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The Widget Store has existing inventory and equipment which will be moved into the new
facility. With the exception of accounts receivable, the bank will take a first lien
on all assets of the business. Accounts receivable are currently pledged on an
existing line of credit at the bank. The following collateral is offered on the
proposed SBA loan.
|
| Collateral |
Market
Value |
Collateral
Margin |
Collateral
Value |
| Land and Building (Cost) |
$400,000 |
x
80% = |
$320,000 |
| Inventory (Existing) |
120,000 |
x
50% = |
60,000 |
| Inventory (Purchased) |
40,000 |
x
50% = |
20,000 |
| Equipment (Existing) |
150,000 |
x
50% = |
75,000 |
| Equipment (Purchased) |
100,000 |
x
50% = |
50,000 |
|
Total Collateral |
$810,000
|
x 65% = |
$525,000
|
Collateral appears to be adequate to support the proposed $500,000 SBA loan. The
loan will be made to the corporation and personally guaranteed by the Smiths. Life
insurance on the lives of Mr. and Mrs. Smith in the amount of $250,000 each will be
pledged to the bank.
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