Questions about Business Financing? Check this out!
February 5, 2013
On January 16th, 2013, the WDCEP hosted its monthly Doing Business 2.0 series. The series brought together more than 20 aspiring entrepreneurs and business owners to listen to a number of senior bankers and lenders in the Washington, DC area. The speakers presented several financing programs available to entrepreneurs and business owners. They discussed in detail the processes by which participants could go about obtaining finance from these programs. Also covered in the discussion were issues, concerns, and questions that entrepreneurs and business owners might have or might need to consider when applying for a loan.
Wayne Williams, Senior Vice President of Business Finance Group, started off the series with a presentation about the Small Business Administration (SBA)’s 504 loan program. Mr. Williams explained key aspects of the program that included eligibility, loan structure, sources of funding, and the application and underwriting processes. He also went over an example of a typical SBA 504 loan and finished the presentation with a comparison of the 504 loan with a conventional loan. See his presentation below for more details.
Thomas A. Nida, Regional President of United Bank, discussed the basics of commercial loan underwriting in two parts. The first part covered underwriting fundamentals and the application of the “Five C’s of Credit”, which were capacity, character, collateral, capital, and conditions. The second part covered the various risk factors that commercial loan underwriters must consider. These included repayment risk, collateral risk, management risk, interest rate risk, credit risk, and government-related risk.
Ken Rosenberg and Jamila Braithwaite, Vice Presidents of Capital One Bank, discussed the differences between two primary sources of external financing, debt financing and equity financing. Rosenberg and Braithwaite covered key aspects of evaluating borrowers’ creditworthiness and explained the elements of successful borrowing. They finished the series reviewing a host of crucial financial ratios that included business debt service coverage ratio, business leverage ratio, and personal debt to income ratio.