Appropriate Borrower Equity Injections Levels? – What Prudent SBA Lenders Should Require
When: Wednesday, January 8, 2014
2:00 p.m. to 3:15 p.m. Eastern
1:00 p.m. to 2:15 p.m. Central
12:00 p.m. to 1:15 p.m. Mountain
11:00 a.m. to 12:15 p.m. Pacific
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The borrower’s equity requirement to business lending is like the Fed Funds rate is to the Prime: it affects a bank’s lending volume much like rates control the money supply.
Minimum equity is a tool to balance transaction risk, express lender confidence and establish the borrower’s ‘skin in the game.’ But some lenders use a “one size fits all” approach to establishing equity requirements, which may expose them to more risk and higher credit losses.
SBA lenders sometimes use their confidence in the loan guaranty to ratchet down equity requirements in order to be more competitive in the market, but the agency’s focus on early defaults and lender underwriting brings that approach into question.
This webinar will examine the best practices of how prudent SBA 7(a) lenders might approach setting borrower equity requirements and includes an up-to-date review of what the SOP 50 10 5 (F) has to say about transaction equity.
Topics to be discussed include:
• Equity benchmarks for prudent lending – setting out the theory behind the numbers;
• Credit policy and borrower equity – establishing external guidelines and internal flexibility;
• Using equity requirements as a competitive tool should be taboo;
• Confirmation of equity capacity is as important as borrower financial statements;
• Documenting the equity requirements for your protection;
• Being tough on non-cash equity requests;
• Swapping equity for more debt? Who’s best interest does that serve?
• The role of the “Utilization of Personal Resources” Rule in setting equity;
• Tracking equity into the business (and ensuring it stays there);
• Conflicts of (agency) interests regarding borrower equity requirements;
• What the SBA has to say about borrower equity;
• Meeting SBA expectations of equity documentation;
Who should attend:
Commercial Loan Underwriters
SBA Loan Underwriters
Small Business Lending Department Managers
Credit Risk Managers
Chief Credit Officers
This webinar is rated “INTERMEDIATE” for all attendees.
Coleman’s Webinar level of instruction guide:
ELEMENTARY — The webinar assumes the audience has no experience in the topic.
BASIC — The webinar is for small business lenders who have some experience in the topic. The webinar is designed as the Topical 101 course. This is the appropriate level of instruction for managers who oversee the function.
INTERMEDIATE — The webinar solves an unique problem for the small business lending professional. A strong working knowledge of the subject matter is recommended.
EXPERT — The webinar discusses detailed, technical and advanced topics for the well-seasoned professional. A strong working knowledge of the subject matter is a must.
Certificates of Participation
All Coleman Webinar attendees will receive a certificate of participation. This documents your continuing education history for your regulators. Also, this documents the answer for SBA’s Review question of continuing staff education.
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Join Coleman’s Expert SBA Instructor:
Small Business Finance Institute
Charles Green is a seasoned finance professional with over 30 years of experience as a commercial banker, mostly funding the small business sector. He founded and served as President/CEO of Sunrise Bank of Atlanta. Charles provides business lender training through several organizations and regularly contributes editorial features for publication.
He has written extensively about business financing through articles and books including Get Financing Now (McGraw-Hill, 2012) and bestselling The SBA Loan Book 3rd Edition (Adams Media, 2011). He earned a B.S. in Finance from the University of Alabama, diploma at the Stonier National Graduate School of Banking and completed Executive Education at Harvard Business School.
Bob Coleman is the Author of “Money Money Everywhere and Not a Drop for Main Street.”
Bob is the Editor of the Coleman Report, a trade newsletter and website for small business bankers. He is the nationally recognized expert on small business lending. He has been a regular contributor for Fox Business News and is sourced frequently by all major financial media news outlets including the Wall Street Journal and Bloomberg.
He is a prolific keynote speaker at numerous small business lending events across the United States every year – including recent international speaking engagements in the U.K. and Germany.
Coleman has a B.A. in Medieval History from the University of California Santa Barbara and a M.B.A. in Real Estate Finance from the University of Southern California.
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|Appropriate Borrower Equity Injections Levels?|
Editor, Coleman Report
607 Foothill Blvd # 546
La Cañada, CA 91012
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