McHenry County EDC News

Financing Forum March 10th, 2011

Are you a business owner with revenue less than $50MM?  Attend March 10th, Finance Forum at the Shah Center, 4100 W. Shamrock Lane, McHenry.  7:30 - 10:00 am - Continental breakfast provided. Click here to register - there is no cost for this event.

This Finance Forum, presented by the EDC and our partners at the Small Business Development Center (SBDC),  is designed to provide an information on financing your business, ongoing physical expansion - building and./or equipment and revenue growth.

We will discuss outlining a financing package and why it is important.  Do you have the right partners ie. CPA, Attorney, Management Team, Financing partners. There will be four breakout sessions to cover topics and provide opportunities for questions. Attendees will be able to participate in two different breakout sessions.

A.  SBA - Speakers Steve Konkle and Bill Kornit  of SomerCor - The SBA’s role is an important one for people who want to finance or grow their business. When you apply for a SBA-backed loan at your local bank or credit union, you are asking SBA to provide a guarantee that you will repay your loan as promised.  Hear from Steve Konkle, how the many SBA programs work with your financial institution to provide the capital (funding)  you need to purchase equipment, real estate or working capital.  In addition to guarantees to your financial institution, the SBA also provides Export Assistance Loans, Veteran and Military Community Loans and Special Purpose Loans.

B. Commercial Banks - Roger Weis of Castle Bank - Castle Bank is a commercial/business bank with traditional loan structure and resources.  Roger Weis, Senior Vice President of Commercial Banking will provide an overview  of senior debt lending and cash management services available in today’s market.  Senior debt borrowing can be a stand along relationship or can be combined with SBA 504 program guarantees.  Mr. Weis will also provide information on necessary items for a financial packet.

C. Private Equity - Private Equity is another tool to expand your business.  At its core, private equity is simple: PE firms establish funds that raise capital from investors — who are referred to as limited partners, or LPs. The private equity firms — known as general partners, or GPs — invest their own capital along with the capital raised from investors. They borrow additional funds from banks and other lenders. With the combination of equity and the borrowed funds, the general partners buy companies that they believe could achieve significantly greater growth and profitability with the right infusion of talent and capital.

Typically, Private Equity firms hold an investment company for 5 years and then sell.  PE firms partner with existing management.

D. Upper Illinois River Valley Development Authority - Andrew Hamilton -  UIRVDA acts as a “conduit” or “middle-man” for issuing bonds.  This authority is another tool to enhance traditional senior debt borrowing.  The authority can issue taxable bonds, tax exempt bonds(Industrial Revenue Bonds for manufacturers).  Typically, these bonds carry an interest rate that is up to 0.80% less than taxable bonds.  In order to issue bonds, the bonds must have credit enhancement which means a senior lender needs to back the  bonds.  Obligation to repay the bonds is the borrowers hence the need for credit enhancement.

More Information on Somercor504:  SomerCor 504, Inc. is a non-profit development company certified by the U.S. Small Business Administration (SBA) to originate SBA 504 loans within the state of Illinois. SomerCor holds a portfolio in excess of $300 Million comprised of more than 600 loans. Somercor consistently ranks in the top 20 nationwide of all CDCs. 

The 504 program helps healthy, for profit businesses with financing for projects involving the purchase, construction, or improvement of fixed assets. Banks and other lenders participate for 50% of the total project cost, while SomerCor finances 40% (up to $1.5 Million and even up to $4 Million in some cases) of the balance. This leaves only a 10% down payment for the business, helping it to preserve valuable working capital. The 504 program is a win-win arrangement. The business maximizes the amount of money it receives and the bank gets a first lien on all the assets with only a 50% loan to value. The business is happy and so is the bank.

SBA 504 20 year fixed rate loans for February have an interest rate of 5.82%.  Come hear how to take advantage of a 20 year fixed rate loan.

Questions, contact MCEDC at 815.363.0444 as for Pam or Jean.



McHenry County Economic Development Corporation
P: 815-893-0895
F: 815-893-6542

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