GrowFL and SunTrust Bank Present: How To Utilize The SBA Loan Programs To Improve Cash Flow And Grow Your Business

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1 GrowFL and SunTrust Bank Present: How To Utilize The SBA Loan Programs To Improve Cash Flow And Grow Your Business GrowFL Webinar Series Date: March 5, 2012 Presented by: Hetal Engineer, SunTrust VP All credit subject to SBA and SunTrust criteria SunTrust Banks, Inc. SunTrust is a federally registered service mark of SunTrust Banks, Inc. Live Solid. Bank Solid. is a service mark of SunTrust Banks, Inc.

2 SBA Background Low down payment (as low as 10%) keeps personal liquidity accessible for new business owner Typically no cash required for partner buyout with pledge of existing equity reflected on balance sheet Blended amortization period (up to 25 years on CRE & 10 years on business acquisition) preserves cash flow with lower monthly payments We will finance goodwill in accordance with SBA SOP guidelines Financing available for new & growing companies that need operating capital with 1-2 years of seasoned financials Expansion financing available to start/buy second/third location 2

3 SBA Qualifying Factors SBA Loan Qualification is based on the following: For-profit, non-publicly traded businesses Tangible business net worth (including affiliates) not to exceed $15 million Average net income of the business not to exceed $5 million over the last two years Personal liquid assets of each principal/guarantor not to exceed the total project costs of the proposed loan. Company ownership must be comprised of 51% U.S. citizens or resident aliens (legal permanent residents) 3

4 SBA 7a Loan Loan Amounts Up to $5.0MM Pricing Typically variable rates from P+1.75% to 2.75% (fixed rates can be available but typically exception pricing) Terms Up to 25 years for CRE transactions Down Payment As little as 10% on CRE deals and solid acquisitions. Can increase based on type or complexity of project Fully Amortized No balloon payments allowed in program 4

5 SBA 7a Loan (cont.) Use of Proceeds Very flexible and thus why 7(a) is so attractive. Can finance CRE, goodwill, working capital, equipment, acquisition, improvements all in one financing package. Gives client significant options for longer term financing Collateral Take available per SBA requirements. If not available, will consider transaction under-secured (based on strength of project) Prepayment Penalty limited to (5%-3%-1%) for deals over 15 years 5

6 SBA 504 Loan Loan Amounts Up to $5MM SBA second mortgage debenture Pricing Both fixed and variable rates available (CDC Rates fixed for 20 years) Terms Typically up to 20 years on both 1 st and 2 nd mortgage pieces Down Payment 10% standard (add 5% for special use properties and 5% for start-up properties) 6

7 SBA 504 Loan (cont.) Use of Proceeds Purchase, refinance, renovation, and construction of CRE Structure Bank funds up to 90% of project and Certified Development Company takes out up to 40% upon fully funding of project Collateral Focus on property being financed. Flexible Can use 504 for RE needs while providing a 7(a) for acquisition and working capital needs 7

8 SBA Express Line of Credit Loan Amounts - Up to $150K LOC Unsecured, Up to $250K Real Estate Secured Pricing - Typically variable rates up to Prime + 4.5% Terms - Normally 2 years than terming out for 5 Down Payment - Minimum of 10% Use of Proceeds - Flexible in use of proceeds Collateral - Typically assets being financed Product Focus - Working capital needs of business Shorter term asset purchases Acquisitions of small CRE projects 8

9 SBA Financing SBA 7a Loan SBA 7(a) SBA 7(a) financing available up to $5MM As low as 10% down payment to purchase an existing business The perfect product for partner buyouts & business acquisitions with goodwill components Blended term if use of proceeds is mixed Minimal 3 yr prepay penalty ONLY if term is longer than 15 years In addition to financing the business acquisition, loan proceeds can also include buying real estate, inventory, equipment. The loan can also include working capital and funding for tenant improvements Can be combined with a 504 if large part of project is real estate No financial covenants 9

10 SBA Financing Other SBA Products Long term fixed rate RE financing available through SBA 504 program. Up to 90% acquisition, construction, and renovation available Revolving working capital financing available through SBA Express Export financing available through Export Express and SBA Export Lines 10

11 SBA & SunTrust General Qualifying Criteria Business needs to demonstrate historical debt service to support business debts (or solid projections for start up companies) Guarantors need to have direct industry experience or strong transferrable Active owner involvement in business (not remote or as a hobby) If also purchasing real estate, the business needs to occupy 51% of space; 60% if construction project Guarantors must have acceptable credit (not a bad credit program) Guarantors need to show solid post closing liquidity Borrowers must be a US Citizen or legal permanent resident alien Borrowers and affiliates must be within size standards of SBA Transactions must finance an eligible SBA type of business and eligible project costs For profit businesses only 11

12 Basis of our decisions: Five C s of Credit Cash flow of the business being purchased Is there historical strength in the numbers Can the business service the new debt? Does the business have stable or improving revenue trends? Credentials Is the borrower s industry experience proven? Cash Position Is the company financially healthy as it relates to leverage, liquidity & net worth? Affiliate businesses are also looked at under the same criteria. Collateral Is it available? Is there a shortfall? Do we need it to strengthen the request? Character How has the borrower handled their personal credit? 12

13 Why Consider SunTrust? SunTrust is committed to providing strong & competitive financing solutions SunTrust s dedicated team of SBA product specialists will help make the process easy and efficient Financing solutions are delivered in a responsive manner with customer satisfaction being a top priority SunTrust is ranked one of the top SBA lenders in Florida based on number of closed loans Call us today! We d like to earn your business. 13