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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