The Power of Credit

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A Little About Me

Kenny Salas• Originally from L.A.• Co-Founder of Camino Financial,

credit platform helping small businesses access loans

• Worked five years on Wall Street investing and advising medium and large companies

• Served on the Board of Directors of Wise Foods and ANC Sports

• MBA, Harvard Business School • BA, UC Berkeley

3Business Financing = Porsche?

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Getting a loan is similar to buying a Porsche

It can get you where you need to go FASTER if driven responsibly

4Business Financing = Porsche?

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It can also get you into a deathly accident if driven recklessly

5The Power of Credit

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Credit can help your business reach new heights if managed responsibly

Fun Fact: Only 26 non-financial companies in the S&P 500 do not have debt

Some Reasons to finance your business:• Grow the top-line: acquire a competitor, equipment, new store, hire

more people, launch a new product

• Improve the bottom-line: buy supplies in bulk to get a discount or improve quality, invest in technology, remodel to attract new customers

• Address Short-Cash Needs: payroll, inventory and other working capital

Rule Of Thumb: Borrow Money To Make Money

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Types of Business Credit 6

Loan Category Installment Loan Line of Credit Cash Advance

What is this product? Installment loan paid over a specified period

Credit line based on short-term business assets (inventory, accounts receivable)

Cash advance in exchange for purchasing future receivables

How does it get paid back?

Installments payments of principal + interest

Owner pays back at his/her own discretion with interest charged on the outstanding balance

Loan is automatically paid back upon receipt of customer receivables less a transaction fee

What does a client use it for?

Business Investments Working Capital Working Capital

Product Types Unsecured LoansSecured Term LoansSBA Loans

Line of Credit Factoring Merchant cash advance

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How Does A Creditor Evaluate A Business?

• 3 Cs of Credit

– Character

– Capacity

– Collateral

• These 3 Cs help determine the Conditions for which a loan can be

made (i.e. loan terms such as tenor, interest rate, amortization)

8How Do I Access Business Credit?

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By telling a story to a debt investor that will understand your business

Telling Your Story• Financials (personal and business)• Credit history (personal and business)• Business plan

Institutional Business Creditors• Banks• Credit card companies• Specialty lenders (e.g. equipment, vehicle)• Online lenders

9Best Practices to Access Business Credit

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Prepare a solid story with hard facts

Protect and build your personal credit score

• Great resource: CreditKarma.com

Actively manage the cash flows of your business

• Great resource: banking mobile applications

Ensure all key business documentation is securely stored AND accessible

• Tax Returns

• Business Bank Statements

• Formation Documents

Maintain 2-3 open trade lines

Build a relationship with your bank or creditor

10Common Pitfalls

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A weak credit story makes it harder to finance your business

• Underreport on tax returns

• No open trade lines prior to applying for business financing

• Not maintaining a personal credit score above 650

• Low average cash balances and/or various overdrafts in bank account

• Same bank account for business and personal

• Not formed as a LLC or Corporation

• Key documentation not readily available

11Key Financing Terms

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The interest rate is important BUT it’s not the only loan term you should ask about

• Loan Size

• Interest Rate (calculate interest paid!!)

• Repayment schedule (i.e. amortization)

• Tenor

• Origination Fees

• Penalties

12How Should I Evaluate a Loan Offer?

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Again, it’s not only about the rate. Ask yourself more questions when evaluating the loan terms

• How much do I need to achieve my goals? BE SPECIFIC!

• How long is it going to take me to make money on the

investment?

• In the end, how much money am I going to make?

• Do the benefits overweigh the cost of the loan?

• How will the loan payment impact other cash needs of my

business?

13Camino Financial – Your Trusted Credit Advisor

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Camino Financial has partnered with LBA to provide FREE credit advisory to its members

All members inquiring about capital will work with a Camino Financial Associate to: • Evaluate their credit profile • Recommend the loan product that best meets your needs

For alternative loans we will:• Prepare and submit a loan application• Negotiate loan terms• Get you funded in less than 10 Days!!

Thank You

Together Moving Forward | Juntos Adelante

Schedule an appointment by calling us at (800) 852-0655 or visiting

caminofinancial.com