207. Submit proof of income or recent year’s tax records (if business owner)
208. Borrowers with established businesses can substitute co-signer qualification by choosing to pay a 5% nonrefundable fee upon disbursal
209.
210.
211. Loan Application Process – Start-Up Business Let’s Get Started: Example Entrepreneur: Rose Montini Business: Handbag Designer and Manufacturer Time in Business: 6 months Requested Loan Amount: $10,000 Purpose: Inventory and Marketing
228. If declined, the loan consultant will explain the reason for the decline.
229. If declined, the loan consultant will help the borrower make an action plan to resolve the issues so that he/she may reapply in 3 months.
230.
231. If the loan is approved, the client must do the following to receive the loan:
232. Electronically sign the disbursement documents (sent via secure email) or sign the documents with a notary
233.
234. Loan Application Process – Established BusinessFunding an Established Business - Example Michael Killian Business: Restaurant Time in Business: 5 years Requested Loan Amount: $30,000 Purpose: Update restaurant with new kitchen equipment, furniture, and signage.
252. ACCION USA’s website has a variety of financial education resources including articles, worksheets and online webinars to help our clients help themselves. www.accionusa.org
253.
254. The online course will walk you through the basics of reading a credit report, managing credit, and improving credit if it has been damaged.
255. Play out different scenarios by answering questions throughout the course to see how much you know about credit, and learn what works best in various situations. Take the Credit E-Learning course Access it at www.accionusa.org in the “Managing Credit” section of the website
256.
257. Revolving Debt: up to $10,000 if debt has a higher interest than an ACCION USA loan. Only one credit card may be refinanced per loan.
260. Question 1: Alejandro Let's Practice! Alejandro Diaz has a used clothing sales business that has eight months in operation and is not yet profitable. Alejandro is aware of the co-signer requirement. Which of the following individuals would make the best co-signer? His cousin who is also a partner in the business. His actively employed aunt. His uncle who is currently unemployed and living with Michael’s grandmother.
261. Question 1: AlejandroLet's Practice! If You Chose #1: His cousin who is also a co-owner of the business. Not the best choice… The co-signer needs to be someone outside of the business. The cousin will already be required to sign on as a co-borrower. If You Chose #3: His unemployed uncle who is currently living with Alejandro’s grandmother. Not the best choice… Co-signers must demonstrate that they have the capability to cover the loan payment should the borrower be unable to pay. Additionally, co-signers must be able to demonstrate a minimum of 6 months of stable employment.
262. Question 1: Alejandro Let's Practice! If You Chose #2: His actively employed aunt. This is the best choice! Alejandro’s actively employed aunt could be an ideal candidate to serve as a co-signer on this loan.
263. Question 2: AlejandroLet's Practice! Alejandro hasn’t created a formal business plan for his used clothing sales business. What are his options? Business plans are unnecessary for small businesses. Create a list of reasons for which he wants the money and how he will use it. Utilize ACCION USA’s online resources to craft a business plan.
264. Question 2: AlejandroLet's Practice! If You Chose #1: Business plans are unnecessary for small businesses. Not the best choice… Business plans play an important role in the documents necessary to gain an approval for a loan. If You Chose #2: Create a list of reasons for which he wants the money and how he will use it. Not the best choice… This is a good start, but what Alejandro needs to do is assemble a business plan.
265. Question 2: AlejandroLet's Practice! If You Chose #3: Utilize ACCION USA’s online resources to craft a business plan. This is the best choice! This is an important document that ACCION USA will want to see prior to approving the loan. ACCION USA’s online resources are very helpful for new borrowers.
266.
267. He has two partners in the business and each of the partners owns an equal share in the business.
270. Question 1: EmekaLet’s Practice! If You Chose #1: Only Emeka as long as he securitizes the loan. Not the best choice… Since the business is established, Emeka does not require a co-signer to securitize the loan. Any partner in the business who owns 20% or more must apply. If You Chose #2: Emeka and one cousin, because only one co-borrower is required. Not the best choice…… ACCION USA stipulates that all partners with more than a 20% interest must apply as a co-borrower. There is no limit to the number of co-borrowers.
271. Question 1: EmekaLet’s Practice! If You Chose #3: Emeka and both cousins. This is the right choice! Since each cousin owns 1/3 of the business, they must each apply as co-borrowers and meet all of the credit qualifications.
272. Question 2: EmekaLet’s Practice! Emeka’s business has had cash flow issues. Revenue and expenses have been inconsistent and the business has reported a loss in certain months. Can he get the loan? He has no chance. Cash flow must be spotless. Yes, if he can demonstrate a current 2:1 ratio of covering the monthly loan payment.
273.
274.
275. Knowledge Check Which of the following will automatically disqualify potential borrowers from receiving an ACCION USA loan? A. Credit Score of less than 575 B. Late payment on rent or mortgage in last 12 months C. An adjustable rate mortgage (ARM) that will adjust during the term of the loan D. All of the above will disqualify potential borrowers
276. Knowledge Check What is the first step you will take with your borrower? A. Examine financial documents for credit worthiness B. Prepare a business plan and financial projections C. Complete the first page of the loan application to determine if borrower is eligible for a loan
277. Knowledge Check How many days does a borrower have to submit their documentation before they will need to reapply? 30 45 60 90