infocomm/corelytics: getting a bank loan (webinar) - with key bank guest
DESCRIPTION
There are new realities in obtaining funding. Learn how to get a loan, types of lenders, ratios that matter most and how to build financial strength by watching trends, predicting your future and getting help when you need it. Frank Coker, Corelytics CEO & Special Guest, Don Brown, Vice President, Key Bank.TRANSCRIPT
Money Matters: New Realities in Obtaining Funding
Presented by:Frank Coker, MBA, CMCCEOCoreConnex, [email protected]
Guest:Don Brown
Vice President Senior Relationship Manager
Key BankGig Harbor, WA
AgendaHow to Get a Loan• Loans and lenders• SBA close-up• The process• Financial strength• Dashboarding• InfoComm resources
Two Types of Loans
• Long term loans• Short term loans• Both types are tied to the loan purpose
(borrowing cause) and repayment source
Types of Lenders
• Banks and Credit Unions• Individuals• Asset Based Lenders• Factors• Non-Bank & Specialty Lenders
SBA Background
• 7(a) Program is SBA’s primary lending program• Long term loans• SBA does not make the loan, they guarantee
them• Guarantee ranges from 50% to 85%• SBA term loans are currently highly desired by
Banks and CU’s
Applying for an SBA Loan
Application Package• Executive Summary• Business Profile• Management Experience• SBA Forms – PFS and Collateral• Business Financial Statements
Do not assume the lender is familiar with your industry
Resources
• http://www.sba.gov• http://www.receivablesxchange.com• http://www.insidebanking.net/sba-
consultants.html• Key Bank link?????
What Does the Lender Want?
• Mutual trust – up-front honesty• Visibility• Opportunity to help solve problems early• Profitable and thriving customers• Long-term relationship• Minimum risk – high certainty• Success stories; referrals
The Biggest Problems
• Surprises – with no opportunity for a fix• Shut down on communications• Personal banker looses borrower to the
“troubled assets” department when surprises occur (no fun for anyone)
• Customer borrows money for the wrong purpose (e.g. LOC for a capital investment)
Special CasesSolutions:• Personal guarantee from
owner• Personal assets as
collateral• Higher cost loans• “Alternative Lending”
sources• Third party investor
(provides investment and guarantee on loans)
High Risk Situations• Service Company – no
long-term assets• Extreme peaks and valleys• Revenues on down trend• Industry that is struggling• Company with history of
losses• Company that is highly
reliant on a single expert
Ratios that Matter• Quick Ratio – short term assets (excluding inventory)
divided by short term liabilities• AR Days – AR divided by average revenue per day• Assets to liabilities – total assets divided by total liabilities• Annual Growth – percent that revenue increased in the
past 12 months over the prior 12 months• Profitability – EBITDA as a percent of total revenue for the
past 12 months• Working Capital Trend – average monthly increase or
decrease in WC• Leverage Ratio – Liability / Equity (should be 1/1)
What is Financial Strength?
Ability to produce cash required to:• Run normal business operations• Absorb routine fluctuations• Sustain operations in the event of a downturn• Investment runway• Build for the future
Build Financial Strength
1. Net profit (retained earnings)2. Equity financing3. Debt financing4. Sell assets5. Working capital optimization
a) Reduce short-term debtb) Improve asset performance
Financial Strength Metrics
Working Capital = Current Assets – Current LiabilitiesTarget Current Assets = 1.5 x Current Liabilities [varies by industry]Target Minimum = (1.5 x Current Liabilities) – Current Liabilities
Healthy Scenarios
• Getting above or being above Target Minimum is the goal
• Understanding “health” requires trend lines
Unhealthy Scenarios
• Falling below or being below Target Minimum is fundamentally unhealthy
• Understanding “health” requires trend lines
Exit - Thinking Ahead
Planned• Acquisition• Merger• Expansion• Investment
Unplanned• Health surprise• Disaster• Opportunity• Technology shift• Competition• Economic downturn
It takes time to get ready;All scenarios benefit from a strong financial position
What are Your Trends
• Growth• Margins• Working Capital• LOB Performance• ROI• Asset Performance• Staff Contribution
Get an Advisor (Coach)
Recommended role:• Facilitate monthly review process
• Build structure and process
• Keep focus on priority issues and opportunities
• Help solve specific problems
• Support accountability
AV Industry Highlights
As of September 22, 2013
Pro AV Sales
24 month growth trend
-2.1%6 month growth trend
+15.8%
Pro AV Gross Margin
24 month growth trend
-3.9%Sales -1.6%
6 month growth trend
+49.8%Sales +0.9%
12 month % of revenue
30.9%
Pro AV Payroll
24 month growth trend
-8.3%Sales -1.6%
6 month growth trend
+0.7%Sales +0.9%
12 month % of revenue
26.2%
Monitor AV Trendsat http://www.corelytics.com/InfoComm
Corelytics Dashboard
•Trends•Goals•Comparison •Forecasts•Metrics•Contribution
Dive Deep – Dive Quickly
Monthly Process
1. Evaluate progress(plan versus actual)
2. Set direction(adjust plan to hit goals)
3. Align team(build understanding and commitment)
InfoComm Benefit:
Free Financial Forecast• Current Corelytics subscribers• New Corelytics subscribers
How?• Email: [email protected]• Subject: Financial Strength• Text: Your contact information
For More Informationhttps://infocomm.corelytics.com
Thank You!
https://infocomm.corelytics.com
Contact Frank at – [email protected] Don at – [email protected]