Show Me the MoneyShow Me the MoneyTraditional FinancingTraditional Financing

March 4-5, 2003March 4-5, 2003

Presented by:Presented by:Mercedes McCall, Region ExecutiveMercedes McCall, Region Executive

S. Craig Suazo, Senior Vice PresidentS. Craig Suazo, Senior Vice PresidentBanco Popular North AmericaBanco Popular North America

Orlando, FloridaOrlando, Florida

BANCO POPULAR COMMITMENTBANCO POPULAR COMMITMENTHISTORYHISTORYSince its inception, over 100 years ago, Banco Popular has been Since its inception, over 100 years ago, Banco Popular has been

committed to serving small business owners and promoting committed to serving small business owners and promoting the economic development of the communities it serves.the economic development of the communities it serves.

Banco Popular, in partnership with SBA, launched its Small Banco Popular, in partnership with SBA, launched its Small Business initiative in 1994 in the U. S. mainland. Our U. S. Business initiative in 1994 in the U. S. mainland. Our U. S. strategy followed in the footsteps of Puerto Rico’s SBA strategy followed in the footsteps of Puerto Rico’s SBA initiative with roots from the beginning of Small Business initiative with roots from the beginning of Small Business Administration.Administration.

Premier Community BankPremier Community Bank in the markets we serve, while in the markets we serve, while leveraging our Hispanic heritage.leveraging our Hispanic heritage.

Presently located in 6 states, representing 80%+ Hispanics.Presently located in 6 states, representing 80%+ Hispanics. Top 10 small business lenders in the country and one of the Top 10 small business lenders in the country and one of the

top Minority lenders. top Minority lenders. Banco Popular is PLP in each domiciled state and Banco Popular is PLP in each domiciled state and

participates in SBA lending in most other states.participates in SBA lending in most other states.

A Question…A Question…How do most businesses obtain capital?How do most businesses obtain capital? Personal savings or debtPersonal savings or debt Gifts from relativesGifts from relatives Sale of personal assetsSale of personal assets InvestorsInvestors Financing Financing

– (Traditional and SBA)(Traditional and SBA)

What is Financing?What is Financing?

Bringing in Bringing in an outside infusion of cash an outside infusion of cash

for the benefit of your business, for the benefit of your business, but at a cost. but at a cost.

Let’s Talk About Let’s Talk About Traditional Financing Traditional Financing

Real Estate FinancingReal Estate Financing Line of Credit FinancingLine of Credit Financing Equipment FinancingEquipment Financing LeasingLeasing Business Credit CardsBusiness Credit Cards

What do I need?What do I need? 3 Years Business Financials and Returns3 Years Business Financials and Returns 3 Years Personal Returns3 Years Personal Returns Current Personal Financial of OwnersCurrent Personal Financial of Owners Business Plan, if a Start-upBusiness Plan, if a Start-up Projections, if historical financials Projections, if historical financials

cannot support repayment of debtcannot support repayment of debt Other documents to support type of Other documents to support type of

requestrequest

Now, Let’s Talk About Now, Let’s Talk About Those Four Wonderful Those Four Wonderful

Things...Things...

CollateralCollateral

Interest RatesInterest Rates

TermsTerms

GuaranteesGuarantees

CollateralCollateralReal Estate:Real Estate:

Generally 75% of the value or purchase price , Generally 75% of the value or purchase price , whichever is less. Can be used for construction (need whichever is less. Can be used for construction (need contract), purchase (need buy/sell) or refinance (need contract), purchase (need buy/sell) or refinance (need copy of notes).copy of notes).

Bank-approved appraisal required.Bank-approved appraisal required.

Line of Credit:Line of Credit: Inventory:25% – 50% depending on marketability and Inventory:25% – 50% depending on marketability and

liquidation parameters.liquidation parameters. Accounts receivable:50% – 80%, depending on quality, Accounts receivable:50% – 80%, depending on quality,

aging and collect ability.aging and collect ability. Aging required.Aging required.

Collateral (cont.)Collateral (cont.)Equipment:Equipment:

50% - 80% of value or purchase price 50% - 80% of value or purchase price (new), whichever is less. (new), whichever is less.

25% - 50% of value or purchase price 25% - 50% of value or purchase price (used), whichever is less.(used), whichever is less.

May require a third party appraisal under May require a third party appraisal under certain circumstances.certain circumstances.

Collateral (cont.)Collateral (cont.)Leasing:Leasing:

80% - 100% of purchase price (new), 80% - 100% of purchase price (new), depending on lease factor and type of depending on lease factor and type of lease.lease.

Business Credit Card:Business Credit Card: Unsecured or UCC secured. Unsecured or UCC secured.

Interest ratesInterest rates Real Estate:Real Estate:

– Variable to Prime or LIBORVariable to Prime or LIBOR– Adjustable every 3-10 yearsAdjustable every 3-10 years– Fixed for 5 yearsFixed for 5 years

Line of Credit:Line of Credit:– Variable to PrimeVariable to Prime

Equipment:Equipment:– Variable to PrimeVariable to Prime– Fixed for 5 yearsFixed for 5 years

Interest rates (cont.)Interest rates (cont.) Leasing:Leasing:

– Lease FactorLease Factor– Calculated on type of lease and term Calculated on type of lease and term

of leaseof lease– Calculated on Residual ValuesCalculated on Residual Values

Business Credit Card:Business Credit Card:– Adjustable to PrimeAdjustable to Prime– FixedFixed

TermsTerms Real Estate:Real Estate:

– Principal plus Interest (faster Principal plus Interest (faster amortization)amortization)

– Principal and Interest (straight Principal and Interest (straight amortization)amortization)

Line of CreditLine of Credit– Interest Only, with principal due at Interest Only, with principal due at

maturity OR on demandmaturity OR on demand

Terms (cont.)Terms (cont.) Equipment:Equipment:

– Principal and Interest (straight amortization)Principal and Interest (straight amortization)

LeasingLeasing– Principal and Interest (straight amortization)Principal and Interest (straight amortization)

Business Credit CardBusiness Credit Card– Principal due each monthPrincipal due each month– Annual FeeAnnual Fee

Are You Going to Ask For My Are You Going to Ask For My Personal Guarantee? Rental Personal Guarantee? Rental

House? First Born?House? First Born? Yes, Maybe, No.Yes, Maybe, No. Remember, the bank has its Remember, the bank has its

investment (the loan) at risk.investment (the loan) at risk. The following is required:The following is required:

– Personal guarantees for all 20%+ Owners Personal guarantees for all 20%+ Owners – Key man life insuranceKey man life insurance– Unsecured or secured guaranteeUnsecured or secured guarantee

How Long Does it Take?How Long Does it Take?

Real Estate: 6-8 WeeksReal Estate: 6-8 WeeksLine of Credit: 2-3 WeeksLine of Credit: 2-3 Weeks

Equipment: 2-3 WeeksEquipment: 2-3 WeeksLeasing: 1-2 WeeksLeasing: 1-2 Weeks

Credit Cards: 1-2 WeeksCredit Cards: 1-2 Weeks

What Else?What Else? AppraisalsAppraisals TitleTitle Insurances (Hazard, Life, Flood)Insurances (Hazard, Life, Flood) SurveySurvey InvoicesInvoices Environmental AuditEnvironmental Audit LicensesLicenses

BANCO POPULARBANCO POPULAR FLORIDA BRANCHESFLORIDA BRANCHES

Central FloridaCentral Florida SanfordSanford

251 West 1st Street 251 West 1st Street DeltonaDeltona

1200 Deltona Boulevard1200 Deltona Boulevard Altamonte SpringsAltamonte Springs

450 East Altamonte Drive450 East Altamonte Drive Semoran BoulevardSemoran Boulevard

430 North Semoran Blvd.430 North Semoran Blvd. Orange AvenueOrange Avenue

1118 South Orange 1118 South Orange AvenueAvenue

Whisper LakesWhisper Lakes11681 South Orange 11681 South Orange Blossom TrailBlossom Trail

Oak RidgeOak Ridge2300 Oak Ridge Road2300 Oak Ridge Road

Boggy CreekBoggy Creek - Kissimmee - Kissimmee2590 Boggy Creek Road2590 Boggy Creek Road

Vine StreetVine Street - Kissimmee - Kissimmee1410 Vine Street1410 Vine Street

South FloridaSouth Florida MiamiMiami

7500 S.W. 8th Street 7500 S.W. 8th Street

SBA FinancingSBA Financing

Robert ChavarriaRobert ChavarriaEconomic Development Economic Development

SpecialistSpecialistUS Small Business US Small Business

AdministrationAdministration