SunTrust Your SBA Lending Partner Presented by: Simeon Harris Date: November 13, 2012 All credit subject to SBA and SunTrust criteria. 2009 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.
Our Proposed Presentation Agenda How SunTrust and the SBA Help Small Businesses in 2012 and Beyond Personal Introduction SunTrust Bank Overview Business Challenges SBA Overview SBA Advantages What Do We Look For Pros and Cons of SBA Pros and Cons of Conventional Why SunTrust Question & Answer Session/Your Feedback 2011, 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.
Simeon C. Harris Assistant Vice President, Relationship Manager, Business Banking Division Introduction Simeon Harris is a Relationship Manager for the Business Banking Division of SunTrust Bank. Originally from Richmond, Virginia Simeon moved to Maryland in 2010. He specializes in working with companies around cash management, banking efficiency and proactive service efforts. He is known by his colleagues as an aggressive advocate for his clients and proactive service provider. Background and Experience SunTrust Bank 10801 Indian Head Hwy Fort Washington, MD 20744 301-203-4512 (Office) 202-264-0823 (Cell) Simeon.harris@suntrust.com Simeon has been in banking for 8 years. During this time he has held management and sales positions. His determination and focus on customer service has enabled Simeon to become a trusted advisor to For Profit and Not For Profit organizations. Education Simeon Harris graduated from Old Dominion University with a Bachelors of Science degree in Marketing. 2011, 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. 4
Market Coverage and Convenience Complementing the SunTrust regional focus are specialty offices serving clients around the country. Key Shaded blue: Icons: SunTrust Banks, Inc. primary geographic footprint SunTrust Robinson Humphrey Offices SunTrust Leasing Offices SunTrust Mortgage Offices (490 offices around SunTrust footprint) Data as of 9.22.09 SunTrust Business Banking 2011, 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.
SunTrust Overview Our corporate mission is to help people and institutions prosper Bank assets totaling over $174..6 billion as of 12/31/11 Senior debt ratings for SunTrust Bank are A3 (Moody s) / BBB+ (Standard & Poor s) 1 Ranked eighth among all U.S. commercial banks by total deposits 2 Headquartered in Atlanta with over 1,600 branches and 2,900+ ATMs across 11 states in the Mid-Atlantic and Southeast Regions SunTrust backs its relationships with nearly two centuries of commitment, leadership and trust SunTrust is a top performing, fullservice financial institution with strong capital and excellent liquidity. Capital Ratios SunTrust Banks, Inc. 4Q 2010 Estimated 3Q 2010 Actual 2Q 2010 Actual Tier 1 Common Ratio 8.08% 8.02% 7.92% Tier 1 Capital Ratio 13.65% 13.58% 13.51% Total Capital Ratio 16.50% 16.42% 16.96% 1 Senior debt ratings as of 1/21/11. For further rating information please refer to our website, suntrust.com. 2 Source: SNL Financial, data as of 12/31/10 SunTrust Business Banking 2011, 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.
Our Service Commitment We are committed to delivering exceptional service through a dedicated commercial team, supported by local executive management. We take personal ownership for any service issues. We listen and ask relevant questions to better understand your needs and financial goals. We share economic and relevant industry insights with you to help your business. We leverage a team of local product specialists and our online capabilities through www.bizsolutionscentral.com to bring a full range of financial solutions. We provide responsive service by returning all calls by close of business. We provide you with a variety of service options including the ability to always speak to a person. We stay in regular contact throughout the year based on your expectations for frequency of interaction. We check in with you periodically to ensure that you are satisfied with your accounts and that we are meeting your service expectations. 2011, 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.
Key Business Challenges We have developed and implemented extensive and ongoing research to understand the most pressing business issues and challenges for businesses like yours. This allows us to take a holistic approach to understanding your unique challenges and providing the appropriate solutions to help achieve your goals. Research shows challenges occur in these top five areas*: Leveraging Time Owners we surveyed tell us that one of their top challenges is actually finding the free time to work on improving the business instead of working for the business. Stretching Cash Flow Many owners tell us that their businesses will only go as far as their cash flow allows, mostly because they are self financing the business and planning to fund growth from existing cash flow Maximizing Profit An increasing priority business owners in our survey noted is the desire to find ways to save money and reduce the expense of doing business in an effort to maximize cash flow and profits. Protecting the Business The business owners in our survey say they often lack the resources, staff expertise and time to effectively protect against crime, fraud, and disasters. Managing Growth Most business owners told us they want to better control their growth by making smarter investments and creating sustainable, cost-effective, and profitable growth plans. *SunTrust Best Practices Research Survey of Business Owners (updated quarterly) 2011, 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.
Tackling Issues and Challenges We explore issues and challenges through an open dialogue so we can develop the right solutions to meet your specific needs. Questions to consider for your business: Leveraging Time How much easier would it be if you were able to track your transactions online and transfer your financial information into your accounting software or to your accountant automatically? How many hours are you spending mailing invoices, collecting bills and depositing checks and cash? Stretching Cash Flow Do you know how far your current cash flow will take you? How do you currently handle your collections and payment process to gain operating efficiencies? What forms of payment do you accept? Maximizing Profit How are you currently monitoring your budget to track your spending? What systems do you currently have in place to control expenses? What are your key obstacles to profitability? Protecting the Business Managing Growth Do you have a contingency plan in place in case of an unexpected event, such as death of a partner, a natural disaster. etc.? Have you experienced fraud in your business? What type? What are your strategies for protecting both business and personal wealth? Do you have a growth plan in place? Do you have access to the financial resources short term and long term to fund that growth? Do you have the right systems in place to monitor the plan going forward, and swiftly make adjustments? What are your market expansion plans either domestic or international? 2011, 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.
Your Commercial Relationship Team Your local Relationship Manager and integrated team will work to deliver continuity and service excellence. Our commitment to you is to: Take personal ownership for any service issues Listen to better understand your goals and bring you ideas to help your business Leverage a team of local product specialists and our online capabilities through www.bizsolutionscentral.com to bring a full range of financial solutions Provide you with service options including the ability to always speak to a person Relationship Manager Simeon Harris Branch Manager Acts as your single point of contact Works as your advocate Coordinates product specialists Champions service delivery Works in tandem with the Relationship Manager Provides day-to-day local support for your banking needs Local decision making right here in Greater Washington Maryland Area Premier business bank in Greater Washington Maryland Area o Client relationships with many landmark Greater Washington Maryland Area companies o Dedicated local presence provides knowledge of the regional business market o Experienced Greater Washington Maryland County based business banking team Business Care 866.476.1460 Services accounts day-to-day Executes routine transactions Offers expanded service hours Team Manager Ensures access to senior management Works as your next tier advocate Supports the Relationship Manager 2011, 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.
A Full Suite of Capabilities Our broad capabilities serve your business through every phase of its growth. Term Loans and Lines of Credit Real Estate Financing Asset Based Lending Equipment Leasing Insurance Premium Financing Franchise and Vendor Programs Financing Solutions Treasury & Payment Solutions Payables and Receivables Online Information and Control Services Liquidity/Cash Position Management Commercial Card Programs Merchant Services Syndicated Finance Interest Rate Risk Management Real Estate Leasing Tax-Exempt Finance Private Placement of Debt Public Debt Issuance Asset Securitization Public Equity Issuance Private Placements of Equity IPOs Follow-on offerings Convertible securities Share Repurchase Programs Debt Capital Raising* Equity Capital Raising* Solutions for your business Global Trade Services Investments and Employee Benefits Currency Risk Management Trade Finance Overseas Investment Trade Services Investment Advisory and Management Fixed Income Investments Retirement Plans Health Savings Accounts Employee Banking Mergers and Acquisitions Buy- and Sell-Side Advisory Business Valuations Fairness Opinions Business Transition Advisory Services* Personal Financial Services Wealth and Investment Management Financial Planning Investment Services** Insurance** Concentrated Equity Strategies Executive Banking *Offered by SunTrust Robinson Humphrey, Inc. ** Offered by SunTrust Investment Services, Inc. SunTrust Business Banking 2011, 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.
SBA Background Why SBA Lending is Attractive to Clients 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 Loan decisions are not collateral dependent if none is available 11
SBA Financing Available through SunTrust SBA 7(a) SBA 7(a) financing available up to $2MM 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 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 12
SBA Commercial Real Estate Financing SBA 7(a) Advantages: As low as 10% down payment One lender, one loan decision, one payment As long as 25 year amortization Minimal 3 year prepay penalty Use of proceeds can include purchase, construction, leaseholds, refinancing, and non RE uses such as working capital, equipment, & business purchase No financial covenants 504 Loan Advantages: As low as 10% down payment As long as 20 year amortization Fixed rate options Low combined bank & CDC rate will be benefit borrower Can accommodate larger CRE projects ($5MM & larger if a manufacturer) Use of proceeds can include purchase, renovation & construction 13
Basis of our decisions: Five C s of Credit Cash flow of the business, or 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 business, or business being purchased, 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? 14
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 skills 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 15
Start Up - Requirements Typically for businesses less than 3 years old, the following minimum requirements should be met: The principals are expected to have contributed a minimum of 25% of the total start-up cost as a cash and/or equity injection. 75% tangible collateral coverage is required to secure the loan request. Minimum personal credit score of 700 or greater 5 years of direct transferable experience Outside sources of income are preferable Business plan with projections for the first 2 years Post-closing liquidity (10% or 6 months of loan payments, whichever is greater) The SBA s SOP guidelines require that documented proof of the owner s equity injection be provided as part of the underwriting requirements. If such documentation is required, it must be included in the borrower s credit file at the Bank. Additionally, for certain loan requests, the principals may be required to provide a business plan including monthly cash flow projections for the following year after the loan is made and annual projections for three years. 16
Pros And Cons - SBA Pros - SBA Cons - SBA Lower down payment/equity injection Higher Rate Longer amortizations available/lower monthly payments Fixed rates difficult to get Lower credit scores accepted Increased Documentation Ability to finance soft costs Longer time frame to approve and document Higher LTV requirements on collateral Limitation of Post Closing Liquidity Ability to approve start-ups Not available for all industries specifically Not for Profits Lower rate on 504 for loans Difficult to provide refinancing for existing SunTrust Debt and Credit Cards Lower cash flow coverage ratios High scrutiny of borrower s background Working capital loans are limited to $250,000 Limited dollar amounts on loans approved Some Prepayment Penalties Higher Closing Costs Real Estate must be owner occupied
Pros And Cons - Conventional Pros Conventional Financing Cons Conventional Financing Lower rate/ fixed rates available Higher down payments and equity injections Higher Working Capital Lines of Credit Lower amortization schedules Faster turnaround Higher Credit Scores Required Lower closing costs Lower LTV Requirements No maximum loans No start-ups or business younger than 2 full years Broader Range of Industries are accepted Higher Cash Flow Coverage Ratios Less Paperwork May not be able to finance soft costs Closes more quickly Easier to refinance SunTrust Debt and Credit Card debt Less scrutiny of borrower s background No Prepayment Penalties
SunTrust: Favorite & Tough Deals Favorite Deals: Partner buy out Medical/Dental/Vet practices Professional businesses (CPA, lawyer, architect) Manufacturing/Distributing businesses Service related businesses Buyers with direct experience in business Tough Deals: Restaurant industry (especially start ups) Ground leases Environmentally distressed properties Recreational properties (e.g. golf courses) Deals we won t do: Assisted living facilities Dealerships all types Hotel/motels Residential contractors/home builders Real Estate Developers 19
Why Consider SunTrust? SunTrust is committed to providing strong & competitive financing solutions for your client 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 client satisfaction being a top priority SunTrust will be an extension of your service; we will work side by side with you as a trusted advisor Call us today! We d like to earn your business. 20
SBA & Franchises Many business owners are choosing franchises due to being able to leverage an established business model and marketing support. The SBA and lenders see many franchises as excellent opportunities to introduce SBA lending solutions. What are some resources you can use to uncover opportunities? Coleman SBA lending data http://colemanpublishing.com/ 25 great franchises http://www.fransurvey.com/certified.asp Entrepreneur Franchise 500, based on volume http://www.entrepreneur.com/franchises/rankings/franchise500-115608/2012,-3.html Franchise Times Top 200 http://www.franchisetimes.com/content/story.php?article=02285 IFA 2012 Growth Survey (for sectors) http://emarket.franchise.org/2012franchisebusinessoutlookfinal.pdf