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Government Guaranteed Lending

Overview of SBA and USDA programs

Presented by: Thomas LyonsVice President, Commercial Lending

Purpose of Presentation

Provide overview of SBA and USDA loan basics

Provide a better understanding of the benefits of SBA and USDA financing

Distinguish the difference between Ridgestone Bank and other SBA lenders

Who is Ridgestone Bank?

A 20-year-old bank headquartered in Brookfield, Wis. with a second location in Schaumburg, Ill. and loan production offices across the country

Our organization is designed to process SBA & USDA loans – it is our niche and focus.

“Preferred” SBA lender Nationwide footprint 900% growth in 8 years

• Sweet Spot - $500,000 - $5 million

• Can become creative with situations where there are multiple business units/entities

• Typical industries include: manufacturers, distributors, some service construction industries, food processing, medical, elderly care, health care, retail, C-stores.

Ridgestone Bank

What makes Ridgestone Different from other SBA lenders?

We pass on all of the SBA’s benefits to the customer; longest available repayment term, deferments, substitutions, etc.We do not require your full banking relationship be moved to Ridgestone Bank.

Ridgestone Bank

Benefits to Small Business Owners

Borrower receives a long term, flexible loan commitment. No balloons or renewals.

Eliminates need to refinance, puts control into borrower’s hands. Short term notes or leases Longer repayment periods = lower payments = greater cash flow Equity requirements for acquisitions (for businesses or other

assets) are lower than a conventional loan. Company has had losses or negative net worth Loans are not limited by value of collateral (SBA).

Common Business Challenges

Growth through Business AcquisitionBusiness wants to purchase assets but limited liquidity or capitalIndividual wants to buy an existing business but limited liquidity or capital

Common Business Challenges

Businesses that exhibit the following may benefit from SBA or USDA Financing

Tight cash flowNo line or limited line availabilityExtended A/R – slow collectionsGrowing AP balances/slow paymentsCovenant violations with bank

The Solution

The Proper Debt StructureSBA and USDA guaranteed loans

provide a repayment structure that help most all small businesses grow and prosper.

How? – Affordable Loan Payments

Matching assets to liabilities

No balloons/fully amortizing

Repayment based on useful life of assets

Machinery & Equipment – up to 15 years

Real estate – up to 30 years

Who is a Good Candidate?

Fast growing companies – need permanent working capital or have capex needs.

Mature businesses – that would benefit from a rebalance/restructure of balance sheet.

Business that may have been served with a forbearance agreement due to covenant violations but have “turned the corner.”

Who is a Good Candidate?

Person(s) or entity buying an existing business Partnership buyouts Businesses looking to buy a building in which

they will occupy at least 51% of the property but don’t want to put down 20-25%

Any business owner that wants security from industry or economic volatility.

Who is a Good Candidate?

Privately owned/for profit businesses• Could be one shareholder or 500• Corporations, LLCs, sole proprietors• Co-ops, ESOPs• Business real estate owned off balance sheet

Government Guaranteed

Loan made by bank; bank moneySometimes approval is bank’s alone (PLP) -

often times the Government Agency underwrites & approves.

Agency issues an “approval document” which lists closing requirements

Bank is responsible for closing loan in accordance with this approval document using mostly standard documents.

USDA or SBA?

SBA 7a loans are limited to $5 Million Cash flow driven More rules and closing documentation More flexible with collateral shortfalls

USDA B&I Loan limits are usually $10 Million Has Balance Sheet Requirements Sometimes less restrictive Collateral coverage minimum of 1:1 on a discounted basis Must be located in rural community as defined by the USDA

Nationwide SBA and USDA Lender Top 10 SBA lender in the country Recognized nationally by the USDA The #1 SBA lender in Illinois The #1 SBA lender in Wisconsin

Ridgestone Bank

Contact Info

Thomas Lyons608-770-6155tlyons@ridgestone.com

Learn more at: www.ridgestone.com

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