SBA LOAN PLANNER Version 2.5 - November 1, 1992 Copyright 1992 Ward Harrington Small Business Loan Information Center Suite E3422 601 Van Ness Avenue San Francisco, CA 94102 This version of the SBA LOAN PLANNER is distributed as Shareware. This means that you are free to use the program for no charge in order to decide whether or not it meets your needs. If you elect to use the program on a routine basis, then you are required to obtain a registered copy by paying a fee. License is granted to the user of a registered copy of the program and its documentation (the Materials) to use the Materials and reports generated thereby an unlimited number of times for an unlimited period of time, and to make an unlimited number of copies of the Materials for the use of the user and others, provided that the user may not incorporate any of the Materials into a larger work, that the user may not alter the Materials when distributing copies of them to others (this provision includes the requirement to place this copyright notice on all distributed copies of the Materials), that the user, when distributing copies of the Materials to others, charge dis- tributees no more than $5.00 for magnetic media and $15.00 for documentation, and that the user and distributees accept dis- tribution of the Materials as without warranty for any purpose. All rights not specifically granted by the foregoing are reserved. To get a registered copy of the latest version of the software (and a printed manual) send $20.00 to Ward Harrington, SBLIC, Suite E3422, 601 Van Ness Avenue, San Francisco, CA 94102. Neither Ward Harrington nor the Small Business Loan Information Center is an employee, agent or affiliate of any governmental organization. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . 1 What kind of loans are we talking about here? . . . . . 1 Where to get More Information on SBA Programs . . . . . 2 Calculating Maturities By Hand . . . . . . . . . . . . . 3 SYSTEM REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . 5 QUICK START . . . . . . . . . . . . . . . . . . . . . . . . . 6 INSTALLING THE PROGRAM . . . . . . . . . . . . . . . . . . . 8 USING SETUP . . . . . . . . . . . . . . . . . . . . . . 8 THE WELCOME SCREEN . . . . . . . . . . . . . . . . . . . 11 USING THE PROGRAM . . . . . . . . . . . . . . . . . . . . . . 12 Screen 1: Company Name . . . . . . . . . . . . . . . . 12 Screen 2: Use of Funds . . . . . . . . . . . . . . . . 13 Screen 3: Use of Funds (continued) . . . . . . . . . . 15 Screen 4: Repayment Period . . . . . . . . . . . . . . 16 REPORTS: VIEWED AND PRINTED . . . . . . . . . . . . . . . . . 18 Understanding the SUMMARY REPORT . . . . . . . . . . . . 18 Understanding the PRINTED REPORT . . . . . . . . . . . . 21 RECONFIGURATION . . . . . . . . . . . . . . . . . . . . . . . 24 OTHER HIDDEN COMMANDS . . . . . . . . . . . . . . . . . . . . 29 PRINTER Commands . . . . . . . . . . . . . . . . . . . . 30 VIDEO Commands . . . . . . . . . . . . . . . . . . . . . 30 TECHNICAL SUPPORT and SUGGESTIONS . . . . . . . . . . . . . . 31 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 INTRODUCTION Many bankers (not to mention business people) are put off by the fact that it is difficult to ascertain the repayment terms of SBA loans when they are in the planning stage of putting a financing plan together. There are rules of thumb, ways of making educated guesses, and simple rounded-off illustrations, but the answer to the question "how many dollars each month is this option going to cost" requires considerable knowledge of the program, and no small amount of calculation. Under the SBA program, the maturity, or period to repay, of a loan is governed by how the borrowed funds are used. Funds used for purchase of inventory and general working capital usually must be repaid in 7 years or less. Funds used for purchase of capital equipment and real estate may be structured over a longer period. Most businesses borrow to finance a variety of needs; under the SBA program, this means that the percentage of funds used for a variety of purposes must be factored into a weighted average in order to determine whether the monthly payment must be calculated on a maturity of 5, 10 or 25 years, or any number of years in between. Further, the SBA regulations allow a higher interest rate for loans with maturities of 7 years or more. In some cases, it is better to limit the loan to less than 7 years, while in others it is better to accept the higher payment that results from a longer maturity. In order to make a proper choice, you need to be able to calculate the longest maturity available, as well as monthly payments for different maturities under the maximum limit. The SBA LOAN PLANNER will tell you the maximum possible maturity for any particular financing scenario, and it will then let you calculate payment options based on the maximum maturity as well as any shorter periods you specify. It will let you view and print the results of as many "what if" scenarios as you may care to set up, so that you will be able to make a well informed decision about structuring a business financing package that includes an SBA loan. Because Government program requirements change from time to time, the SBA LOAN PLANNER lets you reconfigure the way it makes cal- culations. It will also print your name, telephone number and message (as well as the date and time) on its printed reports. What kind of loans are we talking about here? The Small Business Administration, a Federal agency established on a pilot basis in 1953 and later made permanent by Act of Congress in 1955, offers a large number of loan programs. However, two loan programs account for almost all of SBA's lending activity. They are the 7(a) Loan Guaranty Program and SBA LOAN PLANNER 1 1 the 504 program. 7(a) Guaranty Loans account for the lion's share of all SBA lending. The SBA LOAN PLANNER calculates maturities, origination costs, and payment terms for 7(a) guaranty loans. In the 7(a) program the SBA guarantees repayment of part of a loan that a lender (such as a bank, one of a few licensed non-bank Small Business Lending Companies or, in certain States such as Califor- nia and Michigan, Business & Industrial Development Corporations or BIDCOs) makes to a small business. The SBA guaranty lets the lender give the business a much longer time to repay the loan: up to 7 years for working capital, up to 10 years (sometimes more) for equipment, and up to 25 years for real estate purchase or improvement. A loan made for a combina- tion of purposes (such as $10,000 to buy additional inventory, $25,000 to buy a delivery truck, and $50,000 to add space to the warehouse) gets a BLENDED MATURITY based on the amounts of the loan used for the different purposes (in the example just given, the blended maturity would be 9 years if the business leased the warehouse, and 13 years if it owned the warehouse). The SBA has two different ways of calculating a blended maturity, the WEIGHTED AVERAGE method and the SUM OF PAYMENTS method. These methods do not always give the same result, especially at higher interest rates. In approving a particular guaranty, the SBA will usually (but is not required to) use the shorter of the two results. The SBA LOAN PLANNER uses both methods, and will alert you when the Sum Of Payments Method indicates a shorter blended maturity than the Weighted Average method. Where to get More Information on SBA Programs Title 13 of the Code of Federal Regulations, published by the National Archives and Records Administration and available in most public libraries, is the definitive reference for SBA program information. Business loan policy is set forth in Parts 120 and 122. Size standards (the definition of a "small" busi- ness, industry by industry) are in Part 121. The regulations were rewritten and reorganized in 1986, so they are clear and easy to follow. The SBA Answer Line, a 24-hour automated information service, is just a toll free call away from any touch tone telephone. Pre- recorded messages explain nearly every aspect of SBA's financial, management, and procurement assistance programs; the answers are consistent, usually clear, and available in the middle of the night (when most people do their planning). The Answer Line will also give you the address and telephone number of the SBA office that handles program delivery in your area. To get the SBA Answer Line, dial toll free: 1-800-827-5722 SBA LOAN PLANNER 2 2 The SBA also has an internal publication, POLICIES AND PROCEDURES FOR FINANCING FUNCTION also known as S.O.P. 50-10-3. Some SBA offices will let you review a copy, and larger public libraries also may be able to help you. The material on establishing maturities is on pages 79 - 81. Calculating Maturities By Hand The SBA's rule (Page 81 of SOP 50-10-3) is: Where a portion of proceeds are for purposes with a shorter maturity, such as working capital, and a por- tion for purposes with a longer maturity, the loan will be amortized either on a weighted average basis or by calculating the sum of equal monthly payments based on the allowable maturities for each purpose. Only one note will be required. In practice, the processing Loan Officer will usually look at the loan application (SBA Form 4) and segregate the itemization of uses for the loan funds into 3 columns: 7-year uses, 10-year uses and 25-year uses. Each column is totalled, and, using a set of amortization tables or a financial calculator, the processor gets a monthly payment for each of the three columns as if each were a separate loan. The three monthly payments get added together; that will be the required monthly payment. The three totals get added together; that is the amount of the loan. The processor then uses a set of amortization tables or the financial calculator to match the monthly payment and loan amount to a particular term. The processor will then make final adjustments (for refinancing funds and discretionary adjustments - the processor is not REQUIRED to approve the maximum possible maturity for each loan, and is sometimes encouraged NOT to), backs up to the last whole year, and records the monthly payment. One mathematical oddity about this process is that the "answer" will vary depending on what interest rate you use; you will get a shorter maturity at 20% interest than you will at 5%. Using a weighted average avoids this, but the weighted average "answer" won't always correspond with the sum of payments "answer." In the real world, of course, things are even less easy. Let's say that the Acme Sheetmetal Company has a chance to buy its warehouse from the landlord for $250,000. It also needs a new truck which will cost $25,000 and it has the chance to buy some 10-gauge galvanized sheet at a favorable price and figures that $25,000 worth would be a good buy. That is a total financing need of $300,000. SBA LOAN PLANNER 3 3 Acme's financial wizard, not having been born yesterday, under- stands that there a lot of options available to finance this $300,000 opportunity. The company can assume the existing $100,000 loan on the warehouse (which has a known monthly pay- ment) and get a new loan of $150,000 from a bank )on a 20 year basis with a 5 year call for two points and Prime + 3), or it can finance the whole $250,000 at the same 20-year amortization with a 5-year call for four points at Prime + 3. The dealer will finance the truck for 3 years at 6% fixed. The Bank will finance the new sheetmetal on a line of credit, but the banker mentioned at least five times that the line would absolutely have to be rested (have a zero balance) for at least one month out of every 12. Or, Acme can finance all or any part of the package with an SBA loan. All the financial wizard needs to do is to figure out the different combinations of alternatives, see what each will cost on a monthly basis, and decide which makes more sense for the business in view of its expected cash flow. That's a lot of three-column figuring. Just to keep the wizard awake, the SBA will handle loans over $155,000 with a lower guaranty than loans under $155,000 (which makes a difference in the origination fee) and it has a different interest rate for loans that mature in over 7 years (one of the wizard's options is to do just the truck on an SBA loan - and he figured he'd look at 3, 5, 7 and 10 years for that). After I had done this kind of thing a few hundred times, I made a spreadsheet template to make the job easier. A few years of refinement later, the template had so much "nested if" logic in it that it ran so slowly it was almost faster to go back to the old way, so I turned it into a free-standing program. Thanks to the suggestions and observations of a great many people who used the earlier versions, I have kept making the program and the instructions easier to work with. As it stands, the SBA LOAN PLANNER will run with reasonable speed on very modest equipment. To get it to do that, I had to forego drop-down menus, exploding windows, sound effects and anything else that seemed to be less than absolutely essential (and that extends to checking your input before you enter it - yes, you can put words where you ought to put numbers and the program won't complain, and preventing you from zipping around the screen changing words just like you can do on many mainframe and credit report terminals). The SBA LOAN PLANNER is designed to help you structure an SBA loan request as quickly and as easily as possible. Any sugges- tions you have to push it farther along that path will be most welcome. Ward Harrington SBA LOAN PLANNER 4 4 SYSTEM REQUIREMENTS The SBA LOAN PLANNER is designed to run efficiently on modest equipment, although it will take full advantage of extra memory and numeric co-processors. It automatically evaluates the system you are running it on, and it will configure itself to the processor(s), monitor, and memory in use. At the minimum, you will need: * A computer capable of running software written for the IBM Personal Computer (or compatible), * 512 KB of main memory, with at least 400 KB available to the program, * A monochrome or color monitor (the program automatically adjusts itself to the monitor you are using, and it will let you adjust colors on LCD and color monitors to suit your preference), * DOS 2.1 or greater (MS-DOS, PC-DOS or DR-DOS or compatible) although MS-DOS 5.0 or DR-DOS 6.0 are recommended. For network use, you should be using DOS 3.3 or greater. * At least one disk drive; a hard disk is not necessary. You should be sure to copy the program to a blank floppy disk and work only with the copy. * Optionally, a printer. The program is set up to use a generic printer on Parallel Port #1, but you can change this as you need to. The SBA LOAN PLANNER can be run from a 360-KB floppy disk, any larger floppy disk, or a hard disk. SBA LOAN PLANNER 5 5 QUICK START Are you familiar with DOS and your computer? If so, this abbre- viated summary of how to install and use the SBA LOAN PLANNER may be all you need to get started. If this section does not give you enough information, then just go to the next section, In- stalling the Program. In either case, once you have successfully navigated around the program, be sure to at least skim the whole manual. We have tried to incorporate many "hands on" suggestions from seasoned lenders to help you use the SBA LOAN PLANNER to structure better SBA loans. 1. Make a working copy of the program The SBA LOAN PLANNER will fit comfortably in 360 KB, so feel free to make your working copy on a floppy or a subdirectory on your hard disk. The program is not copy-protected; please work from a copy and not your original files! 2. Check your environment Be sure that you are running DOS 2.1 or greater (3.2 or greater if on a network) and that you have at least 400 KB TPA (memory free after DOS and any device drivers and TSRs are running). If you have decided to run the SBA LOAN PLAN- NER from a subdirectory on a hard disk, you should check to see that your CONFIG.SYS file contains the statement FILES=15 or more. 3. Start the program Log to your working copy and type PLAN to start the pro- gram. For example, if your working copy is in Drive A, get an "A Prompt" by typing A: and pressing the Enter key, and then type PLAN and press Enter. An introductory screen will come up while the main program loads. Once the loading process is finished, the introductory screen will display the legend "Press any key to continue ..." Note! You need to log to the drive or directory where the program is located BEFORE typing PLAN. Otherwise you may get the error message "Cannot locate PLAN.EXE." If your working copy of PLAN.EXE (and PLAN.CFG) is in B:, get the B: prompt first, then type PLAN and press Enter. 4. Run SETUP Pressing any key (the space bar is recommended) will take you to the WELCOME screen which will have a menu in its SBA LOAN PLANNER 6 6 upper left corner. One of the choices is Setup; choose it by typing S. Replace the BUSINESS CARD information by typing, editing in the upper left corner of the screen, and pressing Enter. Accept (for now) the information in the MISCELLANEOUS sec- tion by pressing Enter. Once you have accepted all of the suggestions, you will be returned to the WELCOME screen. 5. Take a "Test Drive" The SBA LOAN PLANNER, just like the SBA, wants to know exactly what you want to use the loan funds for, and how long you want to pay the loan back. Just follow the prompts and menus; after 4 input screens, you will come to the RESULT SCREEN which lets you View or Print a report, Review your figures, or Quit. Note! Before deciding to Print, be sure that your print- er is on-line, selected, and ready to print one page. If you decide to print, but the printer decides not to, the program will stall (once you are accustomed to the program, you will want it to stall sometimes, and this is the best way to ac- complish that). Press the Escape key, then Alt + G (for GO) will usually re-start the program after a stall. Alt + X (for EXIT) will usually take you back to the DOS prompt. 6. Review your figures When you arrive at the RESULT SCREEN and choose View, Print, or Review, the program will perform your selection and return you to the RESULT SCREEN. Once you have viewed or printed a report, choose REVIEW. The program will take you, step by step, through the input sequence so that you will be able to "fine tune" your presentation. You can re-review as often as you like. Note! Reviewing does not take you back to the first input screen, where you enter the borrower's name. If you want to start work on a completely new loan, quit the program and start again. 7. Read the section of this manual on RECONFIGURATION Now that you know how to work the program, the RECONFIGURA- TION section will give you a good idea about how it works. SBA LOAN PLANNER 7 7 INSTALLING THE PROGRAM If you used the QUICK START information in the previous section and had no problems or questions, you can probably skip this section. The SBA LOAN PLANNER is not copy-protected in any way, and it is composed of two files: PLAN.EXE, the main program file, and PLAN.CFG, the file that holds your configuration information. Make copies of the two program files onto a floppy disk or your hard disk. As with all software, make another set of copies on another floppy disk, label the disk "SBA LOAN PLANNER BACKUP" and keep it in a safe place where you will be able to find it if something should happen to your working copy. Every time you run the program, it will evaluate the system you are running it on and adjust itself to take maximum advantage of your system's resources. If you upgrade your CPU, add a co- processor or add memory, you don't need to do anything to the SBA LOAN PLANNER. You can use the same floppy on your desk machine and on your portable; the program will know the difference and adjust itself. There are some things the program can't do automatically because it doesn't know your preferences. If you have a color monitor, you might want to change the colors the program uses. If you want to use a printer connected to something besides your first parallel port, you will need to make a manual change. And you will probably want to personalize the program's printed reports with your name, telephone number and other pertinent information. USING SETUP To customize your installation (and to learn how to use the program), take your working copy of the program and: Change to the drive or directory your working copy is in. For example, if your working copy is on a floppy in Drive B:, type B: and press Enter. Start the program by typing PLAN and pressing Enter. The program will display an opening screen and, after it has taken care of its start-up procedure, will wait for you to press any key to continue. Note! You need to log to the drive or directory where the program is located BEFORE typing PLAN. Otherwise you may get the error message "Cannot locate PLAN.EXE." If your working copy of PLAN.EXE (and PLAN.CFG) is in B:, get the B: prompt first, then type PLAN and press Enter. SBA LOAN PLANNER 8 8 Press any key (the space bar is always an excellent choice) and the program will display a WELCOME screen. You can customize and configure ONLY when the WELCOME screen is displayed. The WELCOME screen will display a menu in its upper left corner. The Menu has 3 options: Continue, Quit and Setup. To choose an option from the menu, type its first letter ... to customize your working copy of the program, type S. The SETUP screen will appear. The BUSINESS CARD section of the SETUP screen allows you to enter information that will be used to personalize the reports that are printed by the SBA LOAN PLANNER. You will see a large pointer opposite the phrase Your Name. Type your name as you want it to appear - your typing will be displayed in the upper left corner of the screen and you can edit what you type by using the cursor arrows, the Backspace key and the Delete key. When you are satisfied with the way your name is typed, press Enter. This procedure: type, edit (if necessary) in the upper left corner of the screen, and press Enter, is how the program accepts all of the information you furnish. Once your name is entered, the pointer will move down to Message Line 1. You can use this space for your telephone number, address, the name of your organization, or whatever you like. Message Line 1 will be printed directly under your name on the printed reports. When Message Line 1 is entered, the pointer will move down to Message Line 2, which works exactly like Message Line 1. The information you enter into Message Line 2 will appear directly below Message Line 1 on the printed reports. The MISCELLANEOUS section of the SETUP screen lets you enter information that is subject to frequent change. There are four items which you can accept the displayed values for by pressing Enter, or you can change them by typing in a new value and then pressing Enter: PACKAGING FEE: many small businesses pay attorneys, ac- counts, lenders or other specialists to assemble the documents and exhibits which the SBA requires in the loan package. You cam enter any fixed-dollar amount (many SBA offices are very leery about situations under which the borrower pays a representative a percentage of the amount of the loan as a fee) from zero to what- ever fits. Note that the SBA is likely to require an itemization of these fees if they amount to more than $750, and it may require itemization in any case if they exceed $300. SBA LOAN PLANNER 9 9 MISCELLANEOUS COSTS: this is an allowance for various costs such as lien searches, wire transfers and similar expenses. The program will use the amount you enter here as a minimum; in no case will it report fees of less than the amount you enter, although it may report a higher amount. PRIME RATE: most SBA Guaranty Loans are based on the Prime rate of interest, and are expressed as a "spread" of so many percentage points above Prime. In order to calcu- late monthly payment information, the SBA LOAN PLANNER needs to know the current Prime rate; enter it the way you see the sample on the screen (type 6.000 if the Prime rate is 6%). RATE SPREAD: this is used along with the Prime rate de- scribed above to calculate monthly payment information. The program will use the spread entered here, or the maximum spread allowed, whichever is lower, in its calculations. Enter the spread as you see the sample on the screen: for a spread of 2 points above Prime, type 2.750. Once your Rate Spread is entered, the program will save your old configuration information to disk in a file named PLAN.BAK. It will then save your new configuration information to disk in a file named PLAN.CFG, after which it will take you back to the WELCOME screen. SBA LOAN PLANNER 10 10 THE WELCOME SCREEN The Welcome Screen gives you a chance to choose one of three options from the menu in the upper left corner: Continue, Quit or Setup. It also lets you use certain hidden commands to recon- figure some of the rules the program uses to make calculations, to make personalized adjustments for the monitor you are using, or to choose a printer other than a "generic" printer connected to Parallel Port 1. To make a choice from the three-item menu, type the first letter of your choice. Throughout the program, when you need to make a choice, a menu that works exactly like the menu here will be displayed in the upper left corner of the screen. CONTINUE will let you begin to enter information for a particular financing scenario. More information about CONTINUE is in the following section titled DAILY USE OF THE PROGRAM. QUIT will end the program. SETUP will let you personalize the program and enter guide- lines for origination fees and interest rates. More information about SETUP is in the section just preced- ing this one. For information about using the hidden commands, please refer to the sections titled RECONFIGURATION and HIDDEN COMMANDS. Note! There are two special Hidden Commands you should be aware of right now, because they let you deal with the program if it happens to stall. If, for example, you decide to print a report but the printer decides not to print (perhaps it is turned off, out of paper, jammed, not on line, has a loose cover or is simply out of order) the program will stall. Press the Escape key. Hold the Alt key and type G (for GO). The program should re- start and take you to the WELCOME screen. If it doesn't, then hold the Alt key and type X (for EXIT) and the program should terminate gracefully. SBA LOAN PLANNER 11 11 USING THE PROGRAM Once you choose CONTINUE from the WELCOME screen, you will begin a "guided tour" of four screens that will collect information in order to give you a short on-screen summary, a detailed printed report, and as many opportunities as you want to review and revise your entries. The SBA LOAN PLANNER works in three phases: it gathers informa- tion, reviews the information it has already gathered, and presents results. You enter information in four screens, and, at the end of each screen, you will be able to go back and review (and, if you want to, change) everything you have entered so far. Did you change your mind about something you just entered? Don't worry about it ... finish the screen, choose Review, and make whatever changes you want to. At the end of the information gathering phase, you will be able to View a summary of your results on your screen, to Print a detailed report, or to Review all of your input. You'll probably find it easiest to go through the information gathering screens, then View the summary of results to see how everything adds up, and then Review at least once before Printing. Why would you Review? For example, you might have decided, at first, not to include the origination fees and costs as part of the loan but, now that you know the monthly payment, you are curious about how much it would cost to include the fees after all. Or you might find that your loan adds up to $149,200 and you want to add $800 in working capital to bring it to a round $150,000. In either case, just pick Review from the menu that is presented along with the View screen, make the changes, and View again. You can loop through this process as many times as you want to. But first, you need to enter all of the information from scratch, and a description of each information gathering screen follows: Screen 1: Company Name The only item you need to enter on Screen 1 is the name of the company that will apply for the loan. Note! This is the only input screen that you will not be able to revise. Once you enter a company name, it will remain unchanged until you Quit the program. When the name has been entered, a menu will appear in the upper left corner of the screen with the following choices: CONTINUE: go on to the next screen, or QUIT: end the program. SBA LOAN PLANNER 12 12 Once you choose CONTINUE from the menu, Screen 2 will appear. Screen 2: Use of Funds The program will add up all of the amounts you enter in Screens 2 and 3 to come up with the total amount of the loan. You will be able to revise your entries (to add or delete categories, to change amounts, or to round the total of the loan up or down) until you are satisfied with them. You may accept the amounts shown opposite each category on the screen by pressing the Enter key, or you may type in a whole- dollar amount and press the Enter key, or you may use adding machine mode to "run a tape" of a list of items in a given category. Adding machine mode will be further explained below, under Purchase of Machinery and Equipment but you can use it anywhere the program calls for a number. If the loan you are considering does not call for using any money for the purposes listed in Screen 2, don't worry. Screen 3 has an additional list including general working capital. Screen 2 asks you about funds you intend to use for 7 purposes: PURCHASE OF REAL ESTATE FOR BUSINESS USE. This is commer- cial real estate that will be substantially owner- occupied. Mixed use properties, multi-tenant proper- ties, and situations under which the owner of the real estate and the tenant are technically separate entities but which are nevertheless owned by the same people are special cases, and you should consult an expert about how to deal with them. CONSTRUCTION. If you are planning to allocate much money for construction, be aware that you will need plans, specifications, permits, contractors' estimates (the SBA generally does not permit the borrower to act as General Contractor unless the borrower happens to be a licensed general contractor) and, possibly, perfor- mance bonding. REFINANCING REAL ESTATE. If you are planning to allocate much money for payoff of existing liens against real estate, you should be aware that the SBA tends to be very conservative in this area. Common practices include reduced guaranty percentages (the Regulations give the SBA extreme latitude in the percentage guaran- ty it extends to refinancing funds, including the right to extend no guaranty at all) and requirements that the monthly payment on the SBA loan should be equal to or greater than the sum of the monthly payments on all of SBA LOAN PLANNER 13 13 the loans to be refinanced. Refinancing under the SBA program can be difficult; you should consult an expert about how to deal with the various eligibility ques- tions. PURCHASE OF MACHINERY AND EQUIPMENT. You don't need to add a list of prices manually; you can use adding machine mode to produce a total. If the loan is going to be used to finance purchase of three trucks, each with a different price, and you are trading in one truck for $10,000, just type the price of the first truck, type a + sign, type the price of the second truck, another + sign, the price of the third truck, a - sign, and the amount of the trade-in; then press the Enter key. The program will put the total, adorned with a dollar sign and any necessary commas, in the block. Be aware that the SBA will expect to see proof that the assets were purchased, and may insist on supplemental UCC, encum- brance or chattel filings. PURCHASE OF FURNITURE AND FIXTURES. The comments in the section on Purchase of Machinery & Equipment above apply to this section as well. CONSTRUCTION: LEASEHOLD IMPROVEMENTS. The comments in the Construction and Purchase of Machinery & Equipment sections above apply to this section as well. Note! If the business is located in leased premises, the SBA may require that the maturity of the loan not exceed the unexpired term of the lease along with guaranteed renewals. REFINANCING. The comments in the section on Refinancing Real Estate above apply to this section as well. When you have finished entering the seven values on this screen, a menu will appear in the upper left corner with three choices: CONTINUE: go to Screen 3 and finish entering information on how the loan funds will be used. REVIEW: go back to the beginning of the last screen and accept or change the values you entered there. QUIT: end the program. SBA LOAN PLANNER 14 14 Screen 3: Use of Funds (continued) This is the most creative screen in the program, because it will make a rough (usually high) estimate of the origination costs for the loan you are considering, and offer you the chance to build an allowance for those costs into the loan. The estimate will appear on the screen after you have entered values for the first 4 items: PURCHASE OF INVENTORY: Be aware that the SBA will usually require evidence that the funds allocated for this purpose were used to purchase inventory. PAYMENT OF EXPENSES AND ACCOUNTS PAYABLE: Be prepared to present documentation about exactly what effect loan funds allocated for this purpose will have on the financial condition of the company. GENERAL WORKING CAPITAL: This is "odds and ends" money; it is usually a good idea to keep the amount below 10% of the total loan. Note! Since money allocated for Working Capital can be advanced by the lender with few, if any, documen- tation requirements, you might want to ask for enough to cover a portion of your planned inven- tory purchases, as well as deposits on equipment purchases or construction. Most lenders will want to advance loan funds on the basis of paid re- ceipts; unless the business has a lot of cash, it can help to put enough Working Capital into the loan to give the business the benefit of the "float." OTHER USES OF LOAN FUNDS: Any use of funds not covered so far should be entered here. Use adding machine mode if you like. Once you have entered a value for Other Uses of Loan Funds, an estimate of the origination costs and fees for the loan you have just finished describing will appear in the center of the screen. This estimate will usually be higher than the actual origination costs. The borrower may elect to pay all of the origination fees in cash, or to build part or all of the origination costs into working capital provided by the loan. The pointer will move to a line titled Amount to add to the loan to cover costs and fees; you may accept the given value of zero or type in a higher value. After you enter a value for costs and fees, the program will update the figure for TOTAL AMOUNT OF THE LOAN and display a three-choice menu in the upper left corner of the screen. If the total amount of the loan is not an even number, you may want to SBA LOAN PLANNER 15 15 consider raising or lowering your allocation of funds for General Working Capital to round the amount of the loan off. To do that, choose Review from the menu by typing R. Your three menu choices are: CONTINUE: go to Screen 4 to finish entering information about the loan. REVIEW: go back to Screen 2 in order to accept or change values which you have entered so far. QUIT: end the program. Screen 4: Repayment Period After you choose CONTINUE from the Screen 3 menu, the program will display a three-item screen which repeats the amount of the loan and asks you to make two decisions about repaying that amount. The two decisions are: REPAYMENT PERIOD: Assuming that you want it to calculate the longest possible maturity for the loan you are considering, the program will offer 25 years as the default choice of repayment period. It will use 25 years, or the actual calculated maximum based on the use of funds, whichever is shorter. Note! You can use the REPAYMENT PERIOD space to request a shorter repayment period than your use of funds might be eligible for. For example. you might work for a bank which maintains a policy of an absolute 15-year maximum maturities for commer- cial term loans, so there would be no reason for you to illustrate an 18-year maturity. Or, you may already have been through the program once, and you want to play "what if" with shorter matu- rities as options. Or, you have already been through the program once, and you got an effective maturity of, say 15 years and 8 months and you want to use 15 years as an even number instead. Note! If your business operates in leased premises, the lender or the SBA (usually both) will want to limit the maturity of your loan to the term of your lease plus guaranteed renewals. If you enter the number of years you have to go under your lease here, the SBA LOAN PLANNER will calculate your loan on the basis on the longest available term, or the term of your lease, whichever is shorter. SBA LOAN PLANNER 16 16 DRAWDOWN PERIOD: The SBA does not believe that there is any need for a small business to pay interest on money it won't actually use for a few months. For example, construction generally takes a while, and most con- struction contracts provide for progress disbursements as the work progresses. If the construction schedule calls for completion within 6 months, you might want to show a drawdown period of 9 months. Once you have stipulated a drawdown period, a three-choice menu will appear in the top left corner of the screen: CONTINUE: go to the RESULT SCREEN to select your report, or REVIEW: go back to Screen 2 to review and, optionally, to revise your selections on Screens 2, 3 and 4, or QUIT: end the program. SBA LOAN PLANNER 17 17 REPORTS: VIEWED AND PRINTED The RESULT SCREEN immediately presents a four-choice menu: VIEW: put a short Summary Report on the screen so that you will be able to decide whether or not to make adjust- ments before printing a report, or PRINT: send a one-page report to your printer, or REVIEW: go back to Screen 2 to review and, optionally, to revise your selections on Screens 2, 3 and 4, or QUIT: end the program. If you select either VIEW, PRINT or REVIEW, the program will do what you ask and will then return you to the RESULT SCREEN. Understanding the SUMMARY REPORT Did you build enough working capital into the loan to cover the origination costs and fees? Is the monthly payment higher than you had hoped for? Is the repayment period an odd number of years that might look better if rounded down to the nearest whole year? Is the monthly payment low enough that you are confident that you can add another $50,000 to the loan for additional inventory? In plain words, are you finished structuring the loan, or does it need more work? The Summary Report is designed to help you decide. Sometimes, the SBA LOAN PLANNER will use highlighted reminders on the screen to alert you to things you might want to change. These reminders are purely advisory, and the program will not make any changes based on them. You can ignore the advise entirely, or pick Review from the menu to make some, or all, of the suggested changes. The screen shows eight pieces of information about the loan you are considering: TOTAL AMOUNT OF LOAN: This is the grand total of all of the items you built into the loan in Screens 2 and 3. You might want to adjust it up or down to a round number by adding or subtracting working capital. The program will sometimes suggest that you do this, but you may ignore the suggestion. ORIGINATION FEES & COSTS: This is the SBA Guaranty fee of 2% of the guaranteed portion of the loan, the packaging fee (if any), construction management fees (if any) and miscellaneous fees (if any). SBA LOAN PLANNER 18 18 FEE ALLOWANCE INCLUDED IN LOAN: This is the amount you added to the loan on Screen 3 based on the preliminary estimate of fees and costs. If it is higher or lower than the estimate shown on the line just above, you might want to make an adjustment. If your allowance is higher, the excess will be lumped in with working capital. If your allowance is lower, the program will suggest that you make an increase, but you are free to ignore the suggestion. MAXIMUM MATURITY: This is the maturity calculated on the basis of the use of funds you entered on Screens 2 and 3. The program will automatically round back to the last whole year (for example, if the calculated maturi- ty is 7 years and 7 months, the program will use a maturity of 7 years). MATURITY USED FOR ILLUSTRATION: This is the shorter of the Maximum Maturity (above) or the maturity you stipulated in Screen 4. If this number is less than the maximum, you might want to (but are not required to) request a longer maturity. INITIAL INTEREST RATE: This is the rate of interest that will be charged for the first adjustment period (either a full month or a full calendar quarter, depending on the lender) and is composed of the Prime rate plus the lower of either the spread entered in Setup or the ceiling rate. INTEREST RATE BASIS: For a variable rate loan, this is the number of percentage points above the Prime rate that will be charged. If the Interest Rate Basis is 2.25% and the Prime rate is 7%, the interest rate on the loan will be 9.25%. If the Prime rate drops to 6%, then the interest rate on the loan will drop to 8.25% and if Prime rises to 10%, the interest rate on the loan will rise to 12.25%. Note! The SBA may agree to the institution of a floor and ceiling to the interest rate on a particular loan so that, while the rate will rise and fall with the Prime rate, it will never rise above (nor fall below) limits which are stated in advance. INITIAL MONTHLY PAYMENT: This monthly payment will prevail until the Prime rate changes, unless an alternative payment method (two such alternatives are shown on the printed report which will be described in the next section) is set up. It is calculated by the Weighted Average method. SBA LOAN PLANNER 19 19 ALTERNATIVE MINIMUM PAYMENT: This is calculated by the Sum Of Payments method. If this number is larger than the Initial Monthly Payment (above) the program will sug- gest that you trim the maturity. You may reduce your repayment period request on Screen 4 by a year, or you may ignore the suggestion. Note! The SBA allows its personnel to use either the Weighted Average method or the Sum Of Payments method to calculate a blended maturity; it does not require the use of one way or the other. The Sum Of Payments method will give shorter results as interest rates increase, while the Weighted Average method is not affected by interest rates. You should generally expect that the SBA will prefer the shortest possible maturity, but might accede to your request for a maturity based on whichever method yields the longer result. The upper left corner of the screen will have a three choice menu: CONTINUE: go back to the RESULT SCREEN (as described in the preceding section) to choose to print a report, review your entries, or quit, or REVIEW: go back to Screen 2 and review, and optionally revise, your entries on Screens 2, 3 and 4, or QUIT: end the program. SBA LOAN PLANNER 20 20 Understanding the PRINTED REPORT When you are at the RESULT SCREEN and type P to PRINT the Full Report, a one page, dated and time-stamped report will be sent to your printer. Note! If you have no printer, or if your printer decides not to print (perhaps because it is not turned on, out of paper, jammed, or its cover or cable is loose) the program will stall. If this happens, you can usually recover by holding the Alt key down while you type G (for GO). Most of the time, the program will take you back to the WELCOME screen. If the Alt G solution does not work, hold Alt and type X (for EXIT). The program should terminate gracefully. If all else fails, you'll need to reboot. The printed report is designed to be largely self-explanatory. All printed reports are dated, time-stamped and are captioned with the potential company's name, so that if you are printing a number of reports (perhaps as part of a "what-if" planning session), you will have some help in telling one report from another. After the heading, there are 6 sections: AMOUNT AND PURPOSE OF THE LOAN This section collects your more detailed input information and presents it in basic categories. If you built the origination costs and fees into the loan, they will appear in the General Working Capital category along with any amount you entered on Screen 3 as General Working Capital or as Other Uses of Loan Funds. ORIGINATION COSTS Packaging and due diligence fees are charged by the borrower's representative(s) or the lender. They vary widely. The program calculates this fee according to your instructions under SETUP. SBA Guaranty Fee is set by law at a given percentage of the portion of the loan that is guaranteed by the SBA. The program calculates this fee according to your instructions under RECONFIGURATION. Miscellaneous fees include a minimum estimate (set in SETUP) and construction management fees (set in RECONFIGURATION). SBA LOAN PLANNER 21 21 REPAYMENT TERMS AND CONDITIONS Drawdown Period is the number of months you estimate it will take to put all of the loan funds to work. A loan for the single purpose of buying a building would require a drawdown period of zero; a loan to buy land and construct a building might need a drawdown period of 12 months. Maturity is the maximum number of whole years of principal- and-interest payments permitted under the applicable regula- tions or the requested maturity, whichever is shorter. Interest Rate is determined by the Prime Rate (set in SETUP) and the Spread (set in SETUP and in RECONFIGURATION). Initial Monthly Payment is set according to the interest rate shown on the line above. Note that, if the loan is variable-rate, the monthly payment amount will rise and fall with the interest rate. PAYMENT OPTIONS TO CONSIDER Straight Line Amortization occurs when you divide the amount of the loan by the number of months in the repayment period, and pay the result against principal each month. In addi- tion, you pay interest each month on the unpaid principal balance. Using this option will cause the principal balance of the loan to be reduced much faster, and it will reduce the total amount of money spent on interest over the life of the loan. Because the principal balance decreases quickly, monthly payments will not fluctuate as much with changes in the interest rate as they would under standard amortization. Sinking Fund Amortization attempts to keep the monthly payment level regardless of fluctuations in the interest rate. To do this, it calculates the monthly payment on an interest rate that is higher than the actual interest rate being charged, and assumes that the excess will be applied to reduce the principal balance and, thus, subsequent inter- est accrual. Often, a money market fund is used for this purpose: the sinking fund payments are deposited into the money market account, and the loan payments are paid out of the money market account. As long as a positive balance remains in the money market account, the requirement on operating cash flow is not changed. A good accountant can explain how to use this option to best advantage. SBA LOAN PLANNER 22 22 DETAILS OF THE SBA GUARANTY Two illustrations are shown: the number of dollars and percentage of the entire loan, and the number of dollars and percentage for any refinancing portion. This is especially useful in those periods of time when the SBA is unwilling or unable to underwrite the maximum amount of refinancing funds. The program assumes that all guaranty protection is being used to underwrite non-refinancing funds to the maxi- mum level possible; any guaranty authority not required for those purposes is used for refinancing. FOR MORE INFORMATION, CONTACT: This is where the information you entered in the BUSINESS CARD section of SETUP is printed. SBA LOAN PLANNER 23 23 RECONFIGURATION If the SBA regulations, the customs of your local SBA office, or your own needs change, you may decide to reconfigure the SBA LOAN PLANNER. Before you do any reconfiguring, be sure that you are using a copy of the SBA LOAN PLANNER and that you know where your origi- nal, unchanged, program disk is. The reconfiguration screen will accept any values you specify, and, if you put in wrong values, the program will give wrong results. Your best protection against error is to keep a "clean" copy of the SBA LOAN PLANNER in a safe place so that you will be able to make a fresh start if something happens to your working copy. Reconfiguration is a hidden command. To reconfigure, start the program. At the WELCOME screen, hold the CONTROL key and type C. The menu will disappear from the bright bar at the top of your screen. Hold the ALT key and type R. The Reconfiguration screen will appear with a light bar over the figure 90 next to the caption Small Loan Maximum Guaranty. 16 other values are listed below the highlighted 90; the Recon- figuration screen lets you either ACCEPT each value in turn by pressing the ENTER key, or CHANGE the value by typing in the new value and then pressing the ENTER key. After you have gone through the list of values, accepting or changing them as your needs dictate, the program will save your old configuration to disk in a file named PLAN.BAK. It will save your new configuration to disk in a file named PLAN.CFG, and then it will return you to the WELCOME screen with the menu active. Here is a list of the Reconfiguration items, what they mean, and how to use them: SMALL LOAN MAXIMUM GUARANTY Default value: 90% This is the maximum percentage of a small loan that the SBA will guaranty. A small loan is one with a total amount less than the amount listed under the third item on the Reconfiguration screen, Large Loan Threshold. This number came about when Perrin Mitch- ell, then Chairman of the House Small Business Subcommittee, allowed the Administration to cut the percentage of a loan that the SBA would guaranty from 90% to 85%, but only for loans of $155,000 or more. Remember that this number is a maximum. Under some circumstances (for example, if any part of the loan you are considering would refinance existing debt) then the percentage might be lower. SBA LOAN PLANNER 24 24 To change this number, enter the new value as a decimal such as .75 for 75 percent. LARGE LOAN MAXIMUM GUARANTY Default value: 85% This is the maximum percentage of a large loan (one that is equal to or greater than the Large Loan Threshold below) that the SBA will guaranty. Remember that this number is a maximum. Under some circumstances (for example, if any part of the loan you are considering would refinance existing debt) then the percentage might be lower. To change this number, enter the new value as a decimal such as .75 for 75 percent. LARGE LOAN THRESHOLD Default value: $155,001 This determines which value for the SBA maximum guaranty the program will apply to the loan you are considering. It works in conjunction with the Small Loan Maximum Guaranty and the Large Loan Maximum Guaranty values described above. To change this number, enter the new value as an integer. There is no need to type a comma, since the program will add it for you. SPREAD CAP CHANGE POINT Default value: 84 months The SBA regulations permit a lender to charge a higher maximum interest rate for longer term loans than for shorter term ones. The Spread Cap Change Point is the point at which a loan is considered longer term and for which the higher interest rate ceiling applies. This value works in conjunction with the values for Spread Cap Below Change Point and Spread Cap Above Change Point below. To change this number, enter the number of months as an integer. SBA LOAN PLANNER 25 25 SPREAD CAP BELOW CHANGE POINT Default value: 2.2500% This is the maximum interest rate, expressed in percentage points above Prime, applicable to a loan with a maturity of less than the number of months specified above under Spread Cap Change Point. To change this number, type a long number: 2.5 for two and a half percent. SPREAD CAP ABOVE CHANGE POINT Default value: 2.7500% This is the maximum interest rate, expressed in percentage points above Prime, applicable to a loan with a maturity of more than the number of months specified above under Spread Cap Change Point. To change this number, type a long number: 2.5 for two and a half percent. REFINANCING GUARANTY % ILLUSTRATED Default value: 80% At times, the SBA may be unwilling or unable to issue its guaran- ty on funds used for refinancing to the full extent permitted by law. When temporary conditions (or your preference) cause you to consider a reduction in the percentage guaranty applicable to refinancing, change this number. To change this number, type a long number: 75.5 for 75-and-a- half percent. REFINANCING GUARANTY % CEILING Default value: 80% See Refinancing Guaranty % Illustrated above. Change this value only when the Published National Regulations change. To change this number, type a long number: 75.5 for 75-and-a- half percent. SBA LOAN PLANNER 26 26 SBA GUARANTY CEILING Default value: $750,000 There are two maximum values to be aware of in connection with an SBA loan: the percentage and the absolute amount. A loan to a medical practice to buy the building it occupies can qualify for an 80% guaranty, but, if the amount of the loan is $1,500,000, then the SBA will be limited to a 50% guaranty because of the absolute limit of $750,000. Congress tends to increase this limit while, since 1980, the Administration has tried to reduce it; this, like the Refinancing percentage, is a number to watch if you are involved in SBA lending. To change this value, type an integer (no need to type the comma as the program will add it for you). SBA GUARANTY AMOUNT (CALCULATED) Default value: 0 This is an "integrity check" for troubleshooting purposes. If this number is ever anything but zero, it means that, somehow, numbers have found their way into the program where they do not belong. If you see an amount other than zero here, you should make a copy of your original PLAN.EXE file to use with your existing PLAN.CFG file or, if you prefer, start fresh from copies of both PLAN.EXE and PLAN.CFG. You cannot change this value from the keyboard. SBA GUARANTY FEE (on Gtd Portion) Default value: 2.00 per cent SBA charges a fee for its guaranty, and the SBA regulations allow that fee to be passed through to the borrower. For more than twenty years, this fee was 1%; shortly after losing a pitched battle with Congress to abolish SBA in 1986, the Reagan Adminis- tration lobbied hard for an increase in the guaranty fee to 5%. Congress and the Administration settled on 2%. The fee thus became a politically charged number, and it may change again. To change this value, type a long number: 1.25 for one-and-one- quarter percent. SBA LOAN PLANNER 27 27 EXTRA FEE FOR CONSTRUCTION FUNDS Default value: 2.00 per cent SBA Regulations allow the lender to charge a service fee for loan funds that are used for construction. The ceiling for this fee is presently 2% and the lender has the option to charge less. To change this value, type a long number: 2.50 for two-and-one- half percent. SINKING FUND SPREAD Default value: 2.50 per cent Recognizing the planning problems a variable interest rate and variable monthly payment amount can cause, some lenders and some SBA offices have allowed loans to be set up with an installment amount pegged to a rate of interest that is higher than the actual rate. The amount of each payment that is not consumed by the actual principal-and-interest payment calculated on the actual rate of interest is applied to reduce the principal balance of the loan and thus acts, in turn, to reduce the amount of interest charged on the following payments. This lets the business plan on a fixed-dollar payment amount which, if it remains higher than the actual, calculated variable payment amount, will result in having the loan paid off earlier. In effect, what you do with the sinking fund method is to say that, if your payment is going to be calculated on the basis of moving Prime plus 2.5 percentage points, you will set up a payment budget figure of today's Prime plus 5 percentage points (the regular 2.5 point spread plus the 2.5 point sinking fund spread). This payment amount gets applied against the loan (if the SBA and the lender allow such an arrangement to be formalized - and some SBA offices and lenders do not allow it) first, to cover the actual interest that has accrued on the unpaid princi- pal balance since the last payment with the rest of the payment directly to reduce the principal balance. Where the lender or the SBA will not allow a formal sinking fund arrangement, borrowers often set up a money market account. Every month, they pay the budgeted payment into the money market account, and pay the actual payment from the money market ac- count. If the sinking fund spread is high enough, the amount in the money market account will accumulate and allow the borrower to pay the loan off early or to make capital improvements. To change this number, type a long number: 3.5 for three-and-a- half percent. SBA LOAN PLANNER 28 28 COST CAP Default value: 10.00 per cent SBA Regulations allow lenders and others to charge fees to borrowers for such services as packaging, document preparation, and similar expenses. You can set up boundaries for these fees by choosing SETUP from the WELCOME screen The Cost Cap tells the SBA LOAN PLANNER to add up all of the fees and to ignore any amounts above the Cost Cap percentage. To change this number, type a long number: 10 for ten percent. MATURITY LIMITS Default values: 7 years for Working Capital 25 years for Real Estate purchase and construction 10 years for machinery, equipment, furniture, fixtures and leasehold improvements. These are the maximum limits as set in the SBA Regulations or in usual practice. Note that the Regulations do not require that maturity on working capital funds be limited to 7 years, and that, if you can prove that machinery and equipment to be pur- chased has a longer economic life than 10 years, longer maturi- ties may be granted. To change these numbers, type the number of years as an integer. OTHER HIDDEN COMMANDS There are hidden commands to help you deal with a stall (an event, sometimes requested but other times unwanted, when the program appears to freeze on the screen), to change printers, recalculation methods and the appearance of the program on your screen. Most people will never have a need to use any of these commands and those people who prefer to use them will use them only rarely. Preceding sections of this manual have covered the three Alt commands: Alt + G to GO again after a stall, Alt + X to EXIT after a stall, and Alt + R to RECONFIGURE. The remaining hidden commands use the "slash" key (usually found next to your right Shift key - the one you shift to type a question mark) and one or more letter keys. If you have used any SBA LOAN PLANNER 29 29 major spreadsheet program, these commands will be very familiar to you. The slash commands, like the Alt commands, will only work after the program has stalled. There are two ways to produce a stall: At the WELCOME screen, hold the Control key and type C, or At the RESULT screen, turn your printer off and type P. PRINTER Commands If you don't want to use a generic printer on Parallel Port 1, you can choose your interface and change settings by stalling the program from the WELCOME screen (by holding the Control key and typing C) and typing the slash key. This will bring up a menu in the upper left corner of the screen; type W for Worksheet, G for Global, D for Default, and P for Printer. You will then have a menu of Printer choices; consult your printer's manual for guidance about making changes. The choices you make will be valid only for one session. After you have made your choices, hold the Alt key and type G to Go back to the Welcome screen menu. VIDEO Commands To change the way the program appears on the screen, stall the program from the WELCOME screen (by holding the Control key and typing C) and type the slash key. This will bring up a menu in the upper left corner of the screen. Type V for Video. This will bring up the Video menu. The first three choices on the Video menu are COLOR, LED/B&W, and MONO/HERC. Only one of these choices will work for you, depend- ing on what kind of video card and monitor the program finds installed in your system. You can change the colors your monitor uses, as well as the number of lines and columns on the screen (if your card and monitor support such changes). Remember to use the Video commands only on your working copy of the program so that you don't run the risk of setting the colors to some combination that gives you a blank monitor (a blank monitor is no help in setting the colors back to something you can see). The choices you make will be valid only for one session. After you have made your choices, hold the Alt key and type G to Go back to the Welcome screen menu. SBA LOAN PLANNER 30 30 TECHNICAL SUPPORT and SUGGESTIONS This is program is distributed either free or for a nominal charge that covers reproduction and mailing. Consequently, we do not offer technical support. We will, however, make every effort to questions, comments and suggestions that are mailed to: Ward Harrington Small Business Loan Information Center Suite E3422 601 Van Ness Avenue San Francisco CA 94102 SBA LOAN PLANNER 31 31 Index ACCOUNTS PAYABLE . . . . . . . . . . . . . . . . . . . . . . 15 Adding machine mode . . . . . . . . . . . . . . . . . . . . . 14 Alt + G to GO . . . . . . . . . . . . . . . . . . . . . . . 7, 29 Alt + R . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Alt + X to EXIT . . . . . . . . . . . . . . . . . . . . . . 7, 29 ALTERNATIVE MINIMUM PAYMENT . . . . . . . . . . . . . . . . . 20 AMOUNT AND PURPOSE OF THE LOAN . . . . . . . . . . . . . . . 21 BUSINESS CARD . . . . . . . . . . . . . . . . . . . . . . . 7, 9 Cannot locate PLAN.EXE . . . . . . . . . . . . . . . . . . 6, 8 Code of Federal Regulations . . . . . . . . . . . . . . . . . . 2 CONFIG.SYS . . . . . . . . . . . . . . . . . . . . . . . . . . 6 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 13, 14 CONTINUE . . . . . . . . . . . . . . . . . . . . . . . . . . 11 COST CAP . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Costs and fees . . . . . . . . . . . . . . . . . . . . . . . 15 DETAILS OF THE SBA GUARANTY . . . . . . . . . . . . . . . . . 23 DRAWDOWN PERIOD . . . . . . . . . . . . . . . . . . . . . 17, 22 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 29 EXIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 EXTRA FEE FOR CONSTRUCTION FUNDS . . . . . . . . . . . . . . 28 FEE ALLOWANCE INCLUDED IN LOAN . . . . . . . . . . . . . . . 19 FEES & COSTS . . . . . . . . . . . . . . . . . . . . . . . . 18 Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . 29 FURNITURE AND FIXTURES . . . . . . . . . . . . . . . . . . . 14 GO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Hidden Commands . . . . . . . . . . . . . . . . . . . . . 11, 29 INITIAL INTEREST RATE . . . . . . . . . . . . . . . . . . . . 19 INITIAL MONTHLY PAYMENT . . . . . . . . . . . . . . . 19, 20, 22 Install . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 8 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . 22 INTEREST RATE BASIS . . . . . . . . . . . . . . . . . . . . . 19 INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . 15 LARGE LOAN MAXIMUM GUARANTY . . . . . . . . . . . . . . . . . 25 LARGE LOAN THRESHOLD . . . . . . . . . . . . . . . . . . . . 25 Leased premises . . . . . . . . . . . . . . . . . . . . . 14, 16 LEASEHOLD IMPROVEMENTS . . . . . . . . . . . . . . . . . . . 14 Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . 29 MACHINERY AND EQUIPMENT . . . . . . . . . . . . . . . . . . . 14 Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SBA LOAN PLANNER 32 32 MATURITY LIMITS . . . . . . . . . . . . . . . . . . . . . . . 29 MATURITY USED FOR ILLUSTRATION . . . . . . . . . . . . . . . 19 MAXIMUM MATURITY . . . . . . . . . . . . . . . . . . . . . . 19 Memory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 MISCELLANEOUS COSTS . . . . . . . . . . . . . . . . . . . . . 10 Monitor . . . . . . . . . . . . . . . . . . . . . . . . 5, 8, 30 ORIGINATION COSTS . . . . . . . . . . . . . . . . . . . . . . 21 ORIGINATION FEES & COSTS . . . . . . . . . . . . . . . . . . 18 OTHER USES OF LOAN FUNDS . . . . . . . . . . . . . . . . . . 15 PACKAGING FEE . . . . . . . . . . . . . . . . . . . . . . . . . 9 PAYMENT OPTIONS TO CONSIDER . . . . . . . . . . . . . . . . . 22 POLICIES AND PROCEDURES FOR FINANCING FUNCTION . . . . . . . . 3 PRIME RATE . . . . . . . . . . . . . . . . . . . . . . . . . 10 Print . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 18 PRINTED REPORT . . . . . . . . . . . . . . . . . . . . . . . 21 Printer . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 8 PRINTER Commands . . . . . . . . . . . . . . . . . . . . . . 30 QUICK START . . . . . . . . . . . . . . . . . . . . . . . . . . 8 QUIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 RATE SPREAD . . . . . . . . . . . . . . . . . . . . . . . . . 10 REAL ESTATE . . . . . . . . . . . . . . . . . . . . . . . 13, 29 RECONFIGURATION . . . . . . . . . . . . . . . . . . . . . . 7, 24 Refinancing . . . . . . . . . . . . . . . . . . . . . . 3, 13, 14 REFINANCING GUARANTY % CEILING . . . . . . . . . . . . . . . 26 REFINANCING GUARANTY % ILLUSTRATED . . . . . . . . . . . . . 26 Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Repayment Period . . . . . . . . . . . . . . . . . . . . . . 16 REPAYMENT TERMS AND CONDITIONS . . . . . . . . . . . . . . . 22 RESULT SCREEN . . . . . . . . . . . . . . . . . . . . . . . 7, 18 Review . . . . . . . . . . . . . . . . . . . . . . . . . 12, 14 S.O.P. 50-10-3 . . . . . . . . . . . . . . . . . . . . . . . . 3 SBA Answer Line . . . . . . . . . . . . . . . . . . . . . . . . 2 SBA GUARANTY AMOUNT (CALCULATED) . . . . . . . . . . . . . . 27 SBA GUARANTY CEILING . . . . . . . . . . . . . . . . . . . . 27 SBA Guaranty fee . . . . . . . . . . . . . . . . . . 18, 21, 27 SETUP . . . . . . . . . . . . . . . . . . . . . . . . . 6-9, 11 Sinking Fund Amortization . . . . . . . . . . . . . . . . . . 22 SINKING FUND SPREAD . . . . . . . . . . . . . . . . . . . . . 28 SMALL LOAN MAXIMUM GUARANTY . . . . . . . . . . . . . . . . . 24 SPREAD CAP ABOVE CHANGE POINT . . . . . . . . . . . . . . . . 26 SPREAD CAP BELOW CHANGE POINT . . . . . . . . . . . . . . . . 26 SPREAD CAP CHANGE POINT . . . . . . . . . . . . . . . . . . . 25 Stall . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 29 Straight Line Amortization . . . . . . . . . . . . . . . . . 22 SUGGESTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 31 SUM OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . 2, 3 Sum Of Payments method . . . . . . . . . . . . . . . . . . . 20 SUMMARY REPORT . . . . . . . . . . . . . . . . . . . . . . . 18 SBA LOAN PLANNER 33 33 TECHNICAL SUPPORT . . . . . . . . . . . . . . . . . . . . . . 31 VIDEO Commands . . . . . . . . . . . . . . . . . . . . . . . 30 VIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 WEIGHTED AVERAGE . . . . . . . . . . . . . . . . . . . . . 2, 3 Weighted Average method . . . . . . . . . . . . . . . . . 19, 20 WELCOME screen . . . . . . . . . . . . . . . . . . 6, 9, 11, 12 WORKING CAPITAL . . . . . . . . . . . . . . . . . . . 15, 18, 29 SBA LOAN PLANNER 34 34