SCORE Luncheon Remarks
Gap and Alternative Loans for
Small Businesses
Albert Hartsig
Senior Business Development Officer
The PathStone Enterprise Center
Noon, Friday, November 14, 2008
Oak Hill Country Club
PathStone
Connecting You to Opportunities
A change of name, not mission
- Established in 1969
- Serving the need of migrant farm workers and the rural poor
- New York, Pennsylvania, New Jersey, Ohio, Vermont, Indiana and Puerto Rico
- Affordable Housing
- Employment Training
- Other Services
- Economic Development
Micro and Small Business Lending
Stand Alone & Gap Financing
Established in 1991
Over 325 business loans made
$5M Loan Fund
Currently: 69 Loans, $1.6M outstanding
Service area: All of Upstate New York
A Federally Certified
Community Development Financial Institution - (CDFI)
Funding Sources
- SBA Microloan Program
- USDA Intermediary Re-lending Program
- Bank loans and Equity investments
- The Enterprise Center’s own funds
Uses of Business Loan Funds
- Machinery and Equipment
- Working Capital
- Business Expansion
- Capital Improvements
- Business Purchase
- Start-Up
Typical Terms for a PathStone Enterprise Center Business Loan
Length of Loan:
Working Capital 24 to 36 months
Machinery & Equipment - up to 60 months
Land/Property - up to 120 months
Interest Rate: Fixed, 8% to 10%
Commitment Fees : $100 or 1% of loan amount
Closing Costs : Attorney’s costs if real estate and UCC’s
Applying for a Small Business Loan
- Completed Loan Application
- Business Plan
- 12 Months of Projected Cash Flow
- Personal Financial Statement
- Miscellaneous Attachments
- $50 Application Fee
Loan Approval Process
- Initial Review of Information
- Credit Check
- Site Visit
- Staff Approval / Decline
- Monthly Loan Committee meeting
- Applicant presentation
- Committee Approval / Decline
- Notification of Decision
- Loan Closing
Free Post Loan Technical Assistance
Provided to All Loan Customers
Borrower profiles
Consulting business
- Amount: $25,000
- Uses of funds: Working capital 80% Equipment 20%
- Strengths: Existing business (2 yrs old)
Track record of increasing revenues Existing and backlog of contracts Excellent personal credit
- Weaknesses: Limited Collateral
- Notes: No other business debt, limited personal debt, focused target market
Dental Lab
- Amount: $25,000
- Uses of funds: Working capital 40% Equipment 60%
- Strengths: Low overhead
Close working relationship W/ accounting firm
Realistic projections
Good personal credit
- Weaknesses: Start-up
Limited Collateral
- Notes: Already had small client base,
commission sales arrangement,
concentrated on high margin niche, low personal debt
Retail business, home recreation
- Amount: $16,000
- Uses of funds: Working capital 100%
- Strengths: Solid cash equity investment Excellent personal credit
Outside income
Outside collateral
- Weaknesses: Limited operating history
Existing business debt - Notes: Providing technical assistance in accounting system,
active family management
Tanning salon
- Amount: $25,000
- Uses of funds: Equipment 100%
- Strengths: Profitable historical operations Experienced owner/operator Collateral coverage
- Weaknesses: Personal credit issues
- Notes: Excellent locations,
good operating management in-place
Industrial Machinery Repair
- Amount: $25,000
- Uses of funds: Working capital 100%
- Strengths: Cash equity investment Excellent personal credit Outside collateral
Seller Financing
Bank & public financing
- Weaknesses: Highly leveraged
High LTV - Notes: Assisted lending partners in structuring the deal
Other Programs
- Northern Adirondack Trading Co-Operative
St Lawrence and Jefferson Counties
- Finger Lakes Trading Co-Operative
Livingston, Wyoming, Yates, Allegany
& Steuben Counties
- Finger Lakes Access To Business Capital
Yates County - MAP (Micro Assistance Program)
Contacting Us
PathStone Enterprise Center
400 East Avenue
Rochester, NY 14607
Tel: (585) 340-3304 Albert Hartsig
(585) 340-3387 John Bell
(585) 226-1623 Kathleen English
Fax: (585) 340-3326
TDD: 800-545-1833 x210
Web Site: www.pathstone.org