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How to Make aWinning Loan Presentation

(Business Plan for Getting Funds)

Jerry Chautin, Volunteer SCORE CounselorJKChautin@aol.com

101010

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Curriculum VitaeJerry Chautin

P.O. Box 190070, Atlanta GA 31119-0070e-mail JKChautin@aol.com, Web: http://tenonline.org/sref/jc1bio.html

SCORE® Volunteer, (Retired) Entrepreneur, Mortgage & Business Lending, Real Estate

Retired in 1989 after 30 years in mortgage banking, business lending and real estate, Jerry became a SCOREvolunteer in 1993. Jerry is a duel member of the Atlanta and Manasota (Sarasota) chapters. He counsels clientson perfecting business plans to get funding for business and real estate. He also counsels online with theCyberChapter, teaches online business, real estate courses, manages a business development bulletin board forAOL and moderates the Manasota Counselor Forum listserv. Jerry developed and presents business plan andloan presentation seminars for the Atlanta SCORE chapter. Previously, Jerry founded Trust Realty Funding,Inc. (Trust) and also University Seminars, Inc. (USI). Trust was established in 1971 to provide loans forcommercial real estate and privately held businesses nationwide. USI was created to produce relatedconferences, seminars and courses in partnership with universities, and colleges.

While with Trust, Jerry was also a consultant for the Geneva Corporation, Strategic M/A and other investmentbankers. In that role, he advised owners of privately held small and middle market companies about evaluations,and selling their companies. For negotiating difficult transactions, Jerry received the "Deal of the Year" awardfrom National Association of Mortgage Brokers (NAMB). He was given the "Most Innovative ProgrammingAward" by Georgia Adult Education Association (GAEA) for a series of business, financing and real estateseminars he created for Georgia Tech's college of management. Additionally, he advised URFA (City ofAtlanta's finance agency) on the first Fannie Mae credit enhanced multifamily bond issue for $49 million.

Prior to Trust, Jerry was Senior Vice President and commercial mortgage lending officer for a mortgageaffiliate of 8 banking institutions. He held similar positions with affiliates of Continental Illinois Bank and FirstNational Bank of Pennsylvania.

In addition to SCORE, Jerry previously volunteered as a board member of the advisory council of the AtlantaMortgage Consortium (a nonprofit housing corporation sponsored by local banking institutions) which createdhousing solutions for lower income families. He also served on the board of Georgia Housing and FinanceAuthority's Advisory Committee for Tax Credit Allocation. GHFA is the state agency for issuance of taxexempt bonds and allocation of tax credits for financing residential and commercial real estate.

Jerry has been selected as keynote speaker, conference chairman and seminar leader at universities, colleges andtrade associations. Other presentations have been for Crittenden Publishing, Institute for International Research,Geneva Corporation, National Association of Homebuilders, Institute of Real Estate Management, InternationalCouncil of Shopping Centers, Building Owners and Managers Association, Multi-Housing World, variousbanking, financial and professional trade associations. He was a member of the National Speakers Association,Georgia Adult Education Association and many real estate and financial trade associations.

Jerry has been the author and subject of many articles in various publications on subjects pertaining to realestate, financing and business topics. He has been featured on audio tape, radio and TV and often quoted oncurrent business issues.

Jerry received his education at the University of Florida and Hunter College. Additionally, he attended theSchool of Mortgage Banking at Northwestern University and many related seminars and conferences.

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What We Will Learn

Creating an Effective PresentationHow to Use it

How to Get FundsWhere to Get Help

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3 Purposes of a Business Plan

Objective ViewOperating Tool

Financing Proposal

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Where to Get Funds

Personal SavingsRich Uncle

Seller FinancingHome EquityCredit Cards

Private LenderVenture CapitalVendor Loans

Bank (including SBA)Combination

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Sources & Uses of FundsSources of Funds

Cash from owner previously contributed $ 25,000Additional cash from owner 30,000Proposed loan from bank 100,000Total funds available

$155,000

Uses of funds

Working capital $ 15,000Purchase computer & office equipment 20,000Purchase building 120,000Total uses of funds

$155,000

Here are some things to keep in mind when preparing yourstartup budget:

Office equipment (Fax machine, computer, printers)Production equipment (if you will be manufacturing)Office or production furnitureOffice suppliesLegal and CPA feesInsuranceBusiness licenses or permitsLease depositsRemodeling costsUtility deposits (this can be quite large!)SalariesShippingAdvertising and promotionand the big one ... lots of working capital to carry you through breakeven

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Breakeven Point Analysis

1 2 3 4 5 6 7 8 9 10 11 12Months

Operating ExpensesSales

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Venture Capital

VC FirmsAngel InvestorsSBIC & MSBIC

Size MattersProven Cash FlowEstablished Board

Key OfficersIndustry Preferences

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Choosing the Best Lender

Your current BankNational Bank

Community BankNon-bank Lender

Meet OfficersEstablish Relationship

Test the WaterSubmit Proposal

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Table of Contents

Coverletter

A. PhotographsB. Memorandum (Exec. Summary)

C. Borrower

D. Collateral & AssetsE. Market Research & Marketing Plan

F. Underwriting

g. Recommendation

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Coverletter

Personalize1 or 2 Page OverviewState Loan StructureDescribe StrengthsSolve Weaknesses

Recommend Approval

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Sample Cover Letter

RE: $1OO.OOO MULTIFAMILY LOAN TO ABC DEVELOPMENT,OOO MAIN ST.

Dear Mr. Whiteside:

Thank you for the patience afforded me several visits to your office. Being acustomer your bank, I particularly appreciate the services of the real estatedepartment and am glad your vice president introduced us.

You may recall that seek $000,000 to refinance a small multifamily propertyon Main St. We’re requesting a 10-year loan with payments based upon a30-year schedule, payable monthly at an interest rate of 00%. The borrowerswill personally guaranty repayment of the loan.

I’ve owned the subject for 5 years and have 10 years experience owningmultifamily property. The subject was 40% vacant at the time we bought itand badly in need to rehab. Since then, we renovated it extensively,enhanced the tenant profile and significantly increased the rents. Thusly, thevalue has been substantially increased. This loan will allow us to recapturesome of our equity to continue to improve the subject and also allow us topurchase more properties.

It is noteworthy that the loan request is only 70% of our estimated valueusing the income approach. And debt service coverage will be 1.53 basedupon current rents. The neighborhood has several new developments thatwill continue the increase the value of the subject.

Based upon the experienced ownership, successful history of the subject andconservative underwriting, I highly recommend this proposal as a fineaddition to your small loan portfolio.

Sincerely,

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Photographs

5 X 7 on CoverSmiling Officers

Street SceneBuilding

EquipmentCaptioned Explanation

No Copies - Only Originals

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Our offices are located on a well-traveled street. Landlord has given us sign privileges that will help reduce our operating expenses.

Sample Photographs

Jane Smith fine-tuning our new computer. Jane majored in computer science at the University of Georgia

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Borrower

Business OverviewLegal Entity

Prior SuccessesSources & Uses of Funds

Company & Individual Balance Sheets(Before & After Funding)

Historical & Proforma Operating Statements“Prove” All Line Items with Narrative

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Collateral & Assets

Market ValueReal Estate

Furnishings Fixtures & Equipment (FF&E)Personal CollateralCash Instruments

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Market Research &Marketing Plan

Heart of your Business PlanRecast Chamber of Commerce

Trade AssociationsRMA CPA 10K

Franchise DisclosureDon’t Generalize

Product UniquenessOvercoming Competition

Marketing & Sales ProgramRelate to Revenues

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General Information

Proforma

Eliminate Fluff

Market Research

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Underwriting(Analysis Related to Lender’s Criteria)

Financial FeasibilityReturn (ROI ROE ROA)

(Excluding Owner’s Salary)Debt Service Coverage

Loan to Assets/Value/CostCash, Receivables/Liabilities

Many More

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Recommendation(Summery)

Recap StrengthsRestate Best RatiosWhy a Good Deal

“I Recommend ….”

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What We Have Learned

Business Plans For SuccessBusiness Plans for Loan Presentations

Where to Get FundsWhere to Get Help