the response from Transamerica.

13 Read the response and, if you d like, contact your Regional Account Manager.

14 Get more from Transamerica Small Business Capital!

15 3. In the Red Zone: Getting the Deal Done How Transamerica Goes for the Goal.

16 Approval Criteria Eligibility for SBA program Ability to repay loan Equity Expertise of management Collateral Credit worthiness Other

17 SBA Eligibility Size standard Type of business Use of proceeds Other

18 Ability To Repay Cash flow/debt service coverage Reasonableness of projections

19 Equity Purchase of existing business Does not include borrowed funds!

20 Management Experience Education Motivation to stay in business Credit background Owner-operated

21 Collateral Business assets Land and buildings Ff&e Accounts receivable, inventory Leasehold improvements Goodwill Personal guarantees

22 Credit Worthiness Of Buyer Review credit report/confirmation. Spreads. Personal financial statement. 1040s, 1120s, etc. Lifestyle. Consumer (personal) debt levels. Outside sources of repayment. Diversification of investments.

23 Other Life insurance Environmental issues Appraisals, on business, equipment, or real property

24 Project Budget use Of Funds Contractual purchase price. Working capital. Renovation costs, if applicable. Purchase of FF&E, if applicable. Closing costs. Broker commission or fee? Not part of lender budget...

25 Project Budget sources Of Funds Loan funds Seller note (equity or not?) Gift Equity (cash in bank) Equity in outside assets

26 Project Assumptions Cash flow Break-even

27 Credit Box Loan-to-value Loan size Minimum non-borrowed equity Experience requirement Historical cash flow requirement Maximum goodwill allowed

28 7(a) Loans Typical terms Typical rate Other

29 Example Of 7(a) Loan Project: sale of a business no real estate all goodwill Assumptions: $450,000 total project cost (100%) $382,500 loan amount (85%) $67,500 cash equity (15%) Features/requirements: 10 year loan term, fully amortizing Competitive interest rates Positive cash flow/trends Experience: 1 year direct; 3 years managing

30 Loan Closing Process Documents to receive commitment letter. Construction process. Documents to close. What slows us down...

31 Remember, team: Select pre-qualify on all your listings Choose Transamerica as your primary source for effective financing Count on us to make the play! Thank You!