Download - Bfs ppt-2013-outlook-for-borrowing
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2013 Outlook for Small Business Loans
Sam Thacker512.990.8756
Copyright 2013 BFS-USA Group LLC
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HISTORICAL PERSPECTIVE
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Circa 2005-2008• Largest span of
available business credit since WWII
• Most banks loaning to businesses in all phases of their life cycle
• Commercial credit bubble about to pop
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Bank Failures 2008 - 2012
**Many federally insured credit unions failed also
2008 2009 2010 2011 2012
25
140157
92
51
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OPTIONS FOR 2013
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Conventional Bank Loans
• Unavailable for start-ups- Must have two or three years of profitability
• Banks are looking for hard collateral
• Stellar personal guarantors
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SBA Loans• Few banks are very excited
about making SBA loans
• Good when real estate is part of loan package
• Need to find an SBA loan expert to help you
***Franchise financing may be available for start-ups
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Credit Unions• Might work with start-ups
• Average size of loan is very small
• Randolph Brooks FCU making SBA loans
• May be a good place for equipment finance
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Equipment Leasing Companies• Private commercial lenders
• Still want 2 years in business
• Will finance small ticket equipment and software pretty easily
• Austin has several “B” through “D” credit leasing companies
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SBICs• Small Business Investment
Companies (SBIC)
• President Obama just signed bill providing for $8 billion in new guarantees to SBICs
• Good for start-ups, growth capital, M&A
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SBIC (continued)• Three different
investment/lending models
• Pure equity
• Subordinated debt
• Mixed model
• Government regulated
• Friendly “venture capital”
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SBIC (continued)• Very involved application
and approval process
• They bring expertise to your company
• Subordinated debt model has warrant provisions
• Vertical niche and geographic coverage
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Community Lenders
• Will take risks on start-ups
• Typical size $50,000 to $300,000
• Most participate in a U.S. Treasury program
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Small Asset-Based Lenders• Will finance service
companies
• Some will finance start-ups
• Inventory, accounts receivable and equipmentocean freight
• 80% A/R50% Inventory50% Equipment
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Factoring Accounts Receivable
• Start-ups okay
• Price has become very competitive
• Service companies ideal
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Factoring (continued)
• Good for seasonal and cyclical businesses
• Good for high growth, high profit
• Uneven profit history okay
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Improving Chances Lowering Costs
• Quality financial statements
• Keep excellent records
• Don’t use one size fits all loan if it doesn’t fit
• Understand your risks
• Trusted advisors
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Private Subordinated Debt
• Use for growth capital and expansions
• Start-ups may work if substantial domain expertise
• Look in U.S. and outside the country for sub-debt funds
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CONCULSION
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Funds are Available but…
• You may have to kiss a lot of frogs!
• Creativity is necessary to find the solution that fits your company best
• Formulate a strategy before you start knocking on doors
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2003 - 2008• Insanely easy credit
• Unsecured LOC up to $250,000
• Businesses boot strapped on credit card debt
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Other Important Events
• Textron Financial stopped making new asset based loans – December 2008
• CIT Commercial Credit bankruptcy – November 2009