Banking Applications Series Small Business Loan Information Center Suite E3422 601 Van Ness Avenue San Francisco, California SBA LOAN ESTIMATOR Quickly and Easily Discloses MONTHLY PAYMENTS MATURITIES ORIGINATION COSTS AND FEES and ALTERNATIVE PAYMENT OPTIONS COPYRIGHT (C) 1990-1992 WARD HARRINGTON/SBLIC ALL RIGHTS RESERVED THIS ABBREVIATED DOCUMENTATION AND ITS ACCOMPANYING SOFTWARE ARE PROTECTED UNDER UNITED STATES AND INTERNATIONAL COPYRIGHT LAW. THE SBA LOAN ESTIMATOR is a fully configurable computer program that will let you calculate and disclose REPAYMENT TERMS, ORIGINATION COSTS AND FEES and ALTERNATIVE PAYMENT OPTIONS for loans guaranteed by the U.S. Small Business Administration under Section 7(a) of the Small Business Act of 1953. Under the SBA program, the maturity of a loan is governed by the use of the loan proceeds. Since most loans involve more than one use, the lender must calculate a hybrid maturity. For example, while the SBA will allow up to 25 years for repayment of a loan to purchase real estate, less time will be available if the loan also includes funds for purchase of furniture & fixtures, working capital, and payment of the origination costs & fees. How much less time is determined by the relative proportions of each use to the total amount of the loan. Further, the maximum permitted interest rate is governed by the loan's maturity - the longer the term, the higher the rate - so it is often to the lender's advantage to structure the loan for the longest permitted repayment period. Finally, the amount of the SBA guaranty is governed not only by the use of proceeds (funds used for refinancing may be guaranteed from a maximum of 80% to a minimum of zero) but also by the size of the loan. These variables interact in a way that is burdensome to calculate by hand. By automating the calculation, THE SBA LOAN ESTIMATOR lets you quickly and easily perform comparisons between different financing scenarios, and it provides a comprehensive printed report of each alternative to help you sell, and cross-sell, your prospect. TO USE THE PROGRAM, YOU NEED TO HAVE a computer capable of running software written for the IBM Personal Computer with at least 400 Kb of memory available for the program's use. Most IBM, IBM-compatible and Macintosh (using compatibility software) computers are capable of running the program. The program automatically detects and adapts itself to the CPU, the Numeric Co-processor (if you have one installed), and the amount and type of available memory. While THE SBA LOAN ESTIMATOR is designed to run efficiently on modest equipment, it will take full advantage of the capabilities of high-end hardware. Most monitors are automatically detected and compensated for, but you may set the display colors as you wish. Most printers are supported; the program assumes that you will be using a standard parallel printer attached to parallel printer port #1, but you can specify alternative parallel or serial ports. TO INSTALL THE PROGRAM FOR USE, copy the distribution files (QUOTE.EXE and QUOTE.CFG) onto another floppy disk or onto your hard disk. If your computer has already been set up to run a word processor, spreadsheet, or database program, you do not need to do any additional installation. TO RUN THE PROGRAM FOR THE FIRST TIME, change to the drive and directory where your working copies of QUOTE.EXE and QUOTE.CFG reside, type QUOTE and hit the ENTER key. This will bring up the MAIN MENU screen. Everything done by THE SBA LOAN ESTIMATOR is controlled by a menu which appears in the top left part of the screen as well as on the bottom of the screen where the menu choices are explained. To choose an option from the menu, simply type the first letter of the option's name. The MAIN MENU screen, however, lets you access hidden and semi- hidden features, as well as the choices which are displayed. We will explain the hidden features shortly, but, for now, you will want to use the semi-hidden feature, SETUP, to personalize the program for your own use and to confirm four items which you will need to change occasionally. TO RUN SETUP from the MAIN MENU screen, type S and hit the ENTER key. You will see a screen divided into two sections: BUSINESS CARD and MISCELLANEOUS. A large pointer will be set opposite the phrase Your Name. Type your name as you want it to appear on printed reports - your typing will be displayed in the upper left corner of the screen and you may edit it by using the BACKSPACE key and the cursor arrows. When you have your name set up the way you want it to be printed, hit the ENTER key. This procedure: type, edit in the upper left corner, and hit ENTER, is how the program accepts all of the information you furnish. The BUSINESS CARD section lets you add two message lines, such as the name of your Bank, your address, your telephone number, or whatever else you want to put on the printed reports. The MISCELLANEOUS section lets you enter infrequently-changed information such as the usual packaging fee and miscellaneous costs, the prime rate and the rate spread. To accept the numbers as they appear, just hit the ENTER key and the pointer will move to the next item. If you want to change any of these numbers, just type them in the way you see them on the screen (for numbers, you do not need to furnish dollar signs or commas; the program knows to add them by itself). The program uses a rate spread of 2.75 initially; this means that you want the program to calculate repayment based on Prime + 2.75 or the maximum permitted rate, whichever is lower. If you change the Rate Spread to 1.00, then the program will use Prime + 1 or the maximum permitted rate, whichever is lower. When you have finished the Rate Spread item, the program will save your old configuration file as QUOTE.BAK, and it will then save your new configuration file as QUOTE.CFG. Then it will return you to the MAIN MENU screen. DAILY USE OF THE PROGRAM begins at the MAIN MENU screen. By typing C to CONTINUE, you move to a screen which asks you to enter the customer's name as you want it to appear on the printed reports. When you have typed the customer's name and hit the ENTER key, a menu will appear giving you the choice of C to CONTINUE or Q to QUIT. Type C to continue to the next screen. This is the first of two screens titles HOW THE LOAN FUNDS WILL BE USED. You may enter totals in the blocks, or you may use adding machine mode (for example, if the customer is buying three trucks, each with a different price, you may enter, under PURCHASE OF MACHINERY AND EQUIPMENT, something like 23500+28000+52300 and the program will use the total, or $103,800, in that block. You can add, subtract, multiply and divide in adding machine mode. At the end of this screen, a menu appears with a new option - in addition to C for CONTINUE and Q to QUIT, you may choose to type R to REVIEW. This will take you back to the beginning, so that you will be able to change any of the numbers you have entered so far. The second HOW THE LOAN FUNDS WILL BE USED screen begins to let you do some creative tailoring. Once you fill in the first four items (PURCHASE OF INVENTORY, PAYMENT OF EXPENSES AND ACCOUNTS PAYABLE, GENERAL WORKING CAPITAL and OTHER USES OF LOAN FUNDS) the program will pop up an estimate of origination fees and costs. This estimate will usually be higher than the program's final calculation of fees and costs, and you will be able to adjust for the difference in a few steps. For now, you can enter a number (which can be zero, any portion of the estimate, or a number as high as you like) as the amount to add to the loan to accommodate fees and costs. The next screen will display the amount of the loan, and ask you for a REQUESTED REPAYMENT PERIOD (in years) and a DRAWDOWN PERIOD (in months). The program will calculate repayment on the number you enter for the REQUESTED REPAYMENT PERIOD, or the maximum time the SBA regulations will allow, whichever is less. The program will assume that you will charge the customer for interest only on the actual amounts drawn down for the number of months entered under DRAWDOWN PERIOD. A drawdown period of zero means that you will advance the whole loan in one lump sum at closing. A drawdown period of 1 month means that you will make several advances within 30 days after closing. Drawdown periods of 3-6 months are common, and are an excellent selling point since many non-bank SBA lenders prefer to advance quickly, leaving the customer to pay interest on money he has not used yet. After you enter the drawdown period, the program presents the RESULT SCREEN which lets you type V to VIEW a summary report of the loan on your screen, P to PRINT the complete report on your printer, R to REVIEW the numbers entered so far, or Q to QUIT. To fine-tune the loan, type V to VIEW the summary report, which will show you the TOTAL AMOUNT of the loan, the actual ORIGINATION FEES & COSTS (including the SBA Guaranty Fee of 2% of the amount guaranteed), the FEE ALLOWANCE INCLUDED in the loan, the MATURITY in years, the INITIAL INTEREST RATE, the INITIAL RATE BASIS (as a number of points over Prime), and the INITIAL MONTHLY PAYMENT. Asterisks call your attention to the FEE ALLOWANCE and MATURITY lines, because you may want to adjust the fee allowance higher or lower (it is best, in any event, to adjust the total amount of the loan to an even number by increasing or decreasing either or both of the working capital or fee allowances) and you may want to adjust the maturity inward to a non-fractional number of years (highly recommended). To make these, or any other adjustments, type R to REVIEW. PRINTING REPORTS is usually as easy as typing P from the RESULT SCREEN. This will send the report to a printer attached to Parallel Port #1 (unless you use a hidden command to change that). However, if your printer is not on, not ready, out of paper, or jammed, the program may stall. In that case, hit the ESCAPE key. Then, hold the ALT key and type G; this should give you a menu that lets you choose to CONTINUE or QUIT. If the ALT- G solution does not work, use the "emergency exit" by hitting the ESCAPE key and then holding down the ALT key while typing X to exit the program. TO USE THE HIDDEN COMMANDS, you must be at the MAIN MENU screen. Hold down the CONTROL key and hit the BREAK key (usually located near the 9 on the numeric keypad). The menu will disappear, and you may use these hidden commands: ALT + R to RECONFIGURE. You will rarely, if ever, need to change any of the numbers on the Reconfiguration screen. Changing these numbers incorrectly will make the program give incorrect results, to proceed with caution. Full documentation on this program, including the meaning of each number in the RECONFIGURATION screen, is available from SBLIC, Suite E3422, 601 Van Ness Avenue, San Francisco CA 94102. /V for VIDEO adjustment. This will let you adjust the colors on your screen to your liking; use your arrow keys and ENTER key to make choices. /W for WORKSHEET adjustment. /WR lets you change the RECALC option to Automatic if you have a fast computer. /WGDP lets you select printer interfaces and ports, and to set margins. BEFORE YOU USE ANY OF THE HIDDEN COMMANDS, BE SURE THAT YOU HAVE THE ORIGINAL QUOTE.EXE AND QUOTE.CFG FILES AVAILABLE. If you make a mistake with the hidden commands, you can recover by copying your original QUOTE.EXE and QUOTE.CFG files to your working disk or directory. THE HIDDEN COMMANDS CAN, IF INCORRECTLY USED, RENDER THE PROGRAM USELESS. BY USING THEM ONLY ON COPIES OF THE ORIGINAL FILES, YOU CAN ALWAYS START AGAIN FROM THE BEGINNING. For complete printed documentation, the latest edition of the program, and information on other programs in the Banking Applications series, send $20.00 to: SBLIC Suite E3422 601 Van Ness Avenue San Francisco, CA 94102 Please indicate your choice of media (5.25" or 3.5").