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3. Capital

Capacity or cash flow represents your ability to generate income that will pay your debts. If you’re starting a new business, the bank assesses your global cash flow – your current personal income as well as your projected income from the business. If you’re acquiring an existing company, the lender wants to see that the last three years of business tax returns reflect positive cash flow and profit.

The bank won’t give you money if it sees no evidence that you can repay it. Your capacity is an important part of the evaluation process for the loan. If you don’t have sufficient capacity, you can consider bringing on a partner to add cash flow to the scenario.

4. Character

Character isn’t a question of your personal charm – it’s your business character the bank will assess. What’s your experience in business in general, and in the industry in which your new business will operate? Have you managed profits and losses successfully in your previous business or for an employer? Have you worked your way up through an industry and gained experience in multiple aspects of its operations?

Your loan application should draw from the same work you do when preparing your business plan – detailing your experience and the skills necessary to run your business.

The bank does care about some aspects of your personal history as well. Would-be borrowers are often surprised to learn that they must provide information on any current criminal charges they are subject to, any recent arrests on charges, any convictions or guilty pleas in their history, if they are at least a 50 percent owner in the applicant business, and whether they are delinquent on child support.

5. Collateral

Entrepreneurs should also be aware of a bank’s stance on collateral. Most banks expect its loans to be fully secured, but will not generally decline a loan based on inadequate collateral, assuming the borrower satisfies the other standards for capital, credit, capacity and character. However, if you have what a lending institution terms “worthwhile assets,” then the lending bank will require they be used as security for the loan.

In particular, if you own a home with a value of greater than 20 percent equity, the bank will take a lien against your home as security for the business loan, whereas if you don’t own a home and meet all other loan criteria, the bank will likely approve your loan unsecured. It can be unpleasant for entrepreneurs with a more solid financial base to discover that they are required to take on more risk than some of their peers.

It can particularly put business partners into conflict with one another if one has a qualifying equity stake in a home and the other does not, since the home-owning partner will be required to assume this risk to proceed with the loan application.

What are non-negotiable qualifications to obtain a business loan? Banks are currently looking for personal credit ratings in the high 600s and up. Recent bankruptcies, or no evidence of cash flow, are also general deal-breakers.

Entrepreneurs should remember every bank or lender interprets regulations a little differently. Entrepreneurs turned down by one lender should, if they have a strong business case, keep searching.

As always, consult a financial professional before entering into the application process. Experts can save you time and frustration by helping you understand (and, if necessary, improve) your position. Have your accounting in order, and then make sure you’re aligning yourself with the right partners who want to help you succeed, and aren’t in a trap of unfavorable loans with interest rates that can cripple business right out of the gate.

The 5 C’s aren’t just barriers to overcome to fund your dream – they are the path to bankability. When the 5 C’s align for the bank, there’s a much better chance they’ll align for the success of your business as well.  If you have your 5 C’s lined up, ask about our Loans 4 Biz program. Emerald Coast Business Intermediaries partners with over 65 lenders in helping to buy good businesses.

If you are planning to start or expand a business and need to seek a business loan through an approved lender, there are five factors that banks analyze and are important to determine whether to approve your small business loan application.  They are called the 5 C’s, and if you have them, chances are better that lenders will give you a great loan at a great interest rate:

1. Capital

Also referred to in the industry as equity injection, capital is your skin in the game in the lending transaction. No bank will fund your business at 100 percent of your total cash needs. Let’s say this again slowly, with feeling, and reiterate on print in bold type and larger font: No bank will fund your business at 100 percent of your total cash needs. If you’re creating a new business, typically the bank will require you to contribute 75 percent.  If you’re acquiring an existing business, expect your contribution to be at least 50 percent.

Capital is a deal-breaker for banks. Most advisors will tell you not to proceed with preparing a loan application if you cannot provide the required contribution.

If you don’t have the capital, your goal becomes to figure out how to raise it: find a business partner, use a rollover of an eligible retirement account, or cash out an investment. Note that you may not use borrowed money as an equity injection. Don’t, for example, go looking for a home equity line of credit as your capital investment. If a bank discovers that your capital contribution is subject to debt service, they will deny your loan.

2. Credit

Credit comprises your personal credit score, your credit history and an analysis of your credit utilization. A new trend in lending is that banks may also utilize the FICO Small Business Scoring Service (SBSS) to assess your credit risk. If you can’t meet the minimum scores (which vary among lenders), you’ll need to step back and take the time to improve your credit score and your credit presence.

It’s better to do your homework up front. You can receive one free credit report per year from each of the big three reporters – TransUnion, Equifax and Experian. Check each for accuracy and consistency, and take care of any issues that might be a red flag for the bank.

Since the Emerald Coast area stretches about 100 miles along the coast, the options for fun are endless.

What a great opportunity to make the most of your retirement! The beaches along the Emerald Coast provide opportunities for water sports, snorkeling, boating, fishing, swimming, along with being ideal for those who just want to stroll along the sand looking for seashells. Also, if you enjoy beach combing to hunt for treasures, you have plenty of shoreline to explore!

If golf is your sport of choice, retiring to the Emerald Coast is a GREAT plan! There are some amazing courses here.  In fact, the area is packed with over 20 golf courses, ranging from exclusive clubs to public courses.

And if you’re an art lover, there is a lot to enjoy along the Emerald Coast.  You can experience live performances at the Emerald Coast Theatre, the Northwest Florida Ballet,  and peruse through numerous art  galleries featured in each coastal town.

Into food? In the fall there are several major seafood celebrations in Destin, Pensacola, and Panama City Beach. There’s also the Great Southern Gumbo Cook-off in January at Sandestin Golf and Beach Resort in South Walton. the Taste of the Race event in February,  and the Annual St. George Island Charity Chili Cook-off & Auction in March on St. George Island.  You can find a food event every month to attend through the Panhandle!

Are you ready to retire to the Emerald Coast of Florida? Find out what makes this area ideal for your golden years.

The Emerald Coast – The Best Place to Retire in Florida

From the gorgeous white-sand beaches, to the limitless activities, and amazing weather year-round, the Emerald Coast is the popular retirement spot that retires rave about. Communities like Fort Walton Beach, Panama City, Pensacola, Destin, and Crestview will provide you with affordable real estate, an active lifestyle, and even some business opportunities.

Retiring to the Emerald Coast

Whether you want a bigger city with more of a suburban feel or a small community, the Emerald Coast offers it all. Larger cities like Panama City or Destin give more of an urban feel, while Rosemary Beach or Okaloosa Island give more of a small community atmosphere. No matter where you want to retire to on the Emerald Coast, the real estate market is good.

Emerald Coast Real Estate Market

There are many choices when it comes to real estate in the area. Beachfront condos, homes in a new development, in town, or along the coastal route—what option sounds ideal to you? If you want a retirement community, the Emerald Coast has a few of those options as well. While real estate close to the water will go for more, typically homes in the Emerald Coast area are pretty affordable.

Currently, the national average cost for a home is $169,000, but in Florida, the average is lower at just $152,300.  Narrowing down a few of the cities here you might want to retire to, Panama City’s home prices are averaging $95,100 and Crestview is at $131,400—well below the national average. If you want to retire affordably, there are plenty of areas in the Emerald Coast that will allow you to stay within your budget.

Coming up in next:  Recreation Options and Business Opportunities for Retirees in the Emerald Coast.

There is great value that a seasoned and qualified business intermediary can bring to business owners when selling their business. While it is certainly possible for business owners to sell their company on their own, they will likely make very costly mistakes throughout the transaction process.  These mistakes can be avoided by utilizing a valued transition team of their CPA, attorney, financial advisor, and business intermediary who will play a critical role throughout the sales process.  

In this blog series, learn how a well and properly trained business intermediary brings significant value to a sales transaction:

Understanding Your Goals and Strategic Planning

Business owners may often have other personal goals in selling their business that can be just as or more important than money. Each of these personal goals, including the concern for management team, a desire to stay after the transaction, earn-outs, and company legacy, can change the nature of the process. A good intermediary knows the different strategies of each buyer type and can help align your interests with theirs.

Preparing for the Transaction

Selling a business can be tedious and stressful, and utilizing an experienced business intermediary allows the business owner to focus on running the business and thereby reducing the risk of business erosion during the sales process.

The Value in Using an Intermediary in a Transaction

Confidentiality. We protect the identity of the company and contact only owner approved buyers through a blind profile, a document describing the company without revealing its identity.

Reaching potential buyers. We have a database of over 6,000 buyers who are ready and want to move to the Emerald Coast.

Marketing. We help present your company in the best light to maximize the sale price, and have an understanding of the key values that buyers are looking for.

Valuing your Business. Putting a value on a business is far more difficult and complex than valuing a house. Every business is different, with hundreds of variables that have an impact on the value. We analyze your business and have resources to obtain an independent, third party valuation.

Closing the Deal. Buying and selling businesses is our only business, so there is a much better chance that we can sell your business in less time. The faster the sale, the lower the risk of employee issues, predatory competition, and customer defection.

Peace of Mind

Business intermediaries add a tremendous amount of value to your transaction through our experience and expertise.  We are here to make sure that you can stay focused on running your business and not let the transaction become a distraction that negatively impacts business performance during such a critical period. For transactions involving highly complex family dynamics, we also serve as objective, third-party advisors who help your business make decisions that maximizes a successful outcome for all involved.

As you contemplate the role that a business intermediary will play in your business sale, consider the added peace of mind from being represented by someone you will come to trust with one of your most prized assets. Call us today at 850.424.7451 for a free consultation on how we can add value to selling your company.

You have worked really hard to build your business, and it’s nice to know just how much it’s worth. If you work as hard as you do, you also deserve to know the value of your business. This is a smart thing to know whether you are planning to sell your business in the near future or sometime awhile from now for exit planning purposes.

Join us on Thursday, November 5^th, 2015 at either the morning session from 9-11AM or the afternoon session from 5-7PM with Jeff Moody, Managing Intermediary of Emerald Coast Business Intermediaries and Richard R. Craven, CRC, Financial Advisor of Morgan Stanley Wealth Management as presenters of the seminar.  It will be held at the Kelly Plantation Owner’s Club, 309 Plantation Drive, in Destin, Florida.

Seating is limited so please RSVP by November 4th and calling 850-424-7541 or emailing Je********@cb*****.com.

We love boring businesses, you know, the companies that are under the radar, with no fancy marketing campaigns, quietly providing the economy with what we all need and use.  These high-quality companies have capable and loyal employees who put in countless hours and deliver value.  Their work results in happy clients and strong financial statements.  These businesses churn out products and services, while unexciting, generate solid cash flow and are critical to our infrastructure and overall economy.

The global economy has seen recessions, wars, and things that have rumbled our confidence, but locally these companies continue to do what they do best: operate well run business with goods and services that are in demand each and every year.

If you have owned a business that has found its market fit, is profitable, and continues to show sustainable growth, we want to talk to you. If your company treats its employees with care, has a core competency and maintains a low level of debt, we very likely have a qualified buyer who is interested and just doesn’t know it yet.

Boring businesses make money.  And for every rock star start-up, there are thousands of established businesses working for a really great living.  If you have a boring business to sell, let us match you to a buyer who is ready to continue its legacy of a leader who is responsible, thoughtful, insightful, and disciplined – because that’s what it took to be a successful boring business that has thrived for decades.

Most people relocating to Florida are drawn to its warm climate, advanced healthcare facilities, and endless recreational possibilities. There are some unique qualities about the Panhandle, including the home to the best beaches and seafood festivals in America.

If you are planning on relocating or expanding to the Florida Panhandle, your business may qualify for a  grant offered through the University of West Florida.

Applications are now being accepted at the UWF Office of Economic Development and Engagement through June 16, 2016 for $5 million in job creation incentives.

Businesses in clean technology, life sciences, aviation and aerospace, information technology, homeland security and defense, manufacturing, and financial and professional services will be given preference by the OEDE though all applicants will be considered.  Companies can receive a maximum of $1M in incentives.

These grants are funded by the Industry Recruitment, Retention and Expansion Fund, which were allocated by the Florida Legislature in 2011 to foster economic recovery in those areas hit hardest by the Deepwater Horizon Oil Spill of 2010, and supplements local and state incentives to encourage medium and large companies to relocate to the Florida Panhandle.

To see if your company is eligible, and if your projects meet specific qualifications of the grant, please visit OEDE for details.