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BC Area Conference 2003

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					 Business Development Bank




In Business For Small
      Business
      What does it take to get
      financing!
    • Management
    • Business Plan
    • Financial History
    • Borrower’s commitment
    • Security / collateral
    • Bank’s loan product to fit the need




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      YOU – are the key to the deal
                      • Experience in the
                        industry
                      • Education
                      • Specific training
                      • Decision Making-
                        logical or emotional
                      • Key employees




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      Business Plan
    • A good plan or idea
      alone is not enough to
      get financing
    • Is it clear ?
    • Is it realistic ?
    • Do you anticipate
      making a profit ?
    • Did you do your
      research ?




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        Your personal and company
        financial history
    •   Have you paid your bills
        on time ?
    •   What does your credit
        bureau report say about
        you ?
    •   If you are already
        operating are you
        profitable ?
    •   How you handle your
        existing credit says a lot
        to the Bank how you will
        repay their loan.



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      How committed are you !

    • How much are you
      bringing to the deal ?
    • Is the money coming
      from you or from
      another lender, family
      member or friend ?




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      The Bank - product/solution


    • Personal loan
    • Operating Line of Credit
    • Term Loan
    • Letters of Credit
    • Mezzanine financing




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      Security (Collateral)
    • Accounts Receivable
    • General Security Agreement or Lien (pledge
      an asset like equipment)
    • Inventory
    • Mortgage
    • Personal guarantee
    • Third-Party charge




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      Financial Statements -
    • Who does them and what do these things
      cost !!!


    • Client prepared interim statements
    • Client prepared year end statements
    • Notice to Reader
    • Review Engagement
    • Audited



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      WHAT WE ARE
      • Financial Services
             – Term Lending

      • Consulting Services
             – ISO Series, SRED, HACCP, Operational Reviews
      • Subordinate (Mezzanine) Financing
             – Debt + Equity financing
      • Venture Capital
             – Seed Capital, Equity Financing




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     ABOUT US: A SNAP SHOT
    • $10 billion in loans
    • 80 branches
    • 20,000+ clients
    • 40% of our loans are under $100,000
    • 22% of our loans are from $100,000 to
      $250,000
    • All of our lending products are designed
      to preserve working capital in business
    • We are profitable

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      EXAMPLE [1]:                 Term loan

PROGRAMME                         FINANCING
Purchase Realty $280,000          BDC                        $235,000
                                  Shareholder Invest’m $ 45,000
                   $280,000                                  $280,000

Full Service Trucking Company
• Revenue source: long, short, local hauling operations, & cross docking.
• Prior to BDC program: Operating out of a small warehouse.
• Company Status: Experiencing steady growth rate and found that the
  current premises were cramped, inefficient and did not have sufficient
  space for their fleet.
• Results: Our loan assisted the company with the acquisition of a new
  building to allow growth and improve efficiencies.




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      EXAMPLE [2]:Productivity Plus Loan
  PROGRAMME                           FINANCING
  Equipment               $100,000    BDC   $125,000
  Installation/training    25,000
                                $125,000
      $125,000
 Kitchen cabinet manufacturer
      • Business is 5 years old
      • Steady growth company
      • Has LOC rarely used
      • Replacing old saw with newer, more efficient
        equipment
      • Didn’t want to lease and didn’t want to use working
        capital as the company was in growth mode

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       EXAMPLE [3]:Innovation Financing
  PROGRAMME                        FINANCING
  Marketing Plan   $150,000        BDC          $150,000
                   $150,000                     $150,000


 Directional Carpet Manufacturer
   • Business is 10 years old
   • Has a line of credit in place
   • No security available
   • Proforma term debt equity 1.2:1
   • Wants to execute on a plan to market product in
     S.E. USA
   • Established company, profitable.



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      EXAMPLE [4]:                 Subordinated Debt

PROGRAMME                                FINANCING
Acquire 49% Shares $1,000,000            BDC Sub-Debt      $1,000,000
Retire Vendor Note $1,000,000            Equity Investment $1,000,000
                   $2,000,000                              $2,000,000

National engineering consulting services
 • $15MM annual sales and $1MM EBITDA
 • 10 years in business; market leader in its field
 • Canadian management team acquired 51% from U.S. parent one year ago;
  U.S. parent now willing to sell remaining interest
 • Strengthened employee retention by offering ownership
 • Eliminated unnecessary management fees and contingent liabilities
 • Minimal tangible assets to pledge as security
 • Senior lender considered sub-debt as equity


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      How Are We Different
 • High Ratio Real Estate lending
 • Security shortfalls acceptable
 • Flexible repayment schedule
 • Limited personal guarantees (unsecured)
 • Non-demand loans
 • Ineligible Businesses:
       – Residential properties: Semi-Commercial (if residential component
         is for manager residence and gross income is commercial then we can
         look at it)
       – Supplier of premises to these business: Casinos, bingo halls, pool
         halls, night clubs
       – Tough deals: Gas stations, high risk environmental enterprises


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      BDC Consulting Group
    Whatever challenges a company faces, the
    Consulting Group’s business solutions meet
    their needs in five strategic areas:

        1. Quality-ISO 9000/2000,14000, HACCP
        2. SRED Tax Credit
        3. Strategic Business Assessment
             & Planning
        4. Marketing/sales improvement
        5. Operational Review and GPA


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      What Exactly Can The Consulting
      Group Do For You

   • Help manage growth and become more
     profitable
   • Improve operations while reducing costs
   • Expand market opportunities and revenues
   • Help turn ideas into results




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      Contact Information:           www.bdc.ca
   • Grant Kvemshagen -   382-3002
   • John Yagos - 382-3147
   • Clarence Gruber –382-3005
   • Ron Corbiere – 382-3004




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      Common Questions:
    • Which is the best bank for me ?
    • How do I pick an accountant…do I need an
      accountant ?
    • Do I need to incorporate ?
    • Where do I get help to complete a business
      plan ?




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