Dear Credit Union Partners:
It has been a pleasure to work with you and get to know many of you over the past few months as we work to fine-tune our credit and servicing processes under the recently combined credit team. AVANA Companies and AVANA CUSO are hard at work in shifting to a new, more thorough credit presentation and a revised ATLR format and process. Further, we are utilizing the expertise of AVANA to roll out a series of new opportunities that may be of interest to you.
Credit Presentation Enhancements
Through the combination of our underwriting teams, we have been focused on capturing the strengths and experience of both teams in developing a more detailed, and thorough credit presentation. Our goal is to save you time by providing more in-depth information about cash flow, collateral, and guarantors’ capacity and experience, as well as a more complete representation of what is going on behind the numbers and what is causing specific trends. We hope this enhanced analysis will provide you with complete transparency and help you by simplifying your approval process.
Annual Term Loan Reviews (ATLRs)
As we discussed in last month’s Credit Matters, we are diligently working to refine the ATLR process – increasing speed, improving the quality of information and providing you with timely reviews. Through our renewed effort to consistently hold borrowers accountable, we have had significant success in collecting overdue financial statements. Within the month of January, we were able to reduce the number of loans with past-due financial reporting from 58 to 16 through our collection efforts and intend to bring the rest current within the next 30 days. We have been also been hiring and training new staff to process the information received on a timely basis, with the goal of bringing all ATLRs current by the end of March.
New Relationship = New Opportunities
As a result of the combination of AVANA Companies and AVANA CUSO three months ago, we are pleased to offer an expanded product range to our credit union partners. Our Chief Lending Officer, Sanat Patel (Get to know him in the recent ‘Meet the Team’ video), likes to say, “with change comes innovation”, which is indeed the case after our recent merger.
AVANA CUSO and AVANA Companies share a common purpose, which is to support and empower entrepreneurs and communities across the United States. We believe that job creation is the lifeblood of our economy and we evaluate the potential for job growth in every project we finance. Since the creation of AVANA Capital, our founding company, almost two decades ago, we have believed in the power of SBA loan programs to support American small business owners.
With the addition of AVANA CUSO to the family, we are delighted to now offer an expanded suite of loan products for participation opportunities, including the SBA 504 loan structure.
Why SBA 504?
Our team has over 50 years in combined experience in SBA 504 loans, and we like these loans because they are beneficial to business owners and good for communities. First and foremost, these loans provide the small business owner with access to low-cost funding to acquire their own building. By allowing a small business owner to acquire their own building with just a 10% down payment, the SBA 504 program allows them to preserve working capital for growth, control occupancy costs by becoming their own landlord, and provides the small business owner with the opportunity to build additional equity in their building through price appreciation while also paying down their loan over time. In addition, these loans provide low-cost financing to the small business owner. Furthermore, borrowers with SBA debentures that will fund in February 2021 will benefit from a 25-year fixed rate of 2.752% on the second mortgage financing provided by the SBA.
Equally important, these loans have specific job creation benchmarks, as the program is specifically designed to empower entrepreneurs across our country to hire additional staff, leading to stronger communities and a collective boost to our overall economy.
Finally, this loan structure provides the credit unions with a well collateralized first mortgage at 50% to 60% LTV, significantly reducing the risk of loss in the event of loan default. This program truly is a win-win-win for the borrower, credit union and the community.
Spotlight on SBA 504
Loan Type: Industrial Construction
Loan Size: $3.3 Million
Advantages: This SBA loan enabled the borrower to build a larger and more efficient facility, eliminated the need for him to pay rent, and created new jobs in the local community.
We would be pleased to discuss SBA 504 lending capabilities, as well as other new product opportunities with you at your convenience. Also, for more information on our products, please reference this summary of our offerings.
As always, we are available to review your current portfolio and to talk about ways we can enhance your experience with AVANA CUSO and AVANA Companies.
Kind regards,
Matt Hunt
Chief Credit Officer