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Small Business Startup & Survival
The Credit Process
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Agenda
• Who am I• The five “Cs” of credit• Apply for a loan; Important Factors• Types of Loans• Loan Costs• The SBA’s role• After Loan Closing• Helpful Links
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Who am I
• SVP and Manager of Commercial Banking for Genesee Regional Bank
• 16 years of banking experience, most on the commercial lending side
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The Five “Cs” of Credit
• Capacity – to repay the loan; Most critical
• Capital – your investment; “skin in the game”
• Collateral – security for loan
• Conditions – purpose of loan
• Character – background; experience; trustworthy
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The Credit Process – Loan Application
• Information Needed: Loan application; business plan; financial information
• Timeline: Varies – weeks to months
• Advisors of the applicant: who your team is can influence the outcome
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The Credit Process – Types of Loans
• Line of Credit – Short term working capital use
• Term Loan – Equipment; Leasehold Improvements; Permanent working capital
• Mortgage – Long term fixed asset acquisition (i.e., building)
• Lease - Equipment
• Letters of Credit – International use
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The Credit Process – Loan Costs
• Direct Costs– Interest rate: fixed or variable– Origination fees; processing fees– Loan guaranty fees (i.e., SBA fee)– Appraisal and environmental fees– Attorney and other closing costs
• Indirect Costs– Periodic financial reporting– Covenants
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Credit Process – The Role of the SBA
• Provide the Bank additional comfort to mitigate some weakness of the credit request such as insufficient collateral, new business or no historical cash flow, etc.
• The SBA guaranty does not mean the Bank has zero risk in the transaction.
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The Credit Process – Post Loan Closing
• Communicate, communicate, communicate!!!!!!!
• Be open to your banker with good and bad news. If your banker does not know about an issue, he or she can not assist you!
• Use your banker as a business tool – Networking, advice, leads for your business
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Helpful Links
• www.geneseeregionalbank.com• www.sba.gov• www.growmonroe.com• www.cityofrochester.gov• www.nybdc.com• www.newyorkfed.org/education/addpub/cr
edit.html• Other bank websites