Dallas Kerley, CFEChief Development Officer

• Higher utilization of existing infrastructure

• Leverage marketing dollars

• Protect territory from competition

• Additional units achieve breakeven quicker

Not sure you want to expand?

Financing Your Future

• How the lending landscape has changed

• SBA programs

• What lenders look for when applying for an SBA loan

• Alternative funding options

a. 401(k) rollovers

b. Securities backed loans

c. Non SBA loans

• Multi-unit funding strategies

• Maximum loan amount 5 million dollars

• SBA now focused on increasing the number of loans under $350K

• Special program for loans under $150K

• Currently, the maximum rate is 6% (2.75% above Prime)

• Loan approvals in 10 days can take 30 to 60 days or longer to close

SBA 7ALOAN PROGRAM

WHAT FLAVORICE CREAM ARE YOU?

• Banks Have Different Credit Boxes

• Some Like Chocolate

• Some Like Vanilla

• Some Like Strawberry

• You Need to Apply To the Bank that Likes your Flavor

• Proprietary Lending Programs

NON SBA LOANS

• Typically a faster closing than SBA (30 days)

• Franchise needs to be on an approved list

• Higher interest rate

• Shorter term

• Can be conditionally approved for multiple units

• May not need to use your home as collateral

• One of the more popular funding strategies to purchase a new business

• Many of the franchises sold in the U.S. utilized retirement plan rollovers as part of the funding

• There were more Rollover for Business Start-ups done in 2012 then there were SBA loans within the Franchise Industry

• Why was this created? How does this work? What are the benefits?

401(K)ROLLOVER FUNDING

• Here is an example of the tax implications for someone withdrawing $200,000 from their retirement plan• 10% early withdrawal penalty ($20,000)

• 30% state and federal taxes ($60,000)

• Leaves the individual with $120,000 of the $200,000

WHAT IF I JUSTWITHDRAW THE MONEY?

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401(K)ROLLOVER FUNDING

401(K)ROLLOVER FUNDING

WHAT TYPESOF PLANS QUALIFY

Roth IRAs do not qualify – Most Employers require employment termination prior to using retirement funds.

*Other plans may qualify

401(k) Plans407 Plans (Government agencies)

Cash Balance PlansEmployee Stock OwnershipMoney Purchase PlansSEPs

403(b) PlansAnnuity PlansDefined Benefits PlansIRAsRollover PlansSIMPLE Plans

• Uses your current investment portfolio as collateral for a loan

• Investments Remain in your name

• Interest rate, currently around 4%

• Usually lower than an SBA or Home Equity Loan

• Keep all the appreciation and dividends from your portfolio

• You are borrowing money at say 4% and earning 9% on your investments

• Borrow approximately 70% of the value of your equity portfolio and as much as 80% of a fixed income or bond portfolio

SECURITIES BACKEDLINE OF CREDIT

• Are you on target to hit your projections ?

• Have you reached cash flow positive? If yes, have you sustained cash flow positive for 6 months ?

• If "yes" to both - you may qualify for a business expansion loan with an equity injection of only 10% into the new location.

• If "no" you may still qualify for funding with a higher injection if you are on target with your original projections.

• Projected cash flow for the new location when combined with the existing cash flow from the current location must provide adequate debt service ability for the total debt of all locations.

THINGS TO CONSIDER FOR ADDITIONAL UNITS

• Retain as much of your current liquidity as possible when funding the first location. Inject the smallest amount allowed and borrow the largest amount you can qualify for.

• Make sure your initial projections are reasonable and achievable. Your success in meeting/surpassing those initial projections will weigh heavily in future loan decisions.

• Be willing to inject a larger percentage of the project costs into a second location if the first has not yet reached sustained positive cash flow. (Another critical reason to hold onto liquidity at the beginning) your increased "skin in the game" increases the lender's willingness to say yes.

• Be able to explain "why now" to the lender who wants to know why you want a second location if the first is not yet profitable. (Know the economics of the concept. A Second location in reasonable proximity to the first can reduce expenses and increase profitability, be able to explain how)

MULTI-UNIT STRATEGIES

It’s always been part of the American Dream to own your own business. Many different ways to get the funding you need. We

have almost 30 years of experience helping visionary entrepreneurs launch their dreams!

BENETRENDSONE SOURCE. ONE COMPANY. ONE ANSWER

Benetrends proprietary and confidential

Please contact us at Benetrends.comPhone: 866-423-6387