Economic Development Finance: Introduction to Economic Development Certificate Program October 13, 2010. California State University, Fresno University Business Center, Craig School of Business. PRESENTATION BY:. Paula Connors, Manager - Bond Finance Unit California Infrastructure and
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California State University, Fresno University Business Center,
Craig School of Business
Paula Connors, Manager - Bond Finance Unit
California Infrastructure and
Economic Development Bank
980 9th Street, 9th Floor, Sacramento, California 95814
Phone: (916) 322-1498 – Fax: (916) 322-6314
E-Mail: [email protected]
Dan Bronfman, President
Growth Capital Associates, Inc.
82 Estates Drive, Orinda, California 94563
Phone: (925) 386-0760 – Fax: (925) 386-0765
E-Mail: [email protected]
A B C
I. The Process
II. Terms and Concepts
III. Tips for Doing the Deal
--Automobiles – long cycle
--Food Service – short cycle
The C’s of Credit
When the analysis is done, you should be able to summarize the
Character business history, credit reports, personal interviews
Credit credit history, business history
Capacity analysis of financial statements, equity,
secondary sources of repayment
Capital equity, working capital) -
Remember “Cash is King”
Collateral appraisal, net worth
Cash Flow balance sheet, projected income statement,
personal financial statements
Conditions market study, business plan, economic conditions
Commitment business plan, equity committed
What Are Financial Statements?
(AKA…..Profit and Loss Statement; P& L)
-Cost of Goods Sold (raw materials, labor, manufacturing) Gross Profit
-SG&A (rent, advertising, admin. overhead, officer salaries
Net Income from Operations
Sample Income Statement
Investment Income 2,000
Total Revenue $20,000
Wages, Sal/Benefits $3,000
Merch & Supplies 12,000
Income Tax 1,000
Interest Expense 300
Total Expenses <$17,000>
Net Income $3,000
Sample Balance Sheet
Current AssetsCurrent Liabilities
Cash 400 Accts Payable $300
Accts Rec. 200
Total Current Assets $600 Long Term Liabilities
Loan Payable 200
Total Liabilities $500
Fixed AssetsOwners Equity $1,500
Total Assets $3,000Total Liab. & Equity. $3,000
Current Liab. - CL
Working Capital WC
CA Loan Guarantee
USDA Loan Guarantee
PERS Private Equity
Business Impr. DistrictsFinancing Resources
504 Loan Program: Long term, fixed asset financing used for land acquisition, building construction, purchase of existing building, site improvements, rehabilitation and major equipment acquisition.
How it works: 50% Private Lender
10% Equity Injection
* Packaged through certified development corporations
Additional opportunities to be rolled out as SBA fine-tunes policy:
Structure: SBA guarantees 85% of commercial lender loan.
Structure: SBA guarantees 80% of commercial lender loans less than $100,000 and 75% of loans greater than $100,000.
Structure: Loans are made by non-profit for a maximum 5-year term with fixed rate of interest.
7(a) Loan Program: SBA’s primary loan program used for business acquisition, leasehold improvements, real estate, equipment, working capital, and investing.
How it works: SBA guarantees 75% of
commercial lender loan.
Program enables small businesses to obtain a term loan or lines of credit when it cannot otherwise get a loan. Uses include equipment, construction financing, business expansion and working capital.
Structure: Commercial lender loans are guaranteed up to 90% not to exceed $500,000 on term loans and lines of credit.
Industrial Development Bonds: Manufacturing and job creation
Nonprofit 501( c ) 3:
Exempt facility, Pollution Control:
Environmental and economic
Typical structure 70% IDB
30% Equity Injection
In rural areas only, the program provides a loan guarantee of a commercial lender loan. Uses may be working capital, machinery, equipment, building acquisition and development.
How it works: Up to a 80% guarantee of a loan made by a commercial lender
Program provides low cost loans to public agencies for a wide variety of infrastructure projects. Amounts range from $250,000 to $10,000,000; with loan terms up to 30 years.
California Enterprise Development Authority
California Infrastructure and Economic Development Bank
International Economic Development Council (IEDC)
Economic Development Finance Service (NADO)
Small Business Development Centers
Robert Morris Associates
National Development Council
MANEX: Corporation for Manufacturing Excellence