okay just a little bit of a disclaimer I am fighting a head cold so if you see me taking a sip it's just so I don't completely lose my voice uh anyway I think I've been excited about this opportunity because it's such an important topic you know it's crucial for many entrepreneurs and businesses in the construction industry to answer this question and that is how to secure approval for a business loan particularly when working on government projects we all know that financing is usually the critical step uh in the success of any construction related Endeavor and especially when dealing with the complexities of government contracts before I jump into those details I'd like to share with you a little bit about myself and about Columbia Credit Union I've been a lifelong Banker I didn't put the number of years because when I read it it was uh a little overwhelming uh but my career began when I was in college and I'm still doing it today most of that time I've been involved in commercial lending I joined Columbia Credit Union as a chief lending and chief credit officer seven years ago and I joined because I've always respected Colombia's reputation in the community and I knew that their values aligned with mine very well so Columbia has served our community for more than 70 years uh we do offer banking services to both consumers and businesses we have 14 local branches throughout Clark County and one in Portland our team of 13 business lenders average more than 20 years experience and we serve businesses of all sizes in the last three years we've helped hundreds of small businesses borrow more than $300 million with loans as small as 152,000 to those greater than 20 million so all shapes and sizes we are proud to serve our community um I want to share with you real quickly our core values of people uh so our members and our staff our community we believe that a Vibrant Community is critical to long-term happiness and quality of life for everyone in the community and financial Wellness so as uh Financial Wellness is a core not only for people but for businesses so we are committed to providing resources to make Financial Wellness a reality for everyone you may not have even known that credit unions do business loans uh if you're asking yourself that question let me tell you that you're in the right place we do uh so why choose a credit union over other options and we're going to talk about those other options today too first of all crate unions are not for profit organizations so generally we can offer lower fees and interest rates compared to other lenders uh this can result in significant savings over the life of a loan credit unions are known for our personalized approach to banking we will take the time to understand understand the needs of our members and may offer more flexible term loan terms to the loans in order to accommodate those special needs we are Community focused credit unions are deeply rooted in the communities we serve this local Focus can lead to better understanding of local business needs and challenges making them more responsive and supportive of local businesses lastly we are member owned as a member owned institution credit unions are accountable to their members other words custom customers rather than shareholders this can lead to more customer Centric approach to to Banking and lending decisions now it is important to note that not all credit unions offer business loans so I would advise you to check with your local credit union to see what your options are if they have them available if you're not a credit union member we would love to talk to you about joining Columbia Credit obviously so now let's talk about what you really want to know on that what do you need to know before you apply for a business loan some of what I'm going to say may be new information so I want to emphasize the most important thing to remember here is that we are here to help you every step of the way I encourage you to establish a rapport with your lender ask a lot of questions uh throughout the application process and really the first thing to understand is your project so before seeking financing I SU suest it's essential to have a clear understanding of the project you're undertaking what is the piece that you will be doing and what does it include so think about your scope of work the timeline and of course the budget government projects come with specific requirements and regulations so familiarize yourself with those early and again we are here to help you will need to prepare a detailed business plan a wellth thought out business plan can be key to convincing your lender of the viability of your project your plan should include a detailed description of the project your experience in the field and this is important we really need a realistic Financial projection uh focus on the realistic and maybe even leaning towards pessimistic versus the best case scenario things to focus on will include how will you be paid so what's the timing of those payments are you a sub will you be a sub to a sub will there be retainage in the project that could influence your uh cash flow when you model your cash flow conservatively you'll be more likely to have adequate financing to keep your project on track and your your people paid also in that business plan highlight your track record of successful projects that can help build credibility so don't be shy about describing other projects that you've done even if it's not quite to the scope of what your proposing in this it's still relevant Gathering necessary documentation uh this is a piece that the lenders will always say h get it to me timely and I'll get you a timely response uh the reality is is it's not always easy to do in a timely fashion so again working with your lender will be important we do require various documents to assess your loan application these may include financial statements tax returns project contracts and the like uh having these ready in advance will streamline the application process and demonstrate your Readiness I will share with you a screen that shows what we look for initially in terms of that documentation that's coming up I know you know this one it's established a strong credit profile your personal and your business credit history play a significant role in the loan approval process so ensure that your credit reports are accurate and up to dat if there are any issues work to resolve those before you apply for a loan if you know there's something on the credit that your lender may have a question about get in front of it let's make sure that we're having those conversations uh because again uh we understand that there might be anomalies and so if we can understand that to get over those hurdles if they are hurdles then sooner is better explore govern government loan programs so government backed loan programs such as those offered by the small business administration uh or USDA can be valuable resources for construction companies these programs often offer more favorable terms and possibly lower interest rates in traditional loans uh not all financial institutions have delegated SBA lending Authority A lender with that Authority can save significant time in the loan approval and funding process if an SBA guaranteed loan is right for you ask your lender if you can approve if they can approve the loan on behalf of the SBA uh of course I'm saying that because columia Credit Union does have delegated SBA Authority now I'm not suggesting that everybody needs to have an SBA or a government back loan um I will tell you that the SBA is there for a reason and it's to supplement to encourage financial institutions to make loans that maybe would be a stretch otherwise and so uh if you've heard things about SBA and and maybe prefer not to use that that might be an option but uh keep all your options available to you you will want to demonstrate Financial stability obviously lenders want to ensure that you have the financial stability to repay the loan uh provide evidence of steady cash flow healthy balance sheet and the ability to manage your debt responsibly again I think that's pretty basic uh one of the questions was what do uh we offer uh businesses so I'm just going to click through these here you can see that it's just about everything that your business would need to have uh lines of credit terminals for equipment real estate loans construction loans capex lines credit uh again SBA but credit cards I mean other things that support your cash flow and then all the deposit services including online services uh merchant services brought prevention tools all of which we have expertise in and we'll be happy to go over in detail with you so here's a relatively short list of required documentation uh you'll notice that we're asking for three years uh business Federal Tax Returns uh some of you may be saying I have two years uh but I haven't even been around for three uh we will take what you have and work with you from whatever your starting point is if you do have three years uh obviously we will want that we also understand that coming out of the pandemic uh maybe 20 and even 21 weren't fantastic years so uh don't be afraid to show that information we understand that business may have been uh on the rise since then so securing approval for a business loan for a construction related company working on government projects requires careful planning uh thorough preparation proactive approach so by following these steps and Dem demonstrating your Readiness and capability you can improve your chances of obtaining the financing needed to succeed in the competitive industry and hopefully win that bid and uh get to work on that bridge project again we're taking questions in the chat we're also going to have an open opportunity at the end of the session uh in the meantime I do want to share again I'm Mark Tim I'm the chief lending and credit officer here uh Joe Storm is the director of our Commercial Services and either one of us or anyone on our team is available to answer questions for you fantastic work thanks so much Mark uh we're going to have you stop sharing screen there real quick right and we're going to switch over to our next presenter representing Banner Bank George Martin hi George give me a second here to share my screen okay can everybody see that you're good okay uh so I am George Martin with Banner Bank I'm located here in Vancouver Washington been with bannerbank for five years and uh kind of like Mark I've been in banking since the early 90s uh so and a most fact all that time has been most of the time has been in the in uh southest Washington Clark County a little bit of time in uh the Portland metro area so uh been around a while um Banner Bank is a Commercial Bank uh established in 1990 sorry 1890 uh headquarter in Walla Wala with a large presence in uh Spokan and bellw we are operating in four states in the Pacific North Northwest and those little red dots indicate where where the majority of our branches and uh business banking and Commercial Banking centers are basically up on down the I5 Corridor and then uh 84 over in Idaho so as of December 31st 2023 we had about 15.7 billion of uh of assets and again as a Commercial Bank we are publicly traded so the products and services offered by bannerbank um most businesses have a need uh for some type of line of credit and uh the biggest one being a revolving line of credit you borrow against it for short-term purpose uh you pay it back after a period of time time and we'll go anywhere from a low of 50,000 to well over 10 million uh for loans in lines of credit our capacity I I believe is in excess of 50 50 million for total credit exposure but that can be a revolving line of credit it can be a line of credit to purchase equipment uh it can be a Term Loan to purchase equipment and for those of you who don't know a Term Loan is simply a period of time say years where the loan is repaid unlike a line of credit typically is repaid back annually with an annual renewal um we also do real estate loans both owner occupied and and non-owner occupied in certain segments as Mark had mentioned you know the SBA program is a very valuable program uh particularly for small businesses and Banner Bank does underwrite its own 7A and 504 loans and then the USDA guaranteed loan program is another government uh sponsored program that affords lending to small businesses um in the United States so we had the traditional checking and savings accounts both business and personal um including money market accounts and uh rates have been trending up recently so Savers are actually kind of happy to getting a little bit more bang for their Buck on their interest income businesses also uh tend to need treasury Management Services which is kind of an all-encompassing uh term and it can be account analysis where because it's a business account by law Banks can't pay interest on those we do an analysis of that and try and get generate some earnings credit back to the business that can be used to offset other services uh remote deposit capture is simply a check scanner that sits on your desk and if you're getting paid by checks you run that through the check scanner and it posts to your account we have online banking we can do most of your Banking online and never even really need to set foot in the branch sometimes credit and investment sweeps uh for both lines of credit and if you have excess cash you want to invest those that can be fully automated and then a origination um and positive pay or a couple of other types of Treasury Management Services where you can pay bills online and also send files to the bank if you've got checks that are trying to clear just to verify that hey this is a valid check but Banner Bank has the full Suite of Treasury Management Services as well as uh commercial cards if you've got project managers or superintendent some of them may need to have a commercial card for specific purchase purposes we offer those as well and then finally merchant services if you're uh accepting credit or debit card payments it can be a virtual terminal on your desktop it can be a standalone terminal or even a Mobile card reader that you take out uh you know take out to the field and uh collect your payments that way so again TR traditional Commercial Banking products that Banner Bank offers uh across the board there geared towards businesses so the requirements for loan approval I kind of approach this from the it's kind of called the five C's of credit capacity Capital collateral character and conditions and these are kind of what we as lenders look at we're doing our due diligence and Analysis of a business so the first one uh capacity is simply the ability to repay Al uh with a line of credit do you have the short-term assets you know the AR the inventory uh the progress Billings if you're a contractor that can be readily converted to cash to pay back the line and then for loans the repayment of a loan obviously comes from cash flow and by cash flow we typically mean EIT do which is a measure of measure of cash flow earnings before interest taxes depreciation and advertis so uh for us a good you know all around generally speaking a good debt service coverage ratio is simply the evit do compared to the debt service or the loan payments of 1.25 is the minimum of what we typically look for then on the capital that refers to the equity in the business you know is there sufficient Capital uh paid in capital retained earnings in the business to ensure the business is not highly leveraged because as Bankers we're not we're lenders we're not Partners in your business um and so we don't want to be involved in a business that is very highly leveraged doesn't have enough equity in the business collateral again this is kind of you know it's kind of the back stop there if if if for some reason there was the worst case scenario is there adequate collateral there that the bank could uh could go you know to re to repay the loan as a as a tertiary repayment Source uh it can be for lines of credit it can be the AR the inventory that you've got um supporting the line or for Real Estate it can be the real property itself and you may have heard the term loan to value or LTV uh that's simply the ratio of the the borrowing compared to the collateral and the lower the LTV is the better from a from a lending standpoint uh the fourth one there character again you know when times get tough is the owner uh they have the character to to repay their loan when times get tough and that's something you you don't know until uh times get tough um so we we do look at credit history we do look at FICO scores um but in as a measure of you know trying to get some support there for the character we will ask that uh borrowers their owners guarantee their loans okay and then uh the last one there conditions simply is your market conditions change rates go up economies contract uh is your business flexible enough and adaptable enough to weather you know to weather those changes so those are kind of you know on a high level 30,000 foot those are the kind of the main things that we as lenders look at and then kind of uh these are more considerations just for Public Works projects especially if you are a contractor or a business that's bidding on Public Works contracts um are you the general contractor or are you the subcontractor or as Mark said a sub to a sub because the farther you are down the chain um you know with with Contracting it's paid when paid so if you're a subcontractor to a subcontract and that subcontractor doesn't get paid until the general contractor pays them it can be a while before you receive receive those funds okay um knowing the bid requirements of Public Works jobs is is incredibly important because there's a whole array of legal requirements out there when you're bidding on on Public Works jobs um the big one obviously is it it's a prevailing wage job and did you account for that when you put together your bid do you need to post a bond if you're a subcontractor that's farther down the chain maybe not but as you grow and you're a larger subcontractor on a on a public work job you may be asked to post a bond um all payroll for Public Works jobs has to be certified so that's where getting in with your accountant and having all that explained to you so that's not a surprise when it comes time to uh to submit a a progress billing and you're wondering why you're not getting paid because you're not you're not uh in compliance with the certified payroll requirements uh kind of like everybody else we'd like to have accurate Financial reports work in progress report uh aging balance sheet and income statement are all very important to look forward and to monitor on an ongoing process and then that last bullet point there is in my experience a successful uh Public Work contractor company has to have a has a team behind them which consists of of their attorney their lender their CPA and their insurance agent Andor shity if they're uh if they're needing to post bonds because with those four they can really help guide a company on some of the Public Works jobs that are out there and and when it comes time to bid so U kind of my my my my thoughts that are closing U again that last one have a good team behind you and go into it with the support behind you so it's going to help you alleviate any problems down the road and I will stop sharing fantastic thanks so much George uh up uh last but surely not least we have Stephen fan with craft 3 and alternative Banker Stephen we're excited to hear from you thanks for joining us there we go I'm unmuted there you go I've used Zoom before y'all um so I'm here to share a little bit about craft 3 uh we are an alternative Banker uh Bank like uh Julia said but we are not a bank where was called called a community development financial institution uh you may have heard that acronym before cdfi were one of the larger cdfis here in the Pacific Northwest um been around since 94 on the note there you can see we've done about 700 million over the last 30ish years to nonprofits individuals uh small businesses we are a nonprofit similar to um Colombia like Mark said earlier but we are not a bank in the sense that we do not have depository accounts or treasury no credit cards we strictly do loans for folks and you might be wondering like what types of loans do we do so when a borrower is unable to obtain a loan from a credit union or a bank or a traditional lender for various reasons that you can see on the the screen here whether it's poor credit limited collateral those 5 C's that George mentioned um oftentimes Bankers will reach out to us or direct clients to us because while we utilize the same five Seas of credit that the banks utilize and the credit unions utilize to uh decision loans we're able to be a little bit more flexible because we're utilizing our own loan funds and we can take on a little bit more risk um when it's aligned with our mission and we're supporting the community or small business some of the things we see most often uh like you see here is uh poor credit limited or no collateral um entrepreneurs that only have an itin um or Bridge financing for nonprofits or other types of bridge financing is what we see most often we do also have support in Spanish um that's going to be we have Spanish-speaking lenders business coaches um educational content and then we support the application with Spanish speaking um interpreters but our loan documents and applications are in English they're not in Spanish that's a yet we say that because we're working on it um something that folks uh often forget is this journey is not a straight line and it often times comes backwards so this is a very quick diagram of like where you can see yourself um where you may have seen some difficulties and we'll loop back to this but as you can see you a team like George said at the beginning or at the end of his uh where assembling an advisory team is really important so that they can tell you what you see what they see based on their experience um credit changes this is kind of through the entire process of idea to loan um or if it's not just alone it's you know to the next point in your your growth um we'll be talking a little bit about financing vocabulary the types of funding you may see and then how you can plan your next steps so the vocabulary you know we've talked a ton there's a lot of different types of words that you'll run into see here um big things like micr lenders or break even cash flow analysis you may not know those words in detail but you'll be able to work with folks especially if you have a good team to help you with this um it's okay to ask questions especially when you're in this process you should ask questions um that's why you have the Georges and the marks and the myself of the world is to support the business owner through this process um we're the experts we do this in and day day in day out we want to be able to help you uh oh and Julia Julia helps people too my bad Julia um and we want to be able to support you wherever you are um there are a few types of different there's a few different types of funding that you should be aware of so self-funding sounds exactly like it is you are figuring it out yourself bootstrapping your own business you know there's no application process because it's your money um the sources are your own money so whether it's your retirement accounts your savings if you're able to float your own credit cards that's a source of it but it's you're risking your own funds you're risking your retirement potentially um it's slow because if you don't have enough money you got to earn some money to put towards your your own business it takes time there's grant funding through governments foundations corporations often sometimes um as a grant as it sounds like there's no repayment it's hard however because it's a competitive process there's few dollars to go around for what's needed um and there's going to be work after the fact of you getting the money that it's not just here you go but you're going to have to report back with jobs outcomes um certified documents similar to the payroll uh like that George was talking about earlier Equity financing is where you're offering up a portion of your business uh for some funding essentially so they are Angel Investors Venture capitalists you can bring on your own personal partner um often times it doesn't need to be repaid but you're giving up ownership and control of your own company that dilutes the ability for you to grow or make decisions uh on your own debt financing which is what we are talking about uh today between George and Mark and I is where you're borrowing money with uh the promise to pay us back with a little bit of interest um there are banks credit unions alternative lenders as you can see here the key ones that we're going to talk about which we've already talked about are the traditional lenders Mark and George which are banks and credit unions and then there's us which are cdfis and we're typically on the alternative side as well um there are a number of cdfis in the Portland metro area so you can look them up or reach out to me later if there's questions about who you can partner with or what makes the most sense but with these the the big considerations are loan eligibility so you have to have the financials you have to have numbers you often have to have historical um financials as well but depending on who you're working with uh sometimes there's some flexibility there there's also an interest rate which means you're going to be paying back more than you borrowed but that's the cost of the loan um just like any other loan if you've ever taken one this is a really quick um graph that shows you how much risk these folks are typically willing to take versus how much it'll cost you so as you can see uh Banks and Credit Unions typically take lower risks but they also charge less um for us you can see I don't know if you can see my my uh screen here um but the community development financial institutions we're willing to take on more risk but it also costs more and then predatory lenders are on the opposite end of the spectrum where they're going to be they're willing to take a lot of risk but it's going to cost you a lot of money um and often times and as the bankers can attest to um when you get into a predatory loan it ends up cycling and you end up in a cycle of borrowing very expensive money and then looking for other money to pay this off um and it becomes very hard to get out of when you're planning your next steps for what types of capital to take on um one of the key things that I personally want you to know about and not fall into is the Trap of predatory lending oftentimes this is promises for cash really fast the application is very simple they have typically a few questions about you what you want to borrow and then what types of collateral are available but it's hard for you to understand how much it's going to cost you um the the total cost of loan is hard because you know for a a loan like us a Loan Fund like us or a non or a nonprofit lender uh or Banks or credit unions they're going to have amortization schedules they're going to tell you exactly how much it's going to cost you what the fee will be what the origination costs it's pretty direct um with these loans they may frontload some interest or fees they may add it on it may be compounded monthly instead of annually there's a number of ways and it's really unclear for you as the borrower how much it's going to cost you and that's a concern um no evaluation so they're just going to trust that you're going to tell them that you can afford the money uh the the borrowing the amount that you're borrowing um when there's no evaluation of how you're going to pay it back so both Mark and George talked about financial packages with taxes financials we as lenders look at that to see how much you can afford and rightsize that loan um to see if a you can pay us back because if you can't that's a bad loan for you and for us but also so that you can plan for an appropriate amount of we call it Debt Service but it's we can plan for how much you can afford to pay based on your income reputable lenders I just went over this we're going to look for all those things we're going to look for your returns we're going to look through your financial statements a personal financial statements something that most lenders that are reputable ask for it's going to ask you for your personal liabilities and your personal incomes and what that looks like um George had a great that last slide that George had with the uh items for to to keep in mind uh for public projects that's great because that's something that will be important for every lender and I would you know when Julia sends these out to y'all that's one of the key ones I would take away we as a community development financial institution are looking to support with long-term relationship building you know we're trying to look into what you do where you're at um and support you with essentially meeting you where you're at whether it's needing for connections with folks that are bookkeepers um Spanish speaking especially lawyers uh other advisers similar to Julia Apex accelerators we partner with a lot of other nonprofits and government entities to support folks we also have online learning platforms for small businesses that we can support and connect folks with so for us it's not just doing loans that's one part of how we are a part of the community but it's really getting to know uh the people the businesses and and how we can support the community when you look back at this you know based on just what we've talked about quickly here you know we want you to be able to see that there are spaces for supporting all these items of your journey whether it's understanding your financial statements how to ask questions to A lender or you know what does your credit score mean um craft 3 and other nonprofits like us are here to support you as a resource but also connect you with other trusted resources in all these pieces um if we don't have the capacity to support you with creating a business plan we have other source resources that may be able to um just one example among other things credit scores rebuilding understanding what's on it you know we have support with all that you know when we're reflecting on the journey we want to make sure that you know what you can do to move forward what you can do to ask for more support where you're at but oftentimes that requires one-on-one conversations so we're happy to take on questions here to be able to support you as the business owner but also to just start an initial relationship between whether it's Banner whether it's Colombia whether it's your own bank and your own lender um we are here to support s-craft 3 in that conversation or to potentially even partner with those Banks um with additional Capital that's also something we've been able to support with um all the pictures that you've seen in our slides have been actual borrowers as well so you know we have a lot of work here in the Pacific Northwest and we're excited to be able to support um you wherever you may be at Julia back to you fantastic thanks so much Stephen and uh no worries I my apologies cdfi you're are not a bank uh gotta get that right um so right now we're gonna uh pause here I'm gonna stop the recording we'd like to thank everybody for attending our Workshop today please be sure to check out Washington Apex .org for any more information on upcoming Government Contracting workshops thanks so much everyone take care we'll see you in the next one