The Professional Finance Broker Manual by nuhu idris

BigHeart Limited

The Professional Finance Broker Manual

The Ultimate Wealth Package Series

THE PROFESSIONAL FINANCE BROKER MANUAL

- BigHeart Limited -

The Ultimate Wealth Package Series

Copyrights ÂŠ BigHeart Limited 2007

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written consent of BigHeart Limited, the copyright owner and publisher.

The goodwill message… Welcome to the exciting and profitable world of financial brokerage. This is an opportunity to start a low overhead business, help others get the money they need, and in the process earn a six figure income realistically. You are holding in your hands what may very well be the most significant money-making tool ever made available to you. Through it you will learn exactly how to earn substantial income, by making money available to clients. You will also learn how you may in fact bankroll your own future projects. As funds become increasingly more difficult to obtain, there is a growing need for qualified financial brokers to assist individuals and businesses in securing the fund they require. The commodity you now have to offer is in fact money itself. This guide will show you where it comes from, how your clients will qualify to receive it, and most importantly, how to find qualified borrowers and fund seekers to receive funds, thereby earning commissions. The financial broker who works hard using the principles outlined in this manual can expect substantial rewards for his or her efforts. These materials were particularly compiled and structured for your benefit. Whether you are just beginning in this exciting field or have some experience and you are simply looking for new and innovative money products to offer, this manual will remain an effective tool in all phases of your business, both now and in the future. You’ll find answers to questions like...       

How much can you really make with this business? What skills and equipment will you need? What will your startup costs be? How do you get started? How will you market your business? What are problems to watch out for? What competition is there and what can you do about it?

Many other brokers, just like you, have used the methods and techniques illustrated in these materials successfully. By reading, studying and applying the material, you too can enjoy similar success!

Please, have this in mindâ&#x20AC;Ś. This manual and the materials herein are the products of a research work and a compilation of experiences of people who were at one time or another involved the finance industry in one form or another. They were compiled and made available to you with good intentions, but with the understanding that it is merely advisory in nature. We cannot assume liability for changes or inaccuracies in the information provided here, nor do we make any guarantees that any of the institutions listed or referred to will grant loans or funds in any specific case. Fund/loan approval is done solely at the discretion of the institution applied to or referred to, as such we cannot assume any responsibility for their actions or your success in the operation of your business, or for losses(if any), of any kind incurred as a result of the use of this manual. As a Finance Broker, you are an independent businessperson and you are solely responsible for obtaining any and all necessary licensing/permits that may be required for the conduct of your business activities, either now or in future, in your chosen location of business operation. You are advised to seek professionally required advice in conjunction with and in relation to the use of the materials contained herein. Please, do seek the requisite assistance of a professional/ expert where necessary. We specifically disclaim any and all liabilities, risk or losses or any kind that may be incurred as a consequence of the use, whether directly or indirectly, of any and all advice or information contained in these materials.

Introduction … What is this great business opportunity? Earning a six figure income is within your reach! This manual provides you with the necessary training to enter the lucrative area of business financing. You will provide the financing so desperately needed by individuals, businesses and other organisations today. You’ll have the opportunity to work with fund seekers across the country in every industry imaginable. Whether you choose to operate your business on a full or part-time basis, you’ll enjoy ongoing residual monthly income and generous commissions. Your success will be determined only by the limits you set for yourself through your creativity and hard you work. This is simply an opportunity to start a low overhead business, help others and earn a six figure income. What does a Finance Broker do? More and more individuals, businesses and organisations are in need of financing options just as banks and other finance institutions continue to tighten traditional lending and grant making parameters. These fund seekers are finding it increasingly difficult to obtain the financing they need to operate. It’s estimated that of the nation’s thousands that need financing, only a few ever get it. The problem is that most of these fund seekers don’t know or understand where to obtain their much needed financing and the parameters for obtaining them. They also don’t know what alternative financing avenues are available to them or where to locate them. A professional financial or "money broker" assists people who need a loan or other forms of finance by helping them complete an application, and then forwarding it to the appropriate lender, earning a commission or finder’s fee. Can anyone do this business? Unlike many other industries which require special licensing, large amounts of start-up capital, employees and the like, you’ll be immediately able to hit the ground running with our proven process. You’ll have the necessary Training, Tools, Techniques and Support to make your business a success. You don’t even need a Financial Background to be a Success. Our program was designed to teach individuals with little or no business or financial experience how to provide financing to virtually any fund seeker by working successfully with banks and other financial institutions. Upon mastering of the techniques in this manual, you’ll have had all of the necessary training, techniques, support and, most importantly, the confidence to build your business and the life you’ve always dreamt of.

Can I keep my present job and do this also? Why not? Most people start out on a part-time basis. You will learn how you can successfully earn additional income working this business just a few hours a week. Once again, anyone, regardless of their education or present position in life, can be a successful finance broker. Youâ&#x20AC;&#x2122;ll have the flexibility to work when you want and where you want. As you will see in the training manual, all you need in order to operate your business is a phone and a decent meeting point with your prospects.

Starting Your Business - First things first Your requirements Congratulations! You have already taken that all important first step in the lucrative financial brokerage business by acquiring this manual. You now have a multitude of financial services to market to prospective clients. The next step is to carefully read and re-read this manual. We have tried to simplify our explanations of all the procedures, and have provided many options, allowing you to select the ones that fit best with the time and budget you have allotted to get your business started. If after reading the manual thoroughly you have any questions about what to do, feel free to call us directly on 08023222789. We will be happy to assist you. Here are some few but important things you need to do or put in place to get your finance brokerage business going. Adopting a business name We suggest you begin to build your own business identity by deciding on a company name. A simple but professional sounding name that identifies what you do is best. For example; McManus & Kinsey â&#x20AC;&#x201C; (Financial Brokerage: Loans & Leasing) sounds good. Your business name and address should appear on all printed materials including business cards, stationery and brochures, to present a professional image to clients. Registering your business One of the most important decisions that you will have to make is how your business should be structured and operated. It is important that this decision be made prior to opening or starting your business. This decision impacts many important aspects of your business, such as the risk to your personal assets, taxes, how you finance the business, administrative workload and your ability to grow and control your business. The choice of a business entity can have great impact on the success of your business. Under Companies & Allied Matters Act, all business activities in Nigeria must be carried out under any one of the following legal structures: Private or public limited Liability Company A private or public company may be registered in Nigeria in the following manner: 1. Limited Liability Company- This is the most common legal structure for business activities in Nigeria today. Basically, with this form of company, the liability of its members are limited by the Memorandum of Association to the amount if any, unpaid on the shares respectively held by them. The minimum authorised share capital is N10, 000 in the case of private companies or N500, 000 in the case of public companies. This is the commonest form of business in Nigeria. In addition to its other benefits, it carries with it an air of prestige. 8

2. Company Limited by Guarantee- This is a company without a share capital. The liability of its members are limited by the Memorandum of Association to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up. 3. Unlimited Company- This is a company without a share capital and does not have any limit to the liability of its members. 4. Business Names - A business name is the identity or style under which a business is carried on whether in partnership or otherwise. Such names, subject to certain prohibitions may be registered under the Companies and Allied Matters Act (CAMA), without being incorporated as a company. This could be either as a Sole Proprietor or Partnership. 5. Sole Proprietorship- Though, under the Companies Act, Limited Liability Companies are the most favored form of business structure, a good number of small scale businesses, petty traders and artisans find it more convenient and cheap to carry out their businesses as Sole Proprietors. Professionals like Doctors, Lawyers, and Accountants etc also operate as sole proprietors or registerable firms under the Act, especially where they carry on business in names other than their real names. 6. Partnerships, Firms and Corporate Partnerships- These, as a framework for economic activities, have the same legal functions as a registered sole proprietor the difference being only in the constitution, that is, there is more than one party involved. A partnership though convenient, does not afford the partners protection in business adversities, as the primary recourse is to the partners in their individual capacity. The liability may however, be restricted if there is a Partnership Deed that spells out each partnerâ&#x20AC;&#x2122;s degree of participation and liability. Corporate Partnership on the other hand exists when two or more corporate bodies come together for a particular business objective. They are sometimes loosely referred to as Consortiums. Such partnership may be registered as a firm under the Companies Act. The liability of each corporate partner under this arrangement is unlimited but often mitigated because of each partnerâ&#x20AC;&#x2122;s corporate status. Due to its numerous advantages, we recommend that you set up a Limited liability company with which to carry on your Finance Brokerage Business. For legal advice and assistance in setting up your business entity, you may call EL-AMIN CHAMBERS, a firm of Corporate & Investment Lawyers on 07036634128.

Corporate Identity Package In the financial services industry, your image speaks volumes about your organization. Because of the importance of a professional corporate image, we’ve contracted with some of the finest corporate identity and logo experts to design a corporate identity package that’s individually tailored for you. If you wish to benefit from this package, please contact us. Our Phone No. is 08023222789. With this package which comes at an additional cost; you’ll have the benefit of working directly with our graphic artists to create a truly professional corporate image. You’ll receive: •

Logo Creation (unlimited colors) by our design professionals who will present six initial design concepts for you to chose from.

•

Unlimited alterations and/or changes to the logo of your choice until you are completely satisfied.

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Business card design and layout with camera ready artwork

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Envelope, letterhead design and layout with camera ready artwork.

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All designs and layouts will be provided in digital files.

Your Complete Website Our webmasters have years of experience in site content and optimization while maintaining high visual impact. We’ve taken time to carefully draft every detail of page content and layout to ensure that your internet presence directly reflects the image of a professional organization. This ensures that your website will be a funnel of new business. Let us know if you will like to have a professionally designed website.

Office Structure & Capital Resources In addition to the legal structure of your business, you'll need to set up the business physically as well as manage the capital resources. Though this is a business you can operate from home, if you have the means, it is advisable that you set up your operations in a prestigious location within or fairly close to a business and financial district. Basically, this will be for impressing your clients, but at the same time, by locating in or near your local loan sources, you will quickly come to know the important people on a first name basis. Perhaps the best idea would be to rent a space in a building used by banks, insurance companies, accounting firms, or a group of lawyers. Your office should be neat and functional with an impressive large desk and a comfortable chair. The image you project is of great importance, and being associated with a location that hosts big name firms in the industry will definitely be to your advantage. Include at least one, and preferable two, visitor's chairs when planning and furnishing your office. You must project the impression of affluence and professionalism to anyone coming into your office. The ideal situation is to have a two-person team - someone to be on the outside doing the selling, and someone on the inside handling all the processing. If you have the marketing skills, and enjoy selling, you might look for a sharp and impressive appearing person to handle the processing for you. Or if you have got the processing know-how, you might keep your eyes open for a professional appearing person who could be your "outside arm" and do most of the selling for you. Basically, and excepting for the actual preparation and selling of the loan packages, most of the inside work can be handled by a secretary. However, it will be in your best interest to have a full-time secretary. You should train her to field incoming telephone calls, take care of filing, and do your personal typing for you. A typical loan proposal usually requires long hours of typing. You'll need a telephone and unless you have someone to act as a secretary, you should employ a telephone answering service. You can probably get by with a telephone answering machine, but because you are dealing with money, it is important that you

project an image of success (and a telephone answering machine quickly identifies you as being a one person operation.) So, we still strongly recommend that you use the services of a well trained secretary. Other requirements for your office will include things like: • • • •

Computers Office equipment Tools of your trade Office supplies

The Support Team As an entrepreneur, one of the most important things you can do is to surround yourself with professionals. Even though you might be tempted to feel like Superman, you simply can’t be an expert on everything. The composition of the ideal support team for your business varies depending upon your skills and talents. However, the big three basic building blocks are bankers, attorneys, and accountants that you can trust and rely upon for solid professional advice. This team of professionals is one of the most important choices you'll make while building your business. You'll rely on their advice and assistance throughout your entrepreneurial career, so be sure to choose wisely. Create a Professional Image Image is everything in the world of professional finance brokerage, and prospects will just naturally feel more comfortable parting with their hard-earned money with a company that projects a professional image.

The Business of Running Your Business “Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence, determination and hard work make the difference.” - President Calvin Coolidge Though by using this manual you are receiving the best possible resources you can ever lay your hands on in the finance brokerage world, the success of your business is entirely up to you. With no one to look over your shoulder and keep the pressure on, you may find yourself slacking off on your marketing efforts. It’s natural, and it’s ok. However, now it’s time to step back and get your second wind. Mastering Your Business Generally, the money broker or person operating a business financing service will work with his or her clients in putting the loan or fund seeking application package together in such a way that it will receive favorable consideration by the funder or lender. You'll have the names, addresses and telephone numbers of lenders and fund makers from all over the world, people and firms interested in investing in all kinds of different business ideas and for virtually any amount of money in the Directory of Money Sources we have enclosed. When you have a complete loan/ fund application ready for presentation, you'll select the lenders or firms interested in that kind of business or investment. Either send or present the application package to them. Once you "open your doors" for business, there will be no shortage of people coming to you for their money needs. The problem will be selecting just the requests you know, logically, stand a reasonable chance of approval. Everybody wants and needs money; once you announce that you can get funds/loans for people who need them, you will be overwhelmed with requests. It will be up to you to utilise your time, expertise, and effort according to the greatest profit potential. When talking with a client you want to exude confidence and professionalism. Reading, studying and understanding exactly how each financial product or services is designed and presented will enable you to better serve your clients, and insure your chances for success. 13

With these materials you are being groomed to take a comprehensive approach to finance brokerage. Experience shows that every borrower/fund seeker will require some measure of personal service and counseling to determine the type of financing method that is most suitable. Consequently we have designed these materials to allow you to offer a broad range of financing and money funding programs to your client, in order to allow you to close deals for the highest percentage of your interested prospects. In order for you to provide your client with the best possible service, we have divided these programs up into the categories most requested by borrowers and other fund seekers. What are the types of financing available for businesses and projects? Here are Some Financial Products and Services You Could Offer 1. Business Finance                   

Start-Up Financing Venture Capital Small-Medium Enterprises (SMIEIS) Financing Micro loans Asset-Based Loans Bank-Term Loans Private Loan Guarantees Business Incubators Direct Public Offerings Initial Public Offering Equipment Leasing Bank Overdrafts Bonds and Guarantees Revolving Credits Export/Import Financing Pre- and Post-shipment Contract Financing Letters Of Credit Mortgage Finance International Business/Project Finance

2. Development/Project Finance    

Agriculture Finance Multilateral Finance Projects Textile Rehabilitation Fund/Finance Manufacturing for Export Project loans

 Export Credit in the form of rediscounting facility  Refinancing facility  Rediscounting of exporting grants  Export grants/incentives through the Nigerian Export Promotion Council 3. Grants from International Donors/Agencies 4. Student Loans and Scholarships We suggest you review each program thoroughly so you can explain the advantages (or disadvantages) to your prospective client. In this manner you can help steer your client into the area best suited to his or her specific needs. To help you get your head around the different ways you can help your clients with some of their financing needs, we have below mini-guides or basic information on some different financing sources. Read through to learn the basics, and then start hunting! Let Your Customers Know They Are Important to You Customers, or the lack of them, will make or break your business. So the interest of the customer should be uppermost in your mind. People like people who are interested in them. It makes them feel important. So make an extra effort to let your customers know how important they are to you. Treating them with respect will help get them to you and hopefully, patronize your services. Networking Creating a network system is something akin to developing a great football team. Put together a good team, all working toward a common goal and you will have for yourself success on a platter of gold. There's also an old saying that says who you know is 10 times more important than what you know. As a Finance Broker, there's nothing more true. A wide-reaching and varied network of personal contacts can be your most valuable asset. It's much easier to close deals, solve problems, and manage relationships if you can simply make a phone call to "my paddy in XYZ bank" instead of working through a maze of uncertainties. Take every opportunity you can to build your network. Attend business and social gatherings, and exchange business cards with everyone you meet, minus mad men (laff!). Set aside a few minutes each day to work on developing your network. Make a few quick phone calls to touch base with folks with whom you haven't spoken in a while. Talk to all your friends and acquaintances in the finance world about your brokerage business. Drop a business acquaintance a note to congratulate a contact on his or her daughter's graduation.

Simple acts of friendship such as these can reap significant dividends in the future Communication You'll need to communicate with your clients, employees or business partners virtually every day. This communication can take many forms, from formal reports to business owners, to casual over-the-counter chats with your customers. Here, we will examine several of the types of communication you'll engage in and how you can focus your efforts to achieve maximum business success. As with many businesses, your written communications will be your primary point of contact with your clients. Many people will peruse your brochures, or read your other promotional materials. You simply must invest the time, energy, and money to ensure that these materials appear professional and accurately and favorably represent your services to the marketplace. Informal written communications are just as important as the formal business letters that you'll write from time to time. A well-timed "Thank You" note to a customer or your other contacts can help solidify a relationship. Take the time to generate these communications when appropriate. Many businesses depend equally (or more than equally) on oral communication to keep in touch with their important contacts. As a finance broker, it's essential that you finetune your oral communications strategy to ensure that you're presenting a consistent face to your audience and communicating the intended message in a clear, concise, and engaging manner. Casual oral communication takes place every day in your business. You'll have chats with your employees and customers on a daily basis as you conduct routine activities. Make sure that these communications are all polite, professional, and deliver the same consistent message your business strives to achieve in your formal communication. Brochures As a professional consultant, you probably want fancy, glossy brochures highlighting your skills, background, and experience. Your printer can help you stay within your budget and produce the type of materials you need. Business Letters Every business generates letters - some more than others. You need to write at least one of the following on a semi regular basis: â&#x20AC;˘ Sales letters â&#x20AC;˘ Thank you letters â&#x20AC;˘ Employment offer and termination letters

â&#x20AC;˘

Progress report letters to clients

Regardless of each letter's intent, it's important that you use proper grammar, spelling, and punctuation. An unprofessional letter can be a major negative sign in the eyes of your clients. As you operate your finance brokerage business, you'll find that basic letters can be written internally whereas critical correspondence, such as a mass-mailed sales letter, requires professional help. Telephone Calls The telephone is a central focus in this business as with other businesses. You need to answer incoming calls, place outbound calls, and ensure that customers reaching your business after office hours are able to leave a message for you. With the advent of GSM telephone lines in Nigeria, it is so easy to mix up personal and professional calls. Maintain separate lines for your private and business calls. To ensure consistency of communications, you may want to develop scripts for you and your employees can use when undertaking routine telephone tasks, such as placing outbound sales calls or answering incoming calls. If you choose to use an automated attendant system in place of a live operator, be sure to make it easy to reach a real person. Many callers tend to get frustrated with voice mail and may just hang up rather than navigate complex menus. Don't lose business to the competition because your customers can't find a human voice. It is strongly recommend that you use the services of a well trained secretary to answer your business calls, if you cannot do it personally. Speeches and Presentations Sometimes your business will require that you make formal speeches or presentations to clients. There's a simple three-step formula for success in these situations: 1. Tell them what you're going to tell them: Provide a brief overview of your presentation before launching into detail. 2. Tell them: The meat of your presentation should be clear, concise, and in a language appropriate for your audience. 3. Tell them what you told them: Before stepping down, recap the points you made during your presentation. 4. Use visual aids when appropriate to help guide your presentation.

Growing Your Business The following quote from Lincoln illustrates the strength of his character and is good advice for you as an entrepreneur, albeit a Finance Broker. “Whatever you are, be a good one.” - Abraham Lincoln, 16th President of the United States You'll be called upon to be both a leader and a manager in your entrepreneurial adventures as a financial broker. If you have a particular weakness in one area, don't despair -- everyone can't be strong in everything. In fact, one of the greatest qualities of a leader or a manager is an ability to recognize his or her own weaknesses and compensate for them. Take a moment to explore the qualities that make a good manager: • • • •

Organization Commitment Flexibility Efficiency

On the other hand, leadership entails being: • • •

Visionary Motivational Inspirational

Take some time to reflect on how you exhibit each of the three qualities listed. Are you a natural manager? Is leadership more your style? Are you both a leader and a manager? As an entrepreneur, you're about to embark on an incredibly exciting journey through the worlds of business and leadership. Fortunately, it's a journey that many people have taken before. Endeavour to read the biographies of business gurus and ponder how you might apply what you learn to your business. Although every entrepreneurial venture is unique, the basic tenets of leadership and competition ring true in almost any business. Build Your Own Brand You've undoubtedly heard many stories of the importance of brand building and success stories of how powerful brands have transformed traditionally staid businesses. Brand your finance brokerage services with excellence and uniqueness and watch the world beat a path to you. 18

Your opportunities to make a name for yourself are limitless. You can take many actions that'll help you in your future business, such as: • •

• •

Write articles for newspaper publications on issues and trends in the finance industry. Write a book. There's no better way to silence people who question your authority than to speak on a matter by simply saying something like, "Well, as you can read in Chapter 5 of my book on the topic . . . " Speak publicly on your topic. Earn an advanced degree specializing in an area that will benefit your business venture.

There are tons of books and articles available about the power of brand building. Although many of these books have a consumer goods focus, they often provide powerful learning that you can adapt to the building of your personal brand as a finance broker. After you've begun the brand building process, you'll quickly learn that the process of maintaining your brand never stops. The most important step to becoming an expert in your chosen field is making the decision that you want to become an expert. From there, it's simply a matter of gaining the appropriate background knowledge and then sharing it with others in a visible, public manner. Solve Problems When you ask an entrepreneur to list the skills that make for a successful businessperson, you'll almost always hear "problem solver" somewhere near the top of the list. When you're running your own finance brokerage business, you must always be in problemsolving mood because there's simply no place to pass the buck after it reaches your desk. You'll be faced with a wide variety of issues and expected to act quickly, decisively, fairly, and in the best interest of the business. Take time to practice your problem-solving skills. The next time you're faced with a difficult challenge, work it through to the solution rather than simply passing it off to someone else. After all, "it's not my job" can't be in your vocabulary when you're the captain of the ship. Learn Constantly Learning is a lifelong process for the leader, entrepreneur, and just about everyone else. You must strive to keep your technical skills current, your leadership skills effective, and your management techniques sharp. Learning is essential, but it's important to remember that learning takes many forms. Some of the areas that you might want to explore include:

• •

•

Formal education: Maybe earn a degree in management or a related field, or simply take courses that further your leadership abilities. Reading: Most leaders are also voracious readers. Read everything you can get your hands on. Learn about management, leadership, and how other organizations have faced difficult issues. Seminars and conferences: Attend industry related events. The experience and education you gain there helps further your leadership skills and provides you with great networking opportunities. Experimenting: Try different techniques. Experiment with your technical skills, leadership abilities, and personal talents to broaden your horizons. The more you try the better leader you'll be.

Remember that the most important thing you ever learned in school wasn't between the covers of any book -- it was learning how to learn. Exercise this skill throughout your life to keep your mind agile. When you're faced with a difficult situation, remember that there are many possible responses, some of which might not be obvious at first glance. After you've come up with your base list of options, consider alternatives that might form a good compromise to a difficult situation. In addition to the above, you must master the variety of financial products that form the basis of the solutions you will proffer to your client’s financial needs.

How to Charge Your Professional Fees Once you are organized and rolling, you'll find that most of your day-to-day income will be derived from the packaging of loan/funding applications. A very important aspect of your finance brokerage business is charging fees for your services. Most successful money brokers charge according to the size and type of funds being requested. This is based on the amount of work they have to put in to place the money. For instance, if it looks like a pretty solid business with a good record on the part of the borrower, and good collateral, the fees are usually lower. On the other hand, if it's a high risk proposal or if the borrower has very little business experience and you are going to end up doing a lot of selling to get the loan approved, your fee should be accordingly higher. Once your client has signed the broker's agreement and given you his check for the retainer fee, you'll be helping him or her to get his the funds or investment proposal together. For those who can't or don't want to pay your retainer fee â&#x20AC;&#x201C; simply skip them. Overall, you should position yourself and your service to the client in order to collect a "finder's fee" of 1-10% of the amount of money actually loaned to or invested in his business. A flat fee of N25, 000 â&#x20AC;&#x201C; N50, 000 as a broker's retainer fee for helping him with his funding presentation. However, there is no hard and fast rule in this regard. Always use your discretion as the occasion demands. Remember that not all funds/loans are approved, even though they might have looked good to you in the beginning. With this in mind, you have to charge for your services and make up for the time you spend with those proposals that don't get approved by charging and collecting on those that do get approved. An example of the typical commission charges is shown below. This is only a guide. Loan Amount (=N=) 500, 000, 000 + 250, 000, 000 125, 000, 000 50, 000, 000 10, 000, 000 5, 000, 000 3, 000, 000 Under N3million

Your Fee/Commission 1% 1.5% 2% 2.5% 3% 4% 5% to 10% 10%

Take Note: Except where there is a tripartite fees agreement guaranteeing the payment of your fees at source from the approved funds, always insist on undated Cheques for your fees. The cheque can only be presented on successfully processing your clientâ&#x20AC;&#x2122;s funding request. How to Protect Your Business with Contracts A business of any size or structure must protect itself from everyday practices going awry due to misunderstandings or miscommunications. One way to avoid these problems is to have the agreement between the two parties put in writing. A legal contract will stand up in court against any other documentation. This module explains what constitutes a contract and how to get paid your fees. Written Contract â&#x20AC;&#x201D; for any business deal or service you agree to, you should put it in writing. Since contracts are enforceable only if they can be proven, the best practice is to get it in writing. The function of a written contract is not only that of proof, but to elicit a very clear understanding of the agreement and the terms of the contract. So what is considered a written contract? As long as you have the client's signature, almost anything is acceptable as a written contract. If a contract is in writing and is clear, other documents or evidence will not be considered to interpret it. It is not necessary to invest a lot of time in creating a contract. It does not need to be a long and complicated document with a lot of words that you don't understand. In fact, there is pressure today on attorneys to draw up contracts "in plain English" so they are easier to read and, more importantly, easier to understand. A contract should be written in simple language that both parties can understand. It should include: 1. 2. 3. 4. 5.

the date of the agreement identification of the two parties a description of your services your fees or other consideration the signatures of the parties involved

In addition to the five items above, the contract should also cover the basic terms of the agreement, i.e., pricing arrangements, payment schedules etc. These terms should be clearly stated, so everyone can understand what the terms of the contract are. Before you sign a contract you should consider the following: Whichever business contract you may enter into, it is recommended that you consult with your attorney first before signing. A final check of the document is always worth the

extra time it may involve, especially when it could result in loss of business or, worse, income. Written Fee Agreements It is beneficial to have a "Fee Agreement" with your client to ensure that you can be paid once the funding is consummated. In addition, many brokers feel more comfortable knowing what they will receive their fees upon the successful completion of a funding. A fee agreement, if nothing else, can bring you this peace of mind. We have enclosed a sample fee agreement you should use in situations such as these. Whenever you have a signed fee agreement with your client, make sure you include it with any submission for funding to make certain the lender/financier will recognize and factor in your agreed commission into the financial transaction. (Feel free to use the following forms as a pattern for your own agreement, or you may even want to cut it out, paste it up, and have your printer run off supply for you. If you do cut out and use the form, you will of course place your business name, address and telephone number in the space "Your Name and Address" at the top. Also, be sure to block out the instructions on the signature lines.) 1. YOUR NAME AND ADDRESS AGREEMENT FOR FINANCIAL SERVICE The undersigned, (Borrower's Name) , hereby appoints (Your Name) as his Agent, and authorizes him to submit to lenders financial data and information supplied by the borrower for the purpose of the lender making a loan or investment direct to the undersigned. The undersigned agrees to pay to (Your Name) a fee of _______% of the amount of the loan or investment obtained. The undersigned hereby pays to (Your Name) retainer fee of =N=__________ as a nonrefundable fee for time involved in appraising feasibility of the loan/fund requested. This fee is separate from any other fees due if loan/fund is obtained. ____________________

________________________________

Borrower

Broker

2. FEE AGREEMENT I, ____________________________________________ I (hereinafter called Applicant), hereby appoints ______________________________________ as my Agent, (hereinafter called Broker), to submit my fund/loan application to lender(s). The applicant agrees to provide any and all supporting financial information and Tax Returns requested for the purpose of obtaining a ___________________ loan in the amount of _________________ over a preferred period of ______years at a preferred rate of ______% interest rate per annum, or on different terms authorized and/or accepted by Applicant and approved by the lender. The undersigned agrees to promptly furnish and/or release any and all credit information and/or documents requested by the lender or Broker, for the purposes of consummating this transaction herein. In consideration for services rendered, Applicant agrees to pay Broker herein a commission of _______% of the loan amount received. This fee is deemed earned, due and payable by certified funds upon acceptance of loan proceeds. The undersigned further agrees to pay Broker herein a fee in the amount of __________ in payment of preliminary processing and placement expenses. This fee is separate from any other fee due from the successful consummation of the herein described transaction, and shall be refunded, less any itemized and documented expenses in the event the transaction described herein is rejected by Brokers lender(s) and credited in full toward Brokers commission should financing be approved. Applicant agrees that this Agreement and authorization is on an exclusive â&#x20AC;&#x153;best efforts" basis for a period of 90 days from the below executed date of acceptance by Broker, and thereafter until cancelled by Applicant. It is acknowledged that this instrument was negotiated, executed in and shall be governed by the laws of Nigeria. In Witness whereof the parties herein hereby affix their hands and seals the day and year first above written. SIGNED BY APPLICANT

SIGNED BY BROKER

In addition to having witnesses to the agreement, it is advisable to have your agreements notarized or in other words executed before a Notary Public.

How to Find Clients - Marketing Your Business “Your advertising, not your products or services, in many cases, will determine the success or failure of your business.” - Terry Dean Once you have your Finance Brokerage Business up and running, your biggest task will be to market and advertise your business, and generally work at getting your name out in front of the public… because if you don’t invite them, they won’t come. Don’t make the mistake of believing that all you have to do is set up your finance brokerage business and the world will beat a path to your door. Building a business is hard work, and most of that work will be devoted to finding clients. With hundreds of similar businesses that will be competing, this can be one of the toughest aspects of the business. However, with hard work, an ability to react quickly to change those things that aren’t working for you, and a fair amount of common sense and savvy, you might very well beat the odds and succeed. This chapter will cover the many areas of advertising, and hopefully give you some ideas on how best to match the advertising needs of your business with your budget. Here are some basic fundamentals that will help you to succeed… Define your goals. What do you expect to get out of your business over the next year, or over the next several years? When you get right down to it, determining goals can be pretty overwhelming. However, you need to start somewhere. It’s important that you develop a guideline that will help keep you focused. Goals should include both financial and non-financial aspirations, and be related to the length of your marketing timeline. They are a vital part of your marketing plan, and you’ll need to have a long-term picture of where you’ve been, where you are, and where you are heading. Manage your time wisely. If you’ve heard it once, you’ve heard it a million times… “Fail to plan, plan to fail.” In that vein, remember time management is important in the success of carrying out the marketing plan of your finance brokerage business. Yes, you need to work on your business, developing strategies, and improving on your marketing. You will also need to think about your customers – attracting them, 25

convincing them that they need your service, and keeping them coming back. Plan to make time for both. Identify and profile your target market. Who is going to be interested in the finance brokerage service you’re offering? Do you know the age group or financial status of the customers you think will be most interested in what you have to offer? Your promotional efforts will be most effective if you focus on a group of prospects with common characteristics and similar problems. Start by defining on paper, your ideal customer or client. List the characteristics you expect to find in good customers. Be sure to include the characteristics that will make your service valuable to them. This will be the list that identifies your target market. Build a Customer Profile Rather than trying to be all things to all people, find out what makes the people in your specific market tick, by learning about their demographics and psychographics. Demographics are the basic qualities and characteristics of your best customer. It includes age, gender, culture, employment, industry, income level, marital status, position, and where they live. Psychographics are made up of the emotional and behavioral qualities of your best customer. This includes the emotion, reasoning, psychology, logic, and thought processes behind your customer’s decision to patronise your services. They also include interests, hobbies, and associations to which they belong, previous contacts. Demographics include the segment of the population that needs your services, while psychographics are those within your demographics that want your services. Conduct a marketing research campaign of your own among your current clients, potential clients, and the clients of your competition. Connect with your potential customers. Once you’ve profiled your customers, decide where they are likely to congregate. You’ll find many of your customers already gathered into convenient little niches… for instance, bank managers can easily refer those in need of financing to you. You could drop your carefully prepared fliers in banks, financial institutions etc The following steps will help save you time, stretch your advertising budget a little further, and hopefully, target those people who would most likely be interested in patronizing your services.

Advertising is one area where a lot of new business owners make costly mistakes. So, before you put a lot of money into advertising, make sure you do your homework. Take Care of Existing Customers In order to build and maintain customer loyalty, make your existing customers a priority by taking care of their problems quickly. Develop and design a professional looking website. Your website helps in packaging your service. Form the habit of simply having your cards, fliers and classified adverts simply referring your prospects to your website. As you approach this aspect of your business, step back from time to time and examine whether your website design consists of the elements that create a stimulating selling environments. By its very nature, the web is primarily a text medium. People surf to read, not just look to at pictures. Therefore, the Web calls for the type of writing and presentation that is appealing, informative, and easy to read and understand. Unlike the print medium, the web gives you the space and opportunity to explain, in detail, the benefits of doing business with your company. It allows you to provide customers with a variety of reasons why they should patronise your services, and the opportunity to encourage them to follow through. If writing friendly, informative, and concise copy is difficult for you, hire a good copywriter. Consider your audience. Text should be written in such a way that it’s for “everyman”. Try to maintain a nice balance of text and graphics. By using a piece or two of carefully chosen graphics, along with well-written, informative text, you may be able to capture your visitor’s attention, and convince them that your company is a high quality, reputable finance brokerage firm that delivers what it promises. Go the extra mile and invest in the services of a skilled graphic designer when it comes to designing your website. While there is plenty of software out there that claims you can build your website “in less than an hour”, in this case, the old adage “you get what you pay for”, comes into play. Oftentimes, you’ll invest money in said software, and get amateurish results that just can’t compete with the work of a pro. To get the competitive edge, strive for excellence in all aspects of your website. You may call 0802322789 for professionally designed websites.

Position Your Business on the Web Large industries spend millions of naira to position themselves in the online marketing arena. As a small business, don’t let that intimidate you. One of the many unique qualities of Internet marketing is that you can effectively position your company with little or no money. Develop your own USP (Unique Selling Proposition). A Unique Selling Proposition, (USP), is what sets your business apart from every other competitor in your field. It spells out the precise niche you seek to fill, and how you aim to fill it. If you can’t tell who you are in two sentences, then your USP is too fuzzy to succeed. A brand name is a feeling or impression the consumer has about your services when they see or hear the brand name. Try a positioning statement that relates to a quality in the service that will appeal to the consumer. You must find something that sets you apart, so you’ll be noticed and remembered. Positioning yourself clearly in the customer’s mind in relation to your competition is critical to the success of your finance brokerage business. Highlight Points of Difference Identify and communicate to your customers the points of difference that make your service unique from your major competitor. With this knowledge you may not be able to overtake the leader, but you stand a good chance of carving out a solid niche from which you can gradually increase market share. Be The First Kid on The Block Do you ever get tired of reading, or hearing someone advertise that they are so much better than their competition? That doesn’t necessarily make it true. In fact, it might make a smart client a bit wary. Particularly, since so many businesses are using the same old rap. So, here’s a new concept. How about employing the old noodle and coming up with something completely new? How about trying to be the first at something rather than the best? In Jack Trout’s The 22 Immutable Laws of Marketing, he makes his point perfectly, by asking, “Who was the third person to fly over the Atlantic in a solo flight? Unless you’re a history buff, you won’t know the answer to that. However, most people will remember that Lindbergh was the first, because being first comes to mind immediately. If you reflect back, you’ll realize that regardless of how good they really were, it’s always the “firsts” that you’ll remember.

So, be the first to cater to a specific target market, or be the first to cater to a market in a unique way. Be the first to customize your finance brokerage service to a specific market, or be the first to offer an alternative to an existing service. So, don’t be the best in the same category as everyone else. Be the first in one. Publicize your business. Once you are organized in a work area and with the basics for operating your business, the next move will be to get the word out that you are ready to offer your services to people who need funds, and for people who are willing to invest. This means advertising, visiting, making contact in some way with both the people needing money, and those wanting to realise a profit in the process of lending their money. And don't forget - often those who do not go with you for one reason or another may supply with you with fine referrals The business of financing, like any other business, is dependent on obtaining “customers, (or clients as we prefer to think of them). Without clients, you have no business. Your first order of business then, is to locate potential clients in need of funds, and show them how you can help them get what they need. In order to locate clients, you must advertise your services. There are many ways to do this. Create an action plan, and include deadlines for implementing them. There are plenty of free or inexpensive promotional tools available to you, and we’ll tell you how to use them to your benefit. Remember, getting your business known to your potential clients is the key to your success. Your Advertising Budget We’ve all heard that old adage that you have to spend money to make money. Nothing could be truer in advertising. If your potential customers don’t know you exist, or can’t find you, then you’re sunk. As you go about developing your business’ operating budget, make sure to include a budget for regular, ongoing advertising and promotion. Inexpensive Ways to Advertise Your Business Effectively So you don’t have the multi million naira advertising budget of many of those large companies. That’s ok. Because it’s not how much money you have to spend on advertising, it’s what you do with the resources that you do have that matters. Direct mail advertising… Direct mail is considered to be one of the most cost-effective means of advertising your business. Not only can you isolate your target audience, but you’ll be able to deliver your complete sales message.

The trick to a successful direct mail campaign is getting the recipient to read your message. Each of us is inundated with thousands of pieces of unwanted advertising emails every now and then. Most get deleted, or tossed in the trash without so much as a glance. First, you should obtain or develop your own targeted mailing list. You can obtain

targeted , call 08023222789.

Powerful Simple to use TOOLS needed to Generate and GSM Numbers Yourself

EMAILS

Then, create a series of mailings for your targeted audience. Remember that you may need to get your message in front of your audience as many as seven times before they feel inclined to respond. In each of your mailings, encourage the recipients to respond. You might consider making a ‘special limited-time offer’. You can begin with a letter that introduces yourself and your business. Explain some of the details of your business such as how long you’ve been in business, your experience in your particular field, how your finance brokerage service will benefit them, etc. Your subsequent mailings should give further details about your unique selling points. Here’s a sample direct mail package: Dear ------------------ , We would like to introduce you to some of our unique new financing programs, many of which are not available through traditional lending sources. In today’s financial marketplace, money is tight. Many traditional lending sources are not lending as freely as they used to. You may have encountered difficulty in obtaining funds for:       

Equipment Working Capital Manufacturing Purchasing Importing Exporting Expansion

…Or a variety of worthwhile purposes that will allow your business to grow. If you are seeking new equipment of any kind, we can assist you in arranging a new equipment lease. If you find yourself caught tight due to an influx of orders for your goods or services, we can arrange a cash advance against your new or existing purchase orders or contracts. If you are experiencing cash flow problems because your existing customers are not paying you as quickly as they used to, we can arrange a cash advance against your outstanding accounts receivable. If you are contemplating purchasing the building you are in, a new building for expansion purposes or refinancing the existing commercial mortgage on your existing building, we can help you today! To find out more about our unique and innovative financing programs available to business owners, please call me personally at the number above, drop me a line or return the enclosed response card in the pre-addressed envelope enclosed. We look forward to serving you as a client. Sincerely, For: BigHeart Limited M.D. Farouk Director, Marketing The only way to solicit by email is to solicit prospective clients to request the information directly from you. You can do this by setting up your own website, as earlier advised above and referring prospects to it. If you set up a website you can become the actual compiler by providing the information and applications yourself through email generated from your site by prospective applicants that have expressed an interest in receiving this information – this is the best method to solicit prospective applicants over the Internet via email. Radio Advertisement Another means of reaching your target market in a cost effective way is through radio advertising. Marketing experts believe that the radio is still one of the best means of advertising for small businesses. The secret of success for radio advertising is that your message will be repeated often enough that the brand name of your product or service will be instilled in the listener’s

subconscious, creating instant recognition when they see or hear about your business services. The cost is relatively low, and your message is targeted to a very specific group of listeners. Not only does radio allow you to target your marketing to a specific type of listener, but advertising on radio is still less expensive than advertising with other forms of broadcast media. Creating your radio spot… Simply visit the advertising department in a selected radio station and explain to them the message that you’re trying to convey to your potential customers. Someone will write the ad copy for you, and a disc jockey will record it for airing. You may also consider recruiting the assistance of a professional copywriter to write your sales copy. As in many areas of interacting with other professionals, a little kindness and respect can go a long way in creating a productive relationship resulting in a quality service. Be involved in as much of the ad development process as possible, and personally get to know the people that are handling your account, from the sales staff that writes your ad, to the disc jockey that will read and record your ad. Providing them with a positive impression about you and your company will definitely affect the level of enthusiasm that will go into producing your ads. You can have your advertisement broadcasted on several different stations with different formats, and to specific targeted audiences throughout the country. Naturally, a 60-second radio spot is going to make a more significant impact in the listener’s minds than a 30-second spot, and they don’t cost that much extra. In addition, a 60-second spot will allow you to repeat your main selling points several times throughout the advertisement. Wrap up your advertisement with important contact information such as your phone number, website address, and physical address, if applicable. The ads that are most likely to stick in a listener’s mind are often advertisements that are read live by the radio personality while on the air. Classified Adverts A classified ad is merely a hors d'oeuvre before the main course. Its purpose is to serve as a teaser to pique the interest of your potential customers to get them to call or visit your office for more information.

Your advertisement should offer a solution to your targeted market’s problems. Don’t give them too much detail. If they’re interested they’ll visit your office, your website or contact you for more information. Your ad will need to reach out to your potential customer’s emotions and push their buttons. The key here is to give your potential clients hope for achieving their dreams, or solving their problems. Your ad should be well-written, short, concise, and filled with powerful, descriptive words that will generate leads. Words such as ‘free’, and ‘for a limited time only’, are very effective in accomplishing that. Don’t try to accomplish too much in your ad, remember that you’re not trying to make a sale; you’re just trying to get them into the front door. Many people from all walks of life need money. When you use classified ads, you'll be placing your name and services before thousands of people for a nominal expense. The best classified ads are short, descriptive and to the point. The idea is to stimulate your prospect's interest so they will respond, yet not provide so much information that they will draw the wrong conclusion about how you can help. You may have seen a simple ad like this one in the newspaper: BUSINESS LOANS? Call 01-7907932 or Visit: www.bigheartconsult.com/finance An advert of this size is very inexpensive, can still draw many responses, although they may not be as qualified as another more elaborate ad which might read:

NEED FINANCIAL HELP? Are you looking for a Business Loan or Financing? Or, is your organisation an NGO seeking finance? Do you need a Line of Credit for Working Capital for Business Growth? Do you want to Lease or Finance Equipment for your Business?

Call 01-7907932 or 08031230011 Or visit:

www.bigheartconsult.com/finance

The size of your ad, to a certain extent, DOES make a difference. The 2nd example generally would attract more callers, (and they would tend to be more qualified), than the 1st one, but at a higher cost. It’s best to do some testing to get the best results. Don’t spend more than you have to. Place as large an ad as you can afford and carefully watch the results. The more you advertise and talk to people about your services, the more successful your business is going to be. So first of all, we suggest your run an ad in the classified section of your local newspapers. At the same time you are running the ad inviting people to come to you for their money needs, you should also be running an advert like this:

WANTED! N10, 000,000 NEEDED! Will pay maximum interest. For Real Estate Development Excellent profits plus tax benefits. Call: O1-7907932 The essence of the first advert is to build your list of people wanting money - needing loans that you can process. The purpose of the second advert is to build your list of investors/lenders in your area with money to put into some of these business proposals you get from the first advert. Obviously, you'll get more people wanting to borrow money that people with money to invest or lend, but once you begin running these two advertisements, you'll be on your way. Writing your classified ad… When it comes to writing your ad you must once again think like a potential customer. Write specifically to that person and basically tell them what they want to hear. Convince them that they can’t live without your product or service. If you’re in doubt about what makes an effective ad, take a look at the classified sections of some magazines, and determine what catches your eye – and why. Perhaps it’s a clever, compelling headline, or a quality offer, written in bold, descriptive words, that make it worth your while to respond. Review these ads for their successful approach, and try to apply their techniques to your advertising strategy. Tease readers with a sample of the benefits they might experience if they take part in your offer.

Remember that, ‘free’ is one very powerful little word in the world of marketing. Provide ‘free’ information or a ‘free’ trial period. So, you see, offering something of value for free can result in increased sales, at little expense to you. Make sure your ad includes convenient ways for your potential customers to contact you. Offer them a toll-free number, email address, fax and phone number. Once you have your ad written, let friends and colleagues take a look at it, and ask them some pointed questions to make sure your ad’s message isn’t lost on them. Classified Advertising – Sample Clips Mix and/or match ads and catch phrases below and use your imagination to come up with something new that you like. If you like the advert, it’s a good indication that a potential client might like it too. The idea behind providing just a phone number is that it makes responding an easy impulse. Money available for any purpose. Easy repayment. FREE Info. Call: Loans for qualified individuals and businesses. Contact: Professional Money Finder: loans, mortgages, personal, business, debt consolidation, leasing, Call: Import/Export Financing Available Worldwide! For immediate response Contact: Funds available for any worthwhile purpose - See if you qualify call: Immediate Cash Advanced Against Contracts and Purchase Orders. Call for Info: Financing NOW: On Purchase Orders & Government Contracts. Fast Service - Competitive - Contact: Health Professional Financing: Payments Tax-Deductible with our Equipment Sale-Leaseback. Call: Immediate Business Cash Advanced On Receivables, Contracts, Purchase Orders, Equipment. Call: Full Service Financial Firm Offers IMMEDIATE CASH for…… Call: Test your ads…

Before you invest too many resources in any one ad, you’ll need to test it. There are many ways of doing this. You can test each element in your advertisement, one element at a time. Test your headline, the price you charge for your service, the publication, and your copy. Remember, that when testing your ads, classified or otherwise, to only test one element at a time until you find success. If you completely change your ad every time you run it, you will never know what works and what needs improvement. You can test your ad by having customers to respond to a special website address, or special toll-free number set aside just for it. Where to advertise… You can run your classified adverts in newspapers, magazines, trade publications, etc. As you use classifieds, you will find the best places that work for you to maximize your profits. An advertisement in the Newspapers is relatively inexpensive but can be one of the most effective. Ad costs usually depend on the size of the ad. You should run such an advertisement in as many of the newspapers and print media as you can afford, every week, for at least a month. This means that you'll have an advertising budget; with the money either coming in (or available) to meet these costs before you even run your first ad. (This is part of the necessary planning that has to be done before you actually open for business.) Classified ads can be very effective if targeted towards your specific market. Generally, people that subscribe to special interest, industry, or trade publications will read their magazines thoroughly – including the classified ads. MAKE USE OF SOFT SELL MAGAZINES like ‘City People’…etc. GSM advertisement! Get Over 1 Million Nigerian GSM Numbers list generated from a highly reliable, tested and accurate GSM Number Generator tool that is

simple to use, call 08023222789. So, even if the reader isn’t looking for your services to begin with, your ad may trigger an urge to patronize your services, or at least investigate further, your service. In addition, magazines and journals tend to have a longer shelf life, and live on to be read again and again. Thus, adding life to your classified ad. On the other hand, classified ads placed in daily or weekly newspapers have a relatively short life, as short as one day. And, unless a reader is looking for your specific product or service, your ad can easily get lost in the jungle of other ads. Taking Through Giving

We all love free stuff, particularly when it's in conjunction with something we are interested in buying to begin with. Look for something you can offer to your target market for free. This will help you attract potential clients to your business that may eventually patronise your services. 'Free' is a powerful word in marketing. Use it wisely, and you'll see a definite increase in the response to your ads. Select a product or service that has perceived value to customers - something that they can use again and again. Business cards You will need business cards. These, of course, should be of a fine quality (this is not a very large expenditure). They should simply state your name, followed by the name of your services - Business Financial Services. You may list your phone number in the upper left-hand corner, something such as "Money for Every Need" in the lower righthand corner, and of course your name and firm name centered in the middle. You must learn to use your cards effectively distributing them to people you come in contact with that may need funds, or can refer others to you. If no one knows youâ&#x20AC;&#x2122;re in the finance brokerage business, they will never come to you for these types of services. Business cards are the simplest and cheapest form of advertising available, but you have to take the initiative to print them and pass them out. If you are unable to obtain a good quality business card from a local printer, we can help with our Professional Quality Print Service. You may call 08023222789 for information on how to order some of the printed stationeries you need. Yellow pages & Business Directories Listing Most people look here first for services. A simple listing or display advertisement can pay for itself many times over. Check out the yellow pages listings and study other ads to get ideas for your own listing. For more information, you may visit: www.nigerianyellowpages.com. You have many other options like directory listings. Illustrated Adverts In addition to classified or short-clip adverts you can also run display or bigger advert in magazines or newspapers. The space for this type of advert is usually sold depending on size and may consist of text only, or a combination of pictures and text. This type of advertising may require the services of a graphic artist to design if you decide to use illustrations with text. If you would like to start with a bang and have some extra money to spend, display is the way to go. Law of Seven

You’ve just devoted a great deal of time, effort, and money into an advertising campaign, and so far, you’ve received very little response. Well, don’t despair. This is a marketing principle known as the ‘law of seven’. The ‘law of seven’ means that a prospect has to see your business name at least seven times before they act on your marketing message. It doesn’t happen overnight. Just keep repeating your advertising message often. Your prospects won’t get tired of it. In fact, your ad will just be starting to register in their heads. Frequency is key. If you’re buying an ad in a publication, buy the largest size you can afford to run frequently. In general, several smaller ones are more effective than one huge one. Develop a simple slogan or icon that people will relate to you, and one that will stick with them. Keep it consistent, and above all, remember to have patience, patience, patience. Networking “Word of mouth” is the universal advertising medium of choice usually preferred by most practicing professionals like doctors, lawyers and chartered accountants who feel it may be unprofessional to advertise their services in a more conventional manner utilise this method exclusively. Joining civic organizations like Chambers of Commerce, Rotary Club, and other Social Clubs etc. and attending their various meetings, luncheons etc. is one of the most effective ways to generate prospective clients. Referrals You should contact other professionals in related fields who may be able to refer clients to you. You can use telephone, mail and personal visits to make contact. Let your contact know what you have to offer and that you are willing to pay him for his referral, (doctors and attorneys do this with one another all the time). Some suggested groups to contact are:      

Bankers - Can refer turndowns or cases they can’t handle. Accountants - They know their clients financial condition. Attorneys - Handling financial affairs of their clients. Insurance Agents - Financial planners can be helpful. Real Estate Agents - Financing is the key to their sale. Equipment Vendors - A loan or lease program is welcomed.

Corporate Gift Items Many banks, insurance companies and other corporate organisations use corporate gift items with their logos printed on them as a way to generate repeated exposure and keep their company and services in the minds of their potential clients.

You’ve probably received pens, key-chains, calendars, etc. in the past so you know what we mean. They are readily obtainable. Playing the Publicity Game Free publicity works. It costs nothing. It gets your business seen by thousands of people. And it gives you the kind of branding and recognition that paid advertising just can't buy, however big your marketing budget. Publicity works because it's based on one very simple formula: If you help the press, the press will help you. That's it. As long as you follow that simple rule, you'll find it a breeze to get your business in the press whenever you want. Your local newspaper might have between thirty and fifty pages. Some of those pages will be filled by the people in the advertising sales department. The rest have to be filled by the paper's journalists and editors. The rest of the space in the paper though represents one giant headache for journalists. If you can give those journalists a story that will fill one of those gaps, they'll reward you by publicizing your business. They know how the deal works. Celebrities who hog the gossip columns and the front pages know how the deal works. And big businesses who are always in the news know how the deal works.

Provide well-written, informative articles that would be of interest to your customers. Perhaps you can provide suggestions on how to get the most benefit from your services, or provide information on your business or industry. You should begin by writing on an area that you’re familiar with. While most newspaper publishers won’t accept articles that promote a product or services for which you receive a commission, take the opportunity to provide suggestions to readers on how they can solve a particular problem, and provide them with handy tips and advice. If you provide publishers with well-written, informative copy, you will soon be considered an expert in your field. Just supply the press with the kind of stories they want to print and you can expect a whole heap of great benefits. Once your articles are ready to send out to publishers, you can make a mass release through a general distribution announcement list, or submit your article to individual newspapers through your personal contacts.

Following Up On Your Responses Now you are going to start receiving responses from interested parties, either through phone calls, letter or visits. It’s rather a good feeling to have people contacting you for a change, rather than you having to run after them as is the case in most other “jobs”. Remember the thing that separates a job from a profession is that in a job you do the running, while in a profession, people are running to you.’ According to a study, “How Are Customers Responding to Your Ad”, conducted by Cahners Research, a division of Cahners Business Information, “When customers respond to ads, they usually telephone or mail.” Their study also found that customers are more likely to call an advertiser’s toll-free number, or visit their website for immediate product or service information. . The results of this research can help advertisers adjust to the customer’s desire for immediacy. Help meet your visitor’s need for fast service by setting up a toll-free number for them to call and place orders or to request information. You may contact MTN or GLOBACOM for more information on their toll-free numbers. Provide an easy-to-use secure online order form, and make it a point to respond to email inquiries within 24 hours, if not sooner. Give your customers what they want. If you don’t, your competitor’s most certainly will. Direct mail responses … Many of your potential clients from your direct mail group may not respond the first time you mail. Don’t be discouraged. Your direct mail letter may be saved for future reference, and you may one day receive that all-important call from a new client who suddenly needs your service. It doesn’t hurt to follow up with a phone call or another letter to a few “non-responders” just to stay in touch. Your direct mail efforts could be much more effective that way.

At this point you are about to begin the phase of your business where you must meet with your client, (in person or by phone), to find out what they may need and explain how you can help them. To do the best job you must be thoroughly familiar with the programs available.

How To Speak Your Client's Language The most important trick is to find Out What Your Client Wants ... Then Show Them Exactly What It Is They Have to Do to Get It. Depending upon the method in which you have chosen to market your services, your initial contact with your prospective client will happen in one of the following three ways:   

Your prospective client may send back a mail piece to demonstrate interest or send you a personal letter. He or she may phone you to inquire about various programs or rates available. A client may simply drop into your office if the address was made available to them.

If you are not going to be home or in the office at some given time during the day, all you would need is a telephone answering machine. We have found that of the 3 ways that your client can contact you; most initial contact is conducted by phone. If you are using a cell phone, be wary of where you answer your calls. A noisy environment may spell doom for your business. So, if you are in a non conducive environment you may avoid answering your calls until it is conducive to do so. But be sure to return the calls. Once you have broken down 'conversational ice" you should have your pen and paper in front of you, and proceed in a conversational manner to jot down information you get from your client on his as you go along. Put your prospect at ease by allowing them to talk about themselves first. Keep in mind they have come to you for assistance (financially speaking). A friendly conversational manner will allow you to draw out exactly what your client is looking for. At the same time you will be gathering information for review before any loan or funding can be approved. As you proceed you should be continually reinforcing this confidence in your ability to help your client. Generally clients will fall into two basic categories:

1. The motivated borrower or fund seeker - has an exact idea of his or her needs and are the easiest to handle. 2. The inquiring borrower or fund seeker- merely shopping and needs you to draw him out of his or her shell. If your responder is merely inquiring and asks for "information only", first try speaking with them to find out exactly what is required. That way you can focus on exactly what will be needed to turn your inquirer into a client. The idea is to get your prospective client to talk about themselves, their needs and the reason they contacted you in the first place. It's not that difficult, and takes a little practice, but you can be well rewarded once you've developed this technique. Remember they have contacted you for assistance; you just have to learn how to "break the ice". If your prospective client has called you - dive right in. If you received a letter of inquiry, pick up the phone, dial the number and go for it. For example: CLIENT: "Can you send me some information please? YOU: "Certainly, May I have your name, address, phone number and email?" (Then continue...) Accommodate your client: "I'll be happy to send you information on our financing programs. Start them off - "What is it you're looking for". Keep them going - "What use did you have in mind for the funds." If your client insists that they don't have the time or was just interested in knowing the rates, try to get them into the swing of things by asking about what the money is needed for. Try to get them to talk about themselves. For example: CLIENT: "What are your rates"? YOU: "Rates depend on the type of financing, security, credit and income." Accommodate your client - "I'm sure we have a program that will suitable for you." Get them going - "How much money were you looking for and what do you need the funds for"? What you are attempting to do is open your prospect up a little and get them to talk about themselves. This approach can turn suspects into prospects, prospects into clients, and clients can lead to commissions for you. At this stage you are trying to whet their appetite for the money. You want them to acknowledge their need for funds and the reason the money is needed. Since money is a sensitive subject, be careful not to offend your client in any way. People are very cautious about discussing their financial affairs with a stranger, even when they have contacted you.

Try not to be obnoxious about it. Be persistent but polite. Remember the old adage - the customer is always right. But also keep in mind that this client has come to you. If they still insist that they are just looking for information, graciously take their name, address and phone number, send the information and follow up by phone later. When they loosen up and express interest in proceeding, you can try to set up an appointment for a meeting in their office. Better still, while you have them on the phone jot all the information you can get from them. By asking for the information needed using the easy conversational approach, you can reinforce their confidence in you, while you help by completing the necessary preliminary paperwork. At the same time as you are taking the information, you can continue to discuss the programs and select one that best suits your clientâ&#x20AC;&#x2122;s needs. Remember, you have a wide variety of services to offer. Help them decide which service is most suitable for them. However, donâ&#x20AC;&#x2122;t feel that you have to absolutely "sellâ&#x20AC;? him or her on any one program. At this stage it is more desirable to make sure they are acquainted with the services, and respects and enjoys your professional approach. The main point you should impress upon your client is: if they need the funds, you can help. Fill out an application form for EVERY interested prospect. Taking a complete application the first time around is a very important step. A complete application provides all the important information about your client's personal finances and is needed in order to obtain a favorable credit decision. In addition, by taking the application, even if the client is not entirely certain of their borrowing plans, you will be developing a valuable database of information. This information can be kept in your confidential files, and referred to in the future when your prospect again calls you about their financial needs. You will be presenting a professional image, and demonstrating you have the knowledge, expertise and organizational skills to serve your client in the best possible way. At this point you have advertised your services, received responses and have explained your services to a prospective client. He or she is interested in proceeding and you are in an ideal position to help them gain loan approval quickly Whether you are speaking to your client by phone or in person, your best approach is to continue in a friendly conversational manner and gather the information needed to process the application for funding. There is no exact order that you should ask the questions of your client. In fact, you may find that as they are talking, they will jump from place to place providing you with almost everything you need: At times you may need to prompt or direct them, but if you

keep the conversation light and un-pressured, they will soon open up and give you all the information you will need. What follows is not the last word in breaking the ice with your client. With experience you'll develop your own style and a technique that works best for you. Practice taking an application with a friend, playing client. This'll help you gain confidence and formulate an easy, personable manner.

Conversation Starters/Icings SCHEDULE 1 "Banks look favorably on "money-on-deposit and Cash Flow" when evaluating your credit request. How much cash do you have in all banks"? SCHEDULE 2 “If you are collecting on a loan owed to you, it may be good collateral to borrow against. Does anyone owe you money"? SCHEDULE 3 “The stock market has been on the upswing lately. Do you own any stocks or bonds? Do you own stock in any private companies?" SCHEDULE 4 "Real property is the most secure form of collateral. Do you own any real estate"? SCHEDULE 5 “Lenders may require a borrower to buy or assign life insurance for the loan. How much life insurance do you have"? SCHEDULE 6 “The replacement cost of your personal and household items may have increased with inflation. Can you estimate the value of your personal furniture and appliances"? SCHEDULE 7 “What year, make and model car do you drive? Do you own any other vehicles such as an SUV, van, tractor, etc."? SCHEDULE 8 “Your previous loan experience can help approval by providing a good credit reference. Outside of real estate loans do you owe money to banks, finance companies or individuals"? SCHEDULE 9 "Are your taxes current"?

Utilizing phrases like these helps your client focus in on their own financial situation, while you get the information needed to fill out the schedules and process them for financing! The SCHEDULES have been specially designed to be easy to use. The totals from each schedule are written in the FINANCIAL STATEMENT and Income and Expense section of the CREDIT APPLICATION forms from lenders and other financiers. Mastering these and using them carefully to fill credit application documents will ensure that your client will have a professionally prepared application and financial statement, and will appreciate your courtesy in saving them the time and trouble of having to do it all themselves! Now that's service!

Finding the Right Funding Source Your job as a broker is connecting fund seekers directly to Funding Sources with capital available to place. Don't waste your valuable time talking to sources that can't help you. Get your request in front of those Funding Sources that are pre-qualified to match your clientâ&#x20AC;&#x2122;s specific funding request. Locate possible lenders/investors through accountants, lawyers, stockbrokers, financial institutions, investment funds, Internet and family/personal contacts and most importantly, our carefully prepared Directory of Money Sources. Contacting Other Sources to Expand Your Financial Services As much as we would like to be all things to all of our Brokers, we know that we cannot. We have attempted to introduce you to the field of financial brokerage and have attempted to highlight the unusual and profitable financing alternatives to give you a financial edge, we have added to the financing programs available over the years, and eliminated those that have not been. However, through your advertising you are bound to come up with clients that don't quite fit into the programs outlined here, but may still qualify for financing. In addition, you may wish to expand your financial brokerage into those areas that local lenders service, right in your backyard. Expanding your lender base to include local lenders and lenders who finance the unusual is essential if you want to be successful as a financial broker.

Mastering Your Products/Services Almost every fund seeker will require some measure of and counseling to determine the type of financing method that is most suitable. Consequently we have designed these materials to allow you to offer a broad range of financing and money programs to your client, in order to allow you to close the highest percentage of your interested prospects. In order for you to provide your client with the best possible service, we have divided these programs up into the categories most requested by fund seekers. We suggest you review each program thoroughly so you can explain the advantages (or disadvantages) to your prospective client. In this manner you can help steer your client into the area best suited to his or her specific needs. Each program is described in greater detail further on. Project and Asset Finance - Funding Sources The Nigerian financial system is one of the biggest in sub-Saharan Africa consisting of bank and non â&#x20AC;&#x201C; bank financial institutions. The system comprises of about 24 banks, a number of micro finance institutions, community banks, development finance institutions, licensed finance companies, mortgage banks, loaning companies, insurance companies and custodians of various pension scheme funds etc. The Banks The commonest forms of business and project finance in Nigeria come from the banking sector. In addition to the regular bank loans, overdraft facilities many banks participate special funding programmes created by the government. The Community Banks Community Banks are unit banks that are limited geographically in their operations. Community banks have been set up to meet credit needs of millions of small-scale producers in the rural and urban areas. With the recent implementation of the Microfinance policy by the CBN, most community banks are fast transforming into micro finance banks. Development Finance Institutions (DFIs) In Nigeria, Development Financial Institution (DFIs) or specialized banks/agencies were established by the Federal Government to enhance the development of specific sectors of 46

the economy. DFIs primarily provide financing for businesses in areas that need economic development. Facilities from these DFIs are available to start a new business or expand an established one. A company seeking finance from DFIs must still undergo the security of traditional credit analysis. The difficulty of securing DFIs financing is sometimes compounded by the relatively narrow focus and agenda some of them may have. Equipment Leasing An investor more often than not is faced with the problems of financing large, expensive machinery or equipment for his industry. Equipment leasing is basically a financial arrangement in which the lender technically buys and owns equipment and then "rents" it to a business at a flat periodic rate for a specified time. This is a way of indirectly obtaining what is in actual fact a loan or quasi loan. At the end of the lease, the business may purchase the equipment for its fair market value, a fixed or predetermined amount, or continue leasing the equipment or return it. This form of financing is generally available in the Nigerian financial sector and is appropriate for any business at any stage of development and best used for financing equipment purchases. Leasing can also finance the soft costs often associated with equipment purchases, such as installation and training services. Lease financing is generally more expensive than bank finances, but in most instances it's more easily obtained. Finding an equipment-leasing organization is easy. In addition to some banks and financial institutions that offer leasing services, some of the leasing organisations in Nigeria today are listed in the finance source directory of this manual. Private Financial Institutions Private financial institutions specialize in short-term non-bank financial intermediation. Some private finance companies include insurance companies, privately owned finance houses and a host of others briefly described below. They mobilize funds from the investing public in form of borrowing and provide, among other, facilities for LPO and project financing, equipment leasing, and debt factoring and securitisation, Funds management, Hire-purchase, Export financing etc. The cost of funds provided by these institutions could be quite high. Pension Funds Another potential source of financing in Nigeria is the newly introduced pension funds scheme. This scheme is a government initiative of pension administration that requires the employer and employee to contribute a total of 15% of the employeeâ&#x20AC;&#x2122;s monthly salary to a retirement account to be managed by a pension fund administrator. The Pension Fund Custodian (PFC) receives the total contributions directly from the employers, while the Pension Fund Administrator (PFA) invests and manages the pension fund assets of the employee. The focus here is on the PFAs since they are in charge of

the investment and management of the employeesâ&#x20AC;&#x2122; pension fund and can therefore determine where to invest the pool of resources that will be at their disposal. Insurance Companies The Insurance industry is another major player in the finance sector of the Nigerian economy. The industry is a very strong outlet for long-term finance since they mobilize relatively long-term funds and act as financial intermediaries, but their investments are mainly in government securities and mortgage industry. Primary Mortgage Institutions Primary Mortgage Institutions are licensed to carry out mortgage business in Nigeria and their functions include granting of loans or advances to any person for the building, improvement or extension of a dwelling/commercial house or for the purchase or construction of a dwelling/commercial house, acceptance of savings and deposits from the public and payment of interest thereon, management of pension funds/schemes, performing estate management duties, engaging in estate development through loan syndication and engaging in property trading including land acquisition and disposal: Micro Finance Banks Traditionally, Banks and other regular finance institutions lend mostly to medium and large enterprises adjudged by them to be credit worthy to the neglect of the poor, small and micro enterprises. Microfinance is about providing financial services to the micro and small enterprises as well as the poor who are traditionally not served by the conventional financial institutions. Three features distinguish microfinance from other formal financial products. These are: (i) the smallness of loans advanced and or savings collected (ii) the absence of assetbased collateral, and (iii) simplicity of operations. Micro Finance Institutions (formal and informal) have become the main source of funding micro and small businesses in Nigeria. The traditional microfinance institutions provide access to credit for the rural and urban, low-income earners through NonGovernmental Organization (NGO)-microfinance institutions, moneylenders, friends, relatives, co-operative societies and credit unions. The informal financial institutions generally have limited outreach due primarily to paucity of loanable funds. In order to enhance the flow of financial services to Nigerian rural areas, Government has initiated a series of publicly-financed micro/rural credit programmes and policies targeting the poor as well as micro and small enterprises. The Directory of Money Sources segment of this manual has a listing of some microfinance banks in Nigeria. The Nigerian Capital Market The Nigerian Capital Market is now a very vibrant and convenient source of generating long-term funds.

To enable small as well as large-scale enterprises gain access to public listing, the NSE operates the main Exchange for relatively large enterprises and the Second-Tier Security Market (SSM) where listing requirements are less stringent for small and medium-scale enterprises. The major instruments used to raise funds in the market include equities, debentures, bonds and stocks. Capital markets are classified into two segments, namely primary and secondary. The primary market is a market for new issues of securities. The mode of offer for the securities traded in this market includes offer for subscriptions, rights issues, offer for sale, private placement etc. while the secondary market is a market for trading in existing securities. This consists of exchanges and over the counter deals where securities are bought and sold after their issuance in the primary market. The capital market has further been strengthened with the introduction of the Unit Trust Scheme for mobilizing the financial resources of small and big savers and managing such funds to achieve relatively high returns with minimum risks through efficient portfolio diversification. Efficiently managed unit fund schemes offer the advantages of low costs, liquidity and high returns. Funding through this medium can only be accessed using qualified practitioners in this field. For more information, contact a stockbroker or solicitors. Venture Capital A form of business financing in which funding is not secured in the traditional sense, rather the owner of the business uses a portion of that ownership as the inducement for an investor to provide the needed financing. This owner is literally giving up a percentage of future business profits in return for operating, expansion or start-up capital. Though still a relatively new area in Nigeria, venture capitals are fast growing today. A list of some of the venture capital organisations is available in the Directory of Money Sources segment of this manual.

The Federal Government Development Finance Special Funding Sources/Programs Bank of Industry (BOI) The Bank of Industry Limited (BOI) was established in October 2001. This followed the fusion of the activities of the Nigerian Industrial Development Bank Limited (NIDB) and the Nigerian Bank for Commerce and Industry (NBCI) as well as the National Economic Reconstruction Fund (NERFUND). It is saddled with the responsibility of transforming Nigeria's industrial sector and integrating it into the global economy through providing cheap financing and business support services to existing and new industries, and enhancing the attainment of modern capabilities that will produce competitive goods attractive to both domestic and external markets. The Bank’s products and Services presently include but are not restricted to the following: • • • • • •

Medium and long-term finance, by way of loans, equity and lease financing. Guarantees Investment in Corporate Bonds Business Development Services Co-financing Working capital finance

Education Trust Fund (ETF) Education Trust Fund Export Development Fund (EDF) The Federal Government of Nigeria established the Export Development Fund to provide financial assistance to companies in the private sector that are involved in export business. The financial assistance is designed to cover only part of the export expenses

such as initial expenses in respect of export promotion activities. Such costs include those of Export market research, collection of trade information, advertisement and market sensitization activities in foreign markets as well as participation in trade missions, exhibitions and trade fairs. Other activities covered are participation in workshops, seminars, training courses etc. Application for the EDF has to be filed with NEPC, the government agency charged with the administration of the fund.

Federal Mortgage Bank of Nigeria (FMBN) The FMBN is the apex mortgage institution in Nigeria. It was established in 1977 and saddled with the responsibility of encouraging the establishment and supervision of mortgage institutions and providing them with long-term credits. It also provides longterm credit facilities directly to Nigerian individuals and entities for the development of residential and commercial properties just as it provides financial and technical assistance for the production of building materials etc. The FMBN is also empowered under the National Housing Policy initiated in 1990, to license and regulate primary mortgage institutions in Nigeria and to act as the apex regulatory body for the mortgage finance industry. Small & Medium Industries Equity Investment Scheme (SMIEIS) In 2001, the Banker’s Committee headed by the CBN instituted the SMIEIS scheme. The scheme compels Banks in Nigeria to put aside 10% of their pre-tax profit as equity investments in small and medium scale industry development. Through this scheme, banks take equity stakes of up to 40% in such organisations for a period of up to 4 years. This scheme helps put back parts of the banks’ profits into the development of the society. World Bank Assisted Micro, Small & Medium Enterprises (MSME) Project The World Bank offers numerous facilities to promote small business growth in developing countries. In 2004, the Federal Government of Nigeria and the World Bank reached an accord on MSME Project Finance. The scheme is for a five-year period that commenced from June 2004 to June 2009. The objective of Federal Government of Nigeria/ World Bank’s Micro, Small and Medium Enterprise (MSME) Project is to contribute to faster growth and job creation by supporting the development of the MSMEs. It works to make it easier for them to gain access to capital, information technology, technical assistance and advice. The project consists of four components: 1. Access to capital 2. Business Development Services 3. Investment Climate

4. Public Private Partnerships Small & Medium Enterprises Credit Guarantee Scheme The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established by the SMEDAN Act of 2003 to promote the development of the MSME sector of the Nigerian Economy. SMEDAN’S vision is to establish a structured and efficient micro, small and medium enterprises sector that will enhance sustainable development of Nigeria, while its mission is to facilitate the access of micro, small and medium entrepreneurs/investors to all resources required for their development. One of the schemes put in place towards achieving its objectives in the Small & Medium Enterprises Credit Guarantee Scheme. For more information on this scheme, please visit their website. Nigerian Agricultural, Cooperative and Rural Development Bank Limited (NACRDB) The Nigerian Agricultural, Cooperative And Rural Development Bank Limited NACRDB) is a product of the merger of the defunct Nigerian Agricultural and Cooperative Bank (NACB), the People's Bank of Nigeria (PBN) and the risk assets of Family Economic Advancement Programme (FEAP) in 2000. The Bank is dedicated primarily to agricultural financing at both the micro and macro levels, as well as micro financing of small and medium scale enterprises. The bank’s loans are structured as term loans of short, medium or long durations. They are meant to finance specific well-defined projects/purposes that are consistent with the bank’s mandate. Repayment is periodic with or without moratorium on interest/principal payment. The bank’s interest rate regime on loans is generally concessionary and starts from as low as 7% per annum. National Agricultural Insurance Corporation (NAIC) NAIC was established by the Federal government of Nigeria. It insures investments in the agricultural sector against sundry risks. You may contact the corporation for details of their activities. The National Automotive Council Development Fund (NAC) The Federal Government of Nigeria established the NAC Fund to develop the automotive industrial sector and to promote local production of automotive components and parts. The fund, which is managed by the Bank of Industry, is targeted at those who want to start or expand auto spare parts manufacturing company. National Poverty Eradication Programmes (NAPEP) The National Poverty Eradication Programmes (NAPEP) of the Federal Government of Nigeria is established mainly to monitor, coordinate and review all poverty eradication efforts in the Country with a view to improving impact and enhancing equity and effectiveness on the use of resources.

NAPEP identifies and partners with viable non-governmental organizations or institutions to increase the availability of loanable funds to the poor. NAPEP also partners with commercial banks, cooperatives, micro finance institutions and many companies in the organized private sector in that regards. The Promise Keeper Programmes (PKP) The Promise Keeper Programme (PKP) by NAPEP is a partnership in which Community Based Organizations (CBOs), especially religious bodies act as guardians/guarantors promising to facilitate a relationship between parties in their group in order to create a pool of funds for establishing successful businesses or for providing basic community infrastructure or service. NAPEP promises to provide matching funds to the Programme. The PKP is in two forms: Micro-credit and Infrastructure support.  The PKP for micro credit enlarges the pool of funds available to the poor through a promise by relatively richer Nigerians (Mentors) to help others (Protégés) they have individually identified. A religious body or qualified community based organization acts as the guarantor. • The PKP for infrastructure support enables a community (Beneficiary Community) to obtain funding from benefactors (Patrons) for basic infrastructure development. A Community Development Organization (CDO) acts as the overseer. Nigerian Export – Import Bank (NEXIM) NEXIM was established in 1991. It provides financial and risk bearing services such as the provision of credit in local currency to support Nigerian exports, export credit guarantee and export credit insurance; domestic credit insurance where such a facility will help export, credit insurance in respect of external trade, transit trade and entry point trade; and investment guarantees and investment insurance facilities. NEXIM deals in foreign exchange transactions and maintains a foreign exchange revolving fund for lending to exporters who need to import foreign inputs, raw materials and packaging materials to help export production. It also has a trade information system to support export business. NEXIM provides credit in local and foreign currencies to exporters through commercial and merchant banks. Financial facilities offered in support of non-oil export are: Petroleum Technology Development Fund (PTDF) The PTDF grants scholarship and training funds to deserving scholars undergoing studies related to the petroleum sector. The mission of the Fund is to train Nigerian students, graduates, professionals, technicians and craftsmen in the fields of engineering, geology, science and management for the oil, gas and solid minerals industry in Nigeria and abroad. Urban Development Bank The Federal Government of Nigeria established the UDB in 1992 to create a greater capacity for dealing with the problems of inadequate housing, transportation, electricity, 53

and water supply. The bank is operated strictly as an independent profit making institution and provides financial resources to both private and public sectors for the development of urban dwelling, mass transportation and public utilities.

Funding Programs â&#x20AC;&#x201C; Specific Information Summary of Business Financial Programs BUSINESS LOANS - Loans made to businesses for expansion or other ordinary and necessary business expenses. Made to existing businesses, (3 years min. in business), that can demonstrate viability and profits. Start-up businesses with no history must seek financing from Venture Capitalists or secure the loan personally with stocks, property or other assets. REAL ESTATE LOANS - All loans secured by a mortgage or trust deed on real estate whether residential or commercial, refinance or new purchase. Includes 1st & 2 nd mortgages. Maximum loan-to-value ratio for owner occupied in most cases is 80%. PERSONAL LOANS - Loans made to individuals for personal use like; debt consolidation, vacation, etc. Generally on signature with no collateral required. Must have good credit and strong earnings to qualify or collateral may be required NEW EQUIPMENT LEASES - Leases made to businesses for new equipment or vehicles. Some auto leases to individuals. Allows for the use of the equipment leased for a specific period of time. ACCOUNTS RECEIVABLE FACTORING OR ADVANCE - Businesses who extend credit for goods or services and advanced money secured by pledging the receivables owed to them. PURCHASE ORDER FINANCING - Cash advanced against a written order, (Purchase Order), for business goods or services to be delivered or performed. CONTRACT FINANCING - A monetary advance against a written contract for services to be performed or goods to be manufactured and/or delivered.

Business Financing 'Business financing” covers different methods by which a business or business Owner can borrow money including: 

Secured Loan - A loan secured by business equipment, accounts receivable, inventory, contracts, purchase orders, real estate or some combination.



Equipment Lease - A method by which a business can acquire the use of business equipment without buying it.

Advantages:  Growth can be funded using existing assets combined with good credit standing.  Personal liability may be kept to a minimum.  New avenues for profits can be opened. Disadvantages:  There is a limit on how much can be borrowed using existing business assets as collateral.  Failure to repay can result in a forced sale of the assets and possible loss of the business.  A business must show a history of profits in order to qualify for a loan or lease. IMPORTANT NOTE: Business loans are made to existing businesses, (minimum 2 or more years operational), that have demonstrated their continuing ability to operate successfully. The business must have the ability to take on additional debt and service that debt from the existing cash flow. For start-up businesses, or businesses too new to have sufficient cash-flow, contracts or outstanding purchase orders, we recommend the borrower seek venture capital assistance or secure the funds personally in order to get the business going. In order to differentiate between businesses needing a loan as opposed to seeking venture capital, please note the following distinctions:

Debt Financing - Businesses seeking Loans  Have been in business for 3+ years.  Have assets for collateral (i.e.: equipment, real estate, accounts receivable, furniture, etc.).  Have an established cash flow from which the repayment can be projected and made.  Can assume a new debt.

Equity Financing - Businesses seeking Venture Capital  May be a start-up or a newly established business.  Have little or no assets for collateral.  Have a unique idea for a product or service.  Have insufficient or no cash flow to guarantee repayment of a traditional loan.  In lieu of a guarantee of repayment, an equity position in the company and its profits may be required. (NOTE: Many Venture Capital firms may take an equity position in excess of 40% interest in the business). In effect, your business client must be willing to own a small percentage of a well-funded company in lieu of 100% interest in one that may never get off the ground!). Your ability to recognize the distinction between debt (loan) and equity (Venture capital) financing is critical to your success as a financial broker serving businesses. If a business cannot adequately demonstrate its ability to repay, it may still be able to acquire the funds it needs, provided the owner is willing to give up a "piece: of the business (sometimes a majority interest), to an investor or venture capitalist as this represents a separate area of financing (equity financing). When you assist a business with Venture Capital financing you can also negotiate for yourself an equity share of the company in addition to a percentage of the funds raised! The Advantage to specializing in this most lucrative area is, if the company you assist becomes successful, a venture capital placement that includes stock options, could be worth millions to you, and could literally set you up for life! BANK-TERM LOANS Bank term loans are the basic commercial loans. They typically carry fixed interest rates, monthly or quarterly repayment schedules and a set maturity date. Bankers tend to classify term loans into two categories: • Short Term Loans: • Intermediate-term loans: Usually running less than three years, these loans are generally repaid in monthly installments (sometimes with balloon payments) from a business's cash flow. Repayment is often tied directly to the useful life of the asset being financed.

•

Long-term loans: These loans are commonly set for more than three years. Most are between three and 10 years, and some run for as long as 20 years. Long-term loans are collateralized by a business's assets and typically require quarterly or monthly payments derived from profits or cash flow. These loans usually carry wording that limits the amount of additional financial commitments the business may take on (including other debts but also dividends or principals' salaries), and they sometimes require a profit set-aside earmarked to repay the loan.

Appropriate for: Established small businesses that can leverage sound financial statements and substantial down payments to minimize monthly payments and total loan costs. Repayment is typically linked in some way to the item financed. Term loans require collateral and a relatively rigorous approval process but can help reduce risk by minimizing costs. Before deciding to finance equipment, borrowers should be sure they can they make full use of ownership-related benefits, such as depreciation, and should compare the cost with that leasing. Best Use: Construction; major capital improvements; large capital investments, such as machinery; working capital; purchases of existing businesses. Cost and Funds Typically Available: Rates vary, making it worthwhile to shop. Ease of Acquisition: Challenging but sometimes a moderate challenge when smaller amounts are involved. However, for bigger loans, your client may need a complete set of financial statements and must undergo a complete financial analysis by the lending institution. Success Tips what do banks look for when making decisions about term loans? Well, the "five C's" continue to be of utmost importance. •

•

• •

Character: How have you managed other loans (business and personal)? What is your business experience? "If a corporate executive wants to open a restaurant, then he'd better have restaurant experience. Credit capacity: The bank will conduct a full credit analysis, including a detailed review of financial statements and personal finances to assess your client’s ability to repay. Collateral: The primary source of repayment. Expect the bank to want this source to be larger than the amount you're borrowing. Capital: What assets does your client own that can be quickly turned into cash if necessary? The bank wants to know what your client own outside of the business —bonds, stocks, apartment buildings—that might be an alternate repayment source. If there is a loss, your client’s assets are tapped first, not the bank's. Or, as one astute businessman puts it, "Banks like to lend to people who already have money." Your client will most likely have to add a personal guarantee to all of that, too.

•

Comfort/confidence with the business plan: How accurate are the revenue and expense projections? Expect the bank to make a detailed judgment. What is the condition of the economy and the industry..

When you're choosing a business bank, use the following guidelines: • •

•

Ask friends and colleagues where they bank and if they are satisfied. Forge a relationship with a bank long before your clients will need a loan. You will find out how they treat you. Get to know some folks at the bank on a firstname basis. Start building a relationship. Believe it or not, banks want to talk to you even if they cannot lend your clients money. Scan your newspaper for evidence of who is making the kinds of loans your client is seeking. Not all banks can be the best at everything. Some are better at business loans; some are better with consumer needs. Visit two to four banks to find your fit. Be upfront; tell them your client is considering a loan and that you are talking with other banks. Then listen to their pitch.

Start-Up Financing Start-up financing is the initial infusion of money that advances an idea or an intention into something tangible. It‘s appropriate for any business. Best Use: Commencing initial operation to the point where outside investors can see and feel the venture, as well as understand that you took some risk getting it to that point. Cost: Start-up financing will possess two of the following three qualities: good, cheap and fast. It will never possess all three qualities. Ease of Acquisition: If your client has nothing, it's difficult. If they have personal assets, the hard part is putting them at risk. But doing so is the rite of passage to both success and failure. For Sources of Start-up Financing: – Please, see the Directory of Money Sources As previously mentioned, a loan to a start-up company is more like a forming partnership, and thus may be more suitable for a venture capitalist than a lender. However, an established business may seek funds for expansion. If earnings are consistent or look promising a lender may decide to take the plunge. The major misconception business clients seem to have is that they can borrow unlimited amounts of money to start-up a new business solely on the strength of a good idea. Ideas are important – where would we be in this country today if not for the ideas of our great thinkers. But a lender is not one to appreciate "idea value" when as it relates to his money.

In fact, a lender only cares about one thing - Can the borrower demonstrate the ability and desire to repay the loan. For many businesses, especially start-up situations, demonstrating the ability is far more difficult than demonstrating the desire. Is all lost if you're dealing with a start-up? No. If an individual has a well thought out business plan, can show they have the ability to make good money in a steadily employed position or related business, can provide contracts, purchase orders or other adequate collateral, a lender may take a chance on lending money for a new business. But the funds may also come in the form of a personal loan - secured by collateral or a real estate loan, secured by a mortgage on the borrower's home. In most cases where money is sought for business purposes as opposed to equipment purchases, assets already owned must be pledged as collateral, not assets which may be acquired if the funds are eventually obtained. If inadequate collateral exists to secure the funds, the entrepreneur interested in business expansion or start-up is well advised to consider offering a portion of the business and its projected profits to a venture capitalist in return for the needed funds. Businesses that are established for a number of years, have adequate cash flow and profits, and are looking for expansion money are an entirely different story. In that case the first sources most businesses approach are their own bank. Why? Because business owners usually have daily contact with their bank for depositing the money received from their business, making the bank more aware of the nature and direction of the business and most likely to grant the loan. However, banks tend to have a limited scope in arranging business financing. As a financial broker, you now have access to a variety of business financing alternatives, many of which are typically not available through traditional lending sources such as the local banks. These include new equipment leasing, sale leaseback, accounts receivable factoring, contract and purchase order financing, etc., some of which may assist even the new business owner - Read on!! If you have a client seeking business financing, find out if he or she has already approached their own bank, and whether or not they have been turned down. Often this information will help you better understand how you can fit in the picture. The use of the funds is a very important factor in determining credit acceptance for a business loan. The purpose must be clearly defined, and a sound plan to show additional profits for debt service must be presented. When discussing business financing with your client, always obtain as much detail as you can about the use of the funds. If funds are for purchase of equipment, a lease may be more suitable, (see section on leasing). If the funds are for working capital, exactly how will they be used? If the funds are for paying current expenses, back taxes, etc., how will the situation be avoided in the future?

A little up front investigation can save processing time and increases your chance for approval. Remember to outline the full story in a covering letter whenever you submit these types of clients. Qualifications for business financing rest on two factors:  

Income, collateral and credit of the business itself. Income, collateral and credit of the owner or chief Executive Officer (CEO) of the business.

Of course an incorporated business with many shareholders will be judged more heavily on business information. But for most sole proprietorships, and small general partnerships, the strength of the individual owner(s) is a key point in determining qualifications for business financing. Many times a sole owner mixes his personal expenses for living, automobile, insurance, etc. in the business. This may present a confusing picture to the lender. Remember, the lender is taking a risk when the loan is made. They want to know that the business is being run in a sound and forthright manner to assure then that there will be profits made from which they will be re-paid. When submitting a business loan package, be sure that the business profits and any draw, salary, commissions, etc. to the owners(s) is clearly indicated. If the business pays for the automobile expenses be sure that is understood. The lender will carefully review all business income & expense AND personal income & expense in making a credit decision. Business assets are many times over-valued by business owners. True the replacement cost for fixtures and equipment in today's market is high. But from a lender's standpoint, the "auction" or “salvage” value of these assets is what they look at. After all, if the lender is forced to seize assets in the event of a default, you can be sure their main interest is to sell them quickly and recover what they can. They will have no interest in being business owners in a failed enterprise. ASSET-BASED LOANS Asset-based loans are usually from commercial finance companies and banks that are offered on a revolving basis and collateralized by a company's assets, specifically accounts receivable and inventory. Appropriate for: Companies that may be rapidly growing, highly leveraged, in the midst of a turnaround or undercapitalized. In addition, asset-based financing works only for companies with proven accounts receivable, and a demonstrated track record of turning over their inventory several times each year.

Best Use: Financing rapid growth in the absence of sufficient equity capital to fund receivables and inventory. Asset-based loans can also be used to finance acquisitions. Cost and Funds Typically Available: More expensive than bank financing since assetbased lenders generally have higher expenses than bankers. Still, pricing is competitive among asset-based lenders. Acquisition is comparatively easy if your client’s company has good financial statements, good reporting systems, inventory that is not exotic and, finally, customers who have a track record of paying their bills. If your client does not have any of these, the path to an asset-based loan could be challenging. First Steps Here are the typical steps of a typical asset-based loan: Step 1: The process starts with the company selling its product or service to customers. Unless it's a cash business or a business in which customers pay for all of their purchases, a receivable is created. The receivable, a debt to the company, is, in most cases, repaid to the company for some time. This asset, in combination with inventory, starts the process. Step 2: The lender makes a loan to the company based on the value of the receivables. As discussed, the lender won't advance 100 percent of the receivables but may advance up to 90 percent of the eligible receivables. The moment funds are advanced, the company starts paying interest, and the lender starts earning interest. Step 3: Pay close attention here. Note that with an asset-based loan, in most cases, the customers do not send their payments to the company that sold them the product or service but instead directly to the finance company. Asset-based lending can be uncomfortable for some businesses because a third party gains control of the company's cash flow. To successfully negotiate an asset-based deal, your client must come to the table with financial information that not only paints a positive picture but also is detailed and accurate. They must also be willing to make the lender comfortable. Among the requirements are: • • • • •

The business must have a reasonable net worth and long-term viability. Financial statements must be reviewed by a chartered accountant that the lender deems acceptable. Borrowers must submit a year's worth of monthly projections. The business's principals must guarantee the loan, and the guarantee must be supported by personal financial statements. The Key person life insurance may be required.

ACCOUNTS RECEIVABLE

Accounts receivable are an important asset not to be overlooked. But remember, accounts receivable are only as good as the customers who owe the business money. If the business shows a poor record of collecting money owed, a lender will be reluctant to lend money against past due accounts which they may end up getting stuck with. Oftentimes, a business with delinquent or sluggish accounts receivable is better off looking within itself to generate the capital they need rather than attempting to borrow the funds. An ideal beginning is to step up their own collection efforts by not allowing their accounts to fall behind. After all, if they can cut their past due receivables in half, the cash-flow problem along with the need to borrow any money to solve it are dramatically reduced or even eliminated! A sound piece of advice for any business, but if you are in the business of providing the funds, how can you profit by steering them away from borrowing? The primary method a business uses to collect past due accounts is to submit them to a "collection agency" to help them collect the money owed. Most businesses are reluctant to submit an account for collection for two reasons: 1) It is expensive - Usually 10-40% of the amount the agency helps collect is retained by the agency. 2) It can breed ill will from those clients who have been turned in for collection making it difficult to retain them as customers. It is a known fact the earlier collection proceedings begin on a delinquent account, the easier it is to collect. Still, most businesses are reluctant to turn in an account for collection, however, due to the inherently high collection agency costs. Typical collection agencies are compensated for their services on a "contingency feeâ&#x20AC;? basis, meaning that somewhere between 10-40% of the collected amount is retained by the collections agency in return for their collection efforts. Consequently, the average business owner will wait longer than is prudent for the account to pay on their own while they attempt in-house collection efforts with usually less than satisfactory results. Indeed, what business wants to give up almost half of the monies that are due them in return for a service they feel may not necessarily be needed? So Mr. or Ms. Business owner will often wait until it is too late. So long, in fact even the delinquent accounts can barely remember what they owed and to whom. Now he comes to you for a loan because the business is experiencing cash flow problems. What this particular business owner needs is not so much a loan, but the services of a debt collection agency with a different schedule of compensation than the typical contingency fee.

One in which accounts may be submitted for collection as soon as they become past due, not when they become so delinquent they are virtually uncollectible. Pledging Unpaid Receivables Against A Cash Advance There are tens of thousands of businesses across the country that ship material to their customers and then send them a bill for the materials sent and have to wait for 30 to 60 days or longer until they are paid. There are tens of thousands of additional businesses who extend credit in a like fashion for services rendered, (printers, plumbers, electricians, hospitals, physicians, dentists, etc.), who also have to wait to be paid for their services rendered. If your client has a business that extends credit for goods or services rendered and are in need of financing, they have a ready asset, which can be pledged to secure the funds. The money owed to them by their customers is called their "accounts receivable", and they can pledge these future dollars they will he receiving for immediate financing! The amount of money your client can receive on an account or note receivable will depend on the client's credit and the repayment period of the receivables. If your client simply needs an "infusion" of funds, it may be possible to arrange an advance against outstanding receivables on a one-time basis, however typically a contract is signed for a one to three year period. The client receives between 2/3 and up to a maximum of 80% of the amount owing as a lump sum check. In an ongoing contract, they continue to receive up to 80% of the receivables generated each month. They receive the differential less the discount rate (or financing charge), and less any unpaid or uncollectible accounts when the accounts actually pay. IMPORTANT DIFFERENCE If a business has invoiced or billed for goods or services ALREADY DELIVERED ... It's Accounts Receivable Financing. If a business has a document for goods or services NOT YET DELIVERED ... It's Contract or Purchase Order Financing.

DEVELOPMENT FINANCE Development Finance primarily provide loan financing to businesses in areas that need economic development. Appropriate for: Start-up to established companies that can demonstrate the ability to repay a loan, the size of the loan request, and limited equity from founders or limited collateral. Best Use: To start a new business or to expand an established one. Cost and Funds Typically Available: Relatively inexpensive. Most DFI loans are priced according to risk as opposed to the cost of funds. Since DFI loans tend to be riskier than bank loans, they cost more as well. Ease of Acquisition: Easier than commercial lenders, but challenging, since for loans, a company must still undergo the scrutiny of traditional credit analysis. The difficulty of securing DFI financing is sometimes compounded by the relatively narrow focus and agenda these institutions may maintain. The idea behind a DFI is simple and powerful. In a nutshell, the government agencies make viable loans to businesses that can help the area grow and prosper. Here are five steps to get started. 1. Contact the DFI and schedule an appointment. Not only are they willing to discuss your clientâ&#x20AC;&#x2122;s loan proposal, but may also assist companies in getting loan financing from other institutions. 2. Be ready to demonstrate your "second bottom line." Specifically, how will the loan result in job creation or the introduction of an important service in the community, or how will it help stabilize the economy? 3. Show that your client is committed to the community, and that your clientâ&#x20AC;&#x2122;s longrange plans are to stay there, not grow up and move on.

4. Set aside ample time. DFI loan officers tend to spend more time with you than a traditional commercial lender. Give them their due because it might result in the creative solution that delivers your client’s financing. 5. Be ready to commit some of your own funds. If possible, set aside some of your client’s personal capital to put into the business as an incentive for the CDFI to make a commitment. Nothing gives a lender more comfort than a founder who puts in everything he can. To find a DFI, use the Finance Sources Directory section of this manual.

EQUIPMENT LEASING An Equipment Lease is a way for the businessperson to acquire the unlimited use of equipment necessary to operate and expand their business, (factory or office, etc.), by simply paying a rental payment each month, rather than purchasing the equipment outright. Appropriate for: Any business at any stage of development. Best Use: Financing equipment purchases. Leasing can also finance the soft costs often associated with equipment purchases, such as installation and training services. Cost and Funds Typically Available: Lease financing is generally more expensive than bank finances, but in most instances it's more easily obtained. The range of funds available is unlimited. Advantages:  Since the leasing company (lesser) pays for the equipment in full there is usually no substantial capital outlay.  A business pays only for the use of the equipment -not for the ownership rights, freeing up additional capital to be utilized in other business areas.  At the end of the lease, the equipment may be purchased for its then reduced value or traded for new equipment, thereby avoiding obsolescence.  Monthly lease payments for business equipment are entirely tax-deductible. Disadvantages:  Lease financing is traditionally at a higher rate of interest than conventional bank loans.  Depreciation and/or tax credits are usually kept by the leasing company or passed through to the businessperson only if they are willing to pay a higher rate.  Working capital and other incidental costs associated with acquiring equipment may not be included, requiring additional financing from other sources.

Besides monthly payments, factors that are part of a lease quote are:     

What is the advance rental requirement? What is the security deposit if any? What is the purchase option? Is depreciation and/or any tax credits available retained by the lessor, or passed through to lessee? How much commission will you make as the broker?

Ease of Acquisition: Finding an equipment-leasing company is easy. Please, refer to the Financing sources directory section of this manual. Almost any equipment a business could conceivably need offers a lease option. Though it's not apparent at first glance, the company offering the lease financing is not the same one that is selling the equipment. The company selling the equipment simply makes a direct referral to a leasing company with which it does business. Your position here as a broker here, is similar to that of an independent insurance agent. You should have intimate knowledge of the marketplace and know where to go to get the kind of insurance, or lease, you need. In theory, this generates savings in excess of his or her fees. SUCCESS TIPS: Leasing is a three party transaction involving a Client (or lessee) who wishes to acquire the use of business equipment, a Vendor wishing to sell new equipment, and a Leasing Company (Lesser) willing to buy the equipment on the promise that the client will rent the equipment over a specific period of time. Each party benefits accordingly from this arrangement. 1. The leasing company may borrow the money to buy the equipment on its own good credit, or may purchase the equipment from cash on hand. The rental payments they receive from the client return the cost of the equipment along with a profit. Any tax benefits of ownership such as depreciation are also enjoyed by the lesser and may be used to offset taxes owed on other income they receive. 2. The client gets the use of the equipment without having to spend their own cash to buy or have to borrow from a bank to raise the purchase money. For a small rental payment each month, the client has equipment-making money for his business. And in most cases, since they are leasing a business related asset, they may be in a position to write off 100% of the monthly lease payments! 3. And of course the vendor has sold the equipment to make their profit. Acting as a lease broker, you must deal with both the client wishing to acquire equipment and the vendor selling the equipment. Your success at delivering a solid package on both client and vendor’s equipment will determine your success

in funding business with the leasing company financing the transaction, and thereby earn you your commission! To maximize your chances for success you must provide top service to all parties. You must advertise to bring in the best clients, understand their needs, and provide the knowledge and legwork required to help them finance their equipment needs. And you must also develop good vendor relationships to build referrals for new clients. This is especially important when you arrange leases on any equipment held in high regard by the leasing company. It then makes approval come more quickly when a leasing company gets to review many different credits for the same equipment. Lastly, you must always take care in packaging your clients lease applications so that an accurate and clear picture is presented to the leasing company. MICROFINANCE Traditionally, Banks and other regular finance institutions lend mostly to medium and large enterprises adjudged by them to be credit worthy to the neglect of the poor, small and micro enterprises. Microfinance is about providing financial services to the micro and small enterprises as well as the poor who are traditionally not served by the conventional financial institutions. The Microfinance Program was developed to increase the availability of very small loans to small-business borrowers. The program uses nonprofit intermediaries to make loans to new and existing borrowers. These funds may be used for working capital, inventory, supplies, furniture, fixtures, machinery and equipment. Three features distinguish microfinance from other formal financial products. These are: (i) the smallness of loans advanced and or savings collected (ii) the absence of assetbased collateral, and (iii) simplicity of operations. Micro Finance Institutions (formal and informal) have become the main source of funding micro and small businesses in Nigeria. The traditional microfinance institutions provide access to credit for the rural and urban, low-income earners through NonGovernmental Organization (NGO)-microfinance institutions, moneylenders, friends, relatives, co-operative societies and credit unions. The informal financial institutions generally have limited outreach due primarily to paucity of loanable funds. In order to enhance the flow of financial services to Nigerian rural areas, Government has initiated a series of publicly-financed micro/rural credit programmes and policies targeting the poor as well as micro and small enterprises. Best Use: For start-up companies with lower capital requirements and limited operating history. Microloan borrowers may benefit from the intermediary's expertise in business.

Cost and Funds Typically Available: Most loans are collateralized by equipment, contracts, inventory or other property, and require personal guarantees. Ease of Acquisition: This is an especially good source of funds for businesses that have never borrowed from a bank. And it provides a source of smaller loans that many banks are reluctant to service, especially as a business loan. One of the difficulties in obtaining microloan funding, however, lies in the nonprofit intermediary distribution system. These intermediaries distribute funds in their own communities and/or regions. There are other microloan programsâ&#x20AC;&#x201D;often backed by state and local governmentsâ&#x20AC;&#x201D;that can offer an alternative.

PURCHASE ORDER AND CONTRACT FINANCING If you encounter a client who is attempting to sell products or provide services and has purchase orders for the goods or contract(s) for services to be performed, you may be able to arrange financing based on the strength of these instruments. â&#x20AC;&#x153;It takes money to make money", or so the old adage goes. However oftentimes a new or existing business finds itself in the position of being unable to do business because they don't have sufficient capital to fulfill existing orders or perform services that have already been contracted for. Situations like these are being compounded by current market conditions forcing many businesses to "down size" or scale back because of decreased business demands. This has led to a number of layoffs of former employees, many of who are now choosing to go into business for themselves. There is consequently less working capital available for many established businesses, should their business suddenly pick up, and even less available for the army of new and budding entrepreneurs looking to start-up something new on their own. Yes, even a start-up business can have an asset in hand, which could allow them to receive financing! Contract and Purchase Order Financing can be just the ticket for businesses which have run short of funds due to an unexpected expansion or one that is fairly new or even just starting out - most of which tend to be undercapitalized In either case, if a business has just received a purchase order for a large quantity of goods, larger than they have in inventory and find themselves short of financing to purchase the goods at wholesale to ship and bill out - or they may have to manufacture the goods and the order is larger than they can afford to fill - You can help by arranging financing against their existing purchase order(s).

You can also provide financing to businesses that provide services and already have a contract to perform these services, but find them in a position of being under financed and unable to perform, because they don't have the money to hire the additional employees needed to perform the necessary services. This is contract financing and depending on what is contracted for; you may be in position to help them as well! In both cases, once the goods have been shipped and billed or the contracted services have been performed, and your client is waiting to be paid - this client could obtain ADDITIONAL FINANCING, as they will have just generated an account receivable and may also be able to obtain this type of financing as outlined in the previous section. The area of Contract and Purchase Order financing is getting them financed and up and running in order to get them to generate a receivable account to collect in the first place.

FINDING CLIENTS FOR CONTRACT & PURCHASE ORDER FINANCING Prospective clients for this type of financing are everywhere. Importers, exporters, contractors, electricians, janitorial companies, plumbers, wholesalers, manufacturers, distributors, security firms, printing companies, hospitals, machines shops, Doctors, Dentists, universities, sales & marketing companies as well as inventors and/or patent holders with proprietary products. There are actually tens of thousands of businesses that need these services. Get out your yellow pages or business directories again, under some of the headings suggested above. You can phone or write to them under the appropriate headings. Send them a businessfinancing letter with your letterhead and a copy of your Brochure. Attorneys and accountants can also be mailed to. They could have clients in need of this type of financing. You can offer to offer them a referral fee for any funded transactions. .

REAL ESTATE LOANS Real estate loans come in many forms. Mortgages are the most common. Regardless of the form, which the security instrument takes, the basic idea is the same. A "mortgage” is the legal agreement between a borrower and a lender, where the value of the borrower’s real estate is offered as security for a loan. If the loan is not repaid, the lender can force the sale of the property to recover their money. A "conventional mortgage” (or first mortgage) is the basic financing for real property, with payments usually spread out over a long period of time, (15 to 30 years). In either cases, a mortgage may be either legal (1st Mortgage) or equitable (2nd Mortgage). Under a 2nd mortgage, the borrower can offer the property as collateral, with the same or a different lender in order to receive additional funds. In addition, lenders also make a distinction between mortgages on residential property, where the owner resides, and commercial property, which is held to produce income. There is some overlap in MIX use properties where the owner resides AND rents one or more of the units for income purposes. The important point to remember is that there is a strong motivating element in a residential mortgage that works in the lenders favor. If the borrower defaults on the payments, they not only lose the property they lose their home as well. Advantages:  Low cost since real estate is the most secure form of collateral.  Low payments when they are spread out over a long period of time.  Qualification is easier when there is adequate equity in the property. Disadvantages:  Property value may be a limiting factor in the amount available.

 

Failure to repay may result in loss of the property. Costs such as appraisal fees, title fees & insurance, documentary tax Etc. repaid by borrower, reducing loan proceeds.

REAL ESTATE LOANS: Client Qualifications When determining if a client is qualified for a residential first mortgage, the key factors that lenders look at are:    

How much down payment will be made? Is the property properly valued in the market? Does the borrower have good credit? How much income is available for payments?

Most lenders want to see at least 20-30% of the purchase price of the home as a down payment. Any less and qualification for a new mortgage can be difficult unless your client has strong credit. A down payment of 25% may better qualify a questionable borrower who could not qualify any other way. By sticking with clients who have at least 20-30% or more to put down, you will find that in most cases they have a far greater likelihood of qualifying, and you stand a far greater chance of earning your commission: The lender from an appraisal made by a certified appraiser usually determines the property value. Appraisals provided by the borrower are usually not acceptable. The selling price of the property may over ride any appraisal based on their market assessment of existing local conditions. The credit history of the borrower is obtained through any of several major credit reporting agencies. Once again the lender will prepare and order these credit reports directly. Reports presented by the broker or borrowers are not acceptable. The borrower's income is the key factor in determining if they are qualified for a new mortgage (first or second). A rule of thumb used by lenders is that no more than 40% of the borrower's net income can be used for the mortgage payments. In the case of commercial property, the income generated by the property determines the extent to which a lender will make a commercial first or second mortgage. Positive cash flow and good loan to- value ratios are the key factors.

PERSONAL LOANS A "personal loan" is one made by a lender to an individual borrower when the money is to be used for personal reasons. This type of loan is made when the lender is satisfied that the borrower has the ability and intention to pay the loan back. When no collateral is required, this loan is also referred to as a “signature loan". ADVANTAGES:  The loan can be unsecured1with no collateral such as real estate or personal property required.  If collateral is required, personal property or household goods may be all that is needed.  The loan can be made with simple interest terms offering maximum flexibility, usually with no pre-payment penalty. DISADVANTAGES:  There is a limit on how much can be borrowed with no collateral or security.  With limited or no collateral required, the interest rate may be higher.  Repayment is made over five years or less, with monthly payments proportionately higher than with secured long term financing.  Borrowers with little or no net worth or Insufficient to marginal credit histories will normally not qualify for unsecured funds. IMPORTANT NOTE: Unsecured personal loans are difficult to obtain because the lender is afforded no measure of security other than the borrower's promise to pay. Income and prior credit history become paramount in considering creditworthiness. In recent years banks have lost substantial sums of money making "bad" unsecured loans. Be certain you get a complete picture of your client's income and current financial condition. In some cases it may be advisable to steer your client into a secured financing, or another financial service to obtain cash advances when needed. SUCCESS TIPS: PERSONAL LOANS

Personal loans fall into two categories:  Secured loans (secured by personal property).  Unsecured loans (no collateral required).  The most common places that a borrower may go to receive a personal loan are banks, savings & loans, credit unions and finance companies. PERSONAL LOANS: Client Qualifications Factors in determining qualification for a personal loan are:    

How much is requested in relation to their net income? How much spend able income remains for servicing the new debt after taking into account their existing ordinary and necessary expenses? Does the borrower have good credit? Does the borrower have sufficient personal assets? (Home, stocks, bonds, automobile, etc.) to indicate that they would represent a good credit risk?

Most lenders will not lend an individual more than one-third of what they earn in a year. That means to borrow N100, 000 the borrower would have to show a yearly NET income of at least N300, 000, to N400, 000 to be on the safe side assuming they have no other large outstanding debts. Since nearly everyone has some other indebtedness, a minimum of N500,000 in income per year is probably a more appropriate figure. The spendable income is money left over at the end of the month after paying all the regular monthly expenses of food, clothing, shelter, debt service, medical, dental, daycare, entertainment, etc. Sometimes a formula or "debt-ratio" is used to determine if the borrower is presently living within their means. For lenders looking at borrowers with a high net worth, a 50% debt ratio is the cut-off. The borrower’s net worth is another factor in determining if a lender will make a personal loan. Although no collateral may be required, the lender wants to know that if the borrower defaults they have an opportunity to recover their funds through the legal process. The make-up of person’s net worth is the current market value of all their assets reduced by the value of all their liabilities. Even though the borrower may not be pledging collateral, the fact that they have assets is taken to mean they represent a better risk than someone who has nothing to lose. Insufficient net worth is a reason lenders may not approve an unsecured financing.

SUMMARY:  If your client has good income & good credit history & wishes to borrow money, it’s okay to process.

DIRECT

PUBLIC OFFERINGS

Take your client’s business—and your client’s quest for funding—directly to the public by selling shares in your client’s company. PLEASE, NOTE THAT YOU CAN ONLY DO THIS THROUGH QUALIFIED CAPITAL MARKET OPERATORS. Direct public offerings (DPOs) are the direct sale of shares in a company to individual investors. After the shares are sold by the company, investors may or may not trade on a stock market or exchange. Appropriate for: Direct public offerings work better with established companies, but they can also be used for start-up and emerging companies. One of the most important characteristics a company should possess for a successful direct public offering is a strong affinity for its customers, the surrounding community or the industry in which it does business. In a direct public offering, these affinity groups become the company's shareholders. Best Use: Financing the expansion of profitable operations. Direct public offerings can be used to finance research and development, but public investors often become impatient during long periods of product development. When they are unhappy, they can cause problems for the company later as it tries to raise money to finance the marketing and rollout of the product or service. Cost and Funds Typically Available: Expensive. A direct public offering is less expensive than an initial public offering (IPO) with an investment banker, but only moderately so. The absence of an underwriter's commissions is sometimes more than offset by the marketing expenses a company must bear in a direct public offering. In addition, like a conventional initial public offering, the company must surrender a significant hunk of ownership to its direct public offering investors.

Ease of Acquisition: Difficult. Any transaction that involves securities is challenging. The absence of an underwriter can make the process at once easier and harder. Easier because the company can call the shots without recrimination AND harder because an underwriter has experience with IPOs, and a company typically does not. First Steps A direct public offering is not for the faint of heart. It takes time, money and persistence. Entrepreneurs must evaluate whether they have the chutzpah to see a DPO through. If you think they do: ď&#x201A;§

Ensure that you have a way to corral your affinity groups. Direct public offerings don't work well without a large group of investors that has some sort of connection with the company, its product or its service. A publishing company, for instance, not only has a large base of customers but also has a lot of information about them and can easily contact them by mail or e-mail, through its own media, or via the telephone. On the other hand, in a somewhat frustrating arrangement, successful restaurants have a steady stream of customers but almost no information on them. For companies facing this dilemma, salvation depends on whether or there is a way to access rudimentary information about members of the affinity group, and, once accessed, whether the affinity is strong enough to make a deal. For instance, a restaurateur can easily purchase the names of people who have dined at fine restaurants. So what? Just because someone has dined at a restaurant doesn't mean he or she has is an affinity for a specific restaurant. However, there are lots of ways a company can find information about people who would be naturally interested in them.

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Hire an attorney. Securities laws are perhaps the most complicated laws in the land. And, you need an attorney to make sure you are in compliance. It's important that you seek an attorney with not just experience in securities matters, but with some facility in the direct public offering arena as well.

INITIAL PUBLIC OFFERING An initial public offering (IPO) is the sale of equity in a company, generally in the form of shares of common stock, through an investment banking firm. These shares trade on a recognized stock market. Appropriate for: Start-up to established companies. Start-up companies must demonstrate the potential to develop into profitable enterprises that will deliver significant annual increases in sales and earnings. Established companies must also demonstrate significant future growth potential. Best Use: Financing the expansion of manufacturing or service capacity or marketing activities that have an immediate impact on earnings. Also to provide a company with increasing sales, as a layer of working capital to fund growing inventory (if there is any) or accounts receivable. Cost and Funds Typically Available: Perhaps the most expensive way to finance a company. Not only will an initial public offering cost a significant chunk of the company's equityâ&#x20AC;&#x201D;no less than 25 percent and perhaps a great deal moreâ&#x20AC;&#x201D;but fees and expenses can climb to as much as 20 percent of the deal. Ease of Acquisition: Unreasonably difficult. Going public is one of the most difficult transactions. Many companies try but fail during the process. First Steps What are the strategic reasons you may want to convince your client to consider an initial public offering? Here are some:

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A company cannot reasonably expect to raise venture capital from institutional funds. A company needs a significant amount of permanent capital it won't have to pay back to a bank or other lender. A company seeks growth through acquisitions, and needs a "currency" other than cash to attract and consummate deals.

In addition to strategic considerations, being a public corporation often confers the following benefits: •

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A public company has direct access to the capital markets and can raise more capital by issuing additional stock in a secondary offering. Public companies can also more easily raise funds privately. Public companies can use their common stock to attract and retain good employees. Being a public company is more prestigious than being a private company. Going public provides owners and founders an exit for selling their ownership holdings in the business. Public companies are worth more than private companies. Going public makes your rich—at least on paper. And make no mistake, none of the lawyers, accountants or investment bankers involved in the process gets the least bit squeamish about their client's desire for riches. After all, your client’s success means their success.

For clients whom you convince to go public, your first, most important, fundamental task is to find an investment banking firm that will underwrite the offering. Once that task is completed, with a little luck, a strong market and a lot of determination, everything else will fall into place. To find the right investment banker, you must conduct some research. Specifically, you must discern which firms in the past two years have consistently done initial public offerings similar in size and scope to the one that fit your needs.

Determining Your Client’s Proposed Financing Determine how much money your client requires, when he or she needs the money, how he will use the money, and how he will pay it back. Establish how much money your client needs and the use Entrepreneurs tend to spend too much time looking for money and not enough time making it. This problem stems from the lack of adequate pre-planning given to the initial use of funds. In order to determine what your client’s short and long term capital needs are going to be, you must perform accurate financial projections for your client. Your projections must consider:      

Immediate Need for Capital (Bills to pay) Research and Development (Estimate, then double) Capital Asset Acquisition (Required equipment, etc.) Inventory Floor Planning (Necessary raw materials) Working Capital Requirements (Payroll, payables, etc.) Market Penetration (When will the cash flow begin)

The cash flow model is the best tool for determining your client’s capital needs. Don't be overly optimistic or too conservative, either one could hurt your client. Know what factors will affect your client’s projections to the downside, (sales, costs, price breaks, etc.). Work closely with your client, third parties, financial advisors, accountants, industry consultants, retired executives, etc., to keep from having tunnel vision and missing the big picture. The cash flow model should be month to month for one year and the quarterly for the next two years, annually for the last two years. Conservative Request

It is extremely important that the financial projections fully support the amount of funds your client is seeking.

If your client is seeking debt financing the request must be very specific. Lenders frown upon having to come back to ask for more, because the initial amount was underestimated.. Downside Planning Take the time to plan for the downside. It is far better to over estimate your clientâ&#x20AC;&#x2122;s capital requirements than to run short and be forced to go hat in hand back for more. Supportable Assumptions Both Lenders and Investors are going to want to know that your client has reasonably estimated and supported costs and projected revenues. Your clientâ&#x20AC;&#x2122;s financial pro forma should include detailed information and trade references on the costs of each expense listed.

How To Qualify Your Clients The rules presented here are not absolute. Aggressive lenders in their approach to financing will search for ways to overcome any basic limitations in your client's application. In many cases you will be able to save time and trouble by recognizing a weak case immediately and going on to the next. The main areas lenders look at when reviewing an application are: Income, collateral and credit. Also, the purpose of the loan and personal circumstances of the client are also considered. Money market conditions, economic conditions, and other factors specific to the area of the country where the client is located can also weigh in loan approval. Combine all these with the prior experience of the lender and you have a rather complicated series of events to judge. Some lenders work on a credit scoring system, where each factor receives a certain weighted value. Depending on the total score, a loan or lease is either approved or it isn't. Others have specific negative elements that immediately result in a â&#x20AC;&#x153;turn-down", while many simply look at basic profit and loss factors and make "gut" decisions. The following examples are ways that your client can be judged. You must treat each client in a professional manner and do the best job you can in order to maximize your results. In cases where your client is strong - no problem, but in marginal cases, extra care must be taken in developing a complete and accurate package to overcome any limitations.

Below both positive and negative rules of thumb give you a balanced approach to client qualifying. These may vary from lender to lender. INCOME Positive: + Client has more than 50% of take home pay avail-able for debt service and is not overburdened. + Clients request for money is less than 1/2 his annual income. He is borrowing in moderation. Negative: - Client spends more than 1/2 his monthly income on debt payments and has many obligations. - Client wishes to borrow more than 1/2 his previous yearâ&#x20AC;&#x2122;s income, puts dreams before prudence. COLLATERAL. Positive: + Client owns home, only one mortgage with over 20% of value as built-up equity. Negative: - Client has little or no equity in home or owns no real estate - small net worth. CREDIT. Positive: + Client has established credit, has previously borrowed & made timely repayment. Negative: -Client has little, marginal or no past credit. CIRCUMSTANCES Positive: + Client has successfully run a business at a profit for 3 yrs or held a job that long. Negative: - Client is starting a business, has not shown profitability. Changing or new to job. MARKET CONDITIONS Positive: + Client knows and understands cost of money. Is willing to accept prevailing rates. Negative: - Client demands low interest rates, extended payment terms, or makes unreasonable demands.

HOW TO WRITE A LOAN PROPOSAL – in a nutshell A well-written loan proposal contains: 1. Business name, names of principles and the business address. 2. Purpose of the loan – exactly what the loan will be used for and why it is needed. 3. Amount required – the exact amount your client needs to achieve their purpose. Business Description 1. History and nature of the client’s business – details of what kind of business it is, its age, number of employees and current business assets. 2. Ownership structure – details on your client’s company’s legal structure. Management Profile Develop a short statement on each principal in your client’s business; provide background, education, experience, skills and accomplishments. Market Information 1. Clearly define your client’s business services/products as well as the markets. 2. Identify your client’s competition and explain how your client’s business competes in the marketplace. Financial Information 1. Financial statements – balance sheets and income statements for the past twothree years. If your client is just starting out, provide a projected balance sheet and income statement. 2. Personal financial statements of the principal owners of the client’s business.

3. The collateral your client would be willing to pledge as security of the loan. What Lenders Look For Following are some key questions that investors and lenders will be looking to answer. Keep them in mind when writing a business plan. Is there sufficient demand for the products or services? Youâ&#x20AC;&#x2122;ll need to provide evidence that there is a customer base for the product or service you want to offer. If the product exists today, provide market potential data, market share breakdown, sales history and sales projections for the product/service. If this is a new concept, present results of surveys, focus groups, or test markets based on market research. Does your client have a sustainable competitive advantage? Is your client being realistic? Although investors and lenders love to back businesses with high growth potential, they are also skeptical when the projections seem too good to be true. This is a sign to them that one may be overly optimistic, naive, or worse, deceitful. Make sure you can back up projections in the business plan with reliable data. What goes into the business plan depends upon your clientâ&#x20AC;&#x2122;s specific business and the information required by the lenders and investors. Where possible, you may want to check with the lender or potential investor beforehand to determine their specific requirements.

Why A Lender May or May Not Want To Deal with You All financial institutions basically rent their money, for a fee. Like any successful business they want to move as much of their product as possible. They make money by renting or lending their money and if your situation fits within their lending parameters they will be more than pleased to earn a profit by lending your client their money. Also consider that there is a certain intrinsic cost, which every bank must incur in order to attract their customers. Beyond the hundreds of thousands, (or even millions.') of dollars they must spend on their office buildings and banking towers to attract and accommodate their customers, they spend a great deal more on advertising and promotion in order to attract business. They Need borrowers just as borrowers need lenders. When interest rates are low and money is plentiful it becomes a borrower’s market and shopping for the lowest rates and best terms is practical. When rates are high and money, tight it becomes the lenders market, becoming difficult to obtain financing at any price. The main advantage you have in approaching a lender is that there is no acquisition cost to them in dealing with you, unless of course they decide to underwrite your loan request. The primary disadvantage is that they don't want to hold your hand and bring you up to speed, especially if you're just learning the business. They are only interested in a completed loan package, of the type that normally fits their parameters, with all the "i's” dotted and all the "t's” crossed. If you can’t deliver this to them, they will typically not be interested in dealing with you at all. If You Have A Client In The Wings... If you have already done some advertising and have a client with a specific loan or lease request on your desk, you better get ready to move, FAST. The quickest way to approach

a prospective lender is to pick up the phone and start "dialing for money". But be prepared. You are going to have to give a synopsis of your client and his or her needs and to be as brief as possible to see if you can generate any interest. Every lender will want to know the following for openers: 1. The purpose of the loan and use of the proceeds; 2. Any equity, security or collateral that may secure the loan; 3. Your client’s income, credit history and ability to repay. A typical phone conversation to try to generate interest might go something like this: Mr. Banker, my name is Joseph Smith, I am a Loan Broker with Smith & Jones, and I have a client who has approached our firm who wants to": A) Refinance his home B) Lease a new automobile C) Get a 2nd mortgage for home improvement purposes D) Obtain an unsecured loan (or line of credit etc. "My client claims to have excellent credit, and is: Looking for a mortgage, etc. of N_______ He's prepared to put 20-30% down," (if a new purchase on a home) "With an estimated value of N_________” "What kind of rates do you currently have for these"? (Take notes, this is valuable information.') - Now continue… "Our firm normally gets a lot of these types of requests, which we have been forwarding to other ……….. I thought your bank might be interested in establishing a working relationship with our firm so that we could pass some of these types of deals your way. Would this be of any interest to you? “ If you are going to get anywhere with this or any lender, this conversation should get you through the door. You will not only find out if you have a chance of dealing with them but also (and most importantly), whether or not they are willing to deal with a broker. Once you are feeling comfortable conversing with this particular lender, get out a copy of the Lender Profile Form provided at the end of this section and start filling it out and file it for future reference. The most important questions you should ask are:   

What types of loans/FUNDS will the institution do? Who at the institution handles these types of requests? The qualifications of the borrowers they are looking for?

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Exactly whose credit application is needed? Specifically what supporting documentation is required? What are their current interest rates and terms? What they are willing to pay you or are can you charge? Whether they will honor a signed Fee Agreement from you?

You have now made a valuable connection in the financing world! Don't abuse your new privilege. If the lender/FUNDER is local to you, NOW would be the time to put on your best suit and offer to discuss your clients’ request over lunch. Regardless of what happens with this request, you will have made a valuable new lender contact, who can potentially pay you thousands of dollars over whatever this get acquainted lunch could wind up costing you. (Usually if the lender is interested in your deal they'll offer to pay anyway, but come to pick prepared to pick up the tab just in case)!

What If He's Not Interested??? If the lender is not interested, ask them why not and once you have listened to their reasoning, ask them the all-important question; "Do you know who else here locally might be interested?" Once you have the name of another potential lender, you should go in by stating, "Mr. Next Banker, I was just speaking with Mr. Banker who mentioned that you might be interested in a client I have… “and start the conversation all over again. Once you have uncovered a local lender who is interested in your clients financing proposal, you can start with the required paperwork. And again, be forewarned, most lenders prefer to have loan requests made on THEIR application. That way they know where to find whatever they are looking for and will be certain that it meets any legal requirements they may have on their end. In addition, different lenders require different documentation, so you must find out, (and keep a record of), what each individual lenders "packaging. Requirements consist of. As previously mentioned, most real estate loans are usually acceptable on the standard FNMA Long Form Application included with these materials. Make copies and be sure to verify that this form is acceptable to them before proceeding. Regardless of your best intentions or the worth of your clients financing request, no lender is under any obligation to deal with you. Many institutions have a policy that they will not deal with loan brokers, period – whereas others will welcome you with open arms. Lenders who have a policy against brokered business may have been "burned" by a broker in the past. The loan they made went into default and the banks board of directors

had to blame someone and may have instituted a policy against any future brokered business. Other lenders may have different trepidations. Many are concerned that a broker may have already made promises (to a person who would ultimately be their customer) that they will not be able to keep. An unrealistically low rate of interest may have been promised or certain disclosures necessary to the financing may not have been made. If an up-front fee was charged, they may have serious concerns as to the actual creditworthiness or even the intelligence of the borrower - didn't they know he could have come to them for "free"? Others are concerned as to what your commission may add to the acquisition cost or to the servicing of a brokered loan. Still others are worried that the amount of your commission may preclude the borrower from qualifying at all or may only qualify for some lesser amount, because of your participation in the deal. Whether founded in fact or fallacy, it's their money - Remember the Golden Rule when it comes to financing: "He (or She) who holds the Go1d,makes the Rulesâ&#x20AC;?. Don't waste your time or theirs attempting to convince a particular lender that they should deal with you if they don't want to. There are plenty of others who will. Contact Appropriate Lenders Before attempting to establish any lender contacts, you must organize what it is you have to offer and you should only make contact with lenders who would be interested in what you have. In other words, don't contact a mortgage bank with a venture capital or an accounts receivable request. Typically, they won't be interested. Make sure they do the type of financing you have to offer them; otherwise you will encounter a closed door. If you are unsure, ask the person who answers the phone when you call whether or not their institution finances You can call them up introduce yourself determine exactly what they do and need and add them to your own database of lenders. The lending business is not stagnant. It is always in a state of flux. Lenders are always changing their parameters and areas of interest for a variety of reasons. A particular lender may have encountered problem loans in a certain area and are now stay away from those types of financings. Keep abreast of what is going on in the financial markets by reading financial publications geared to this industry.

Since you may not be aware of which types of institutions handle what we have provided you with a guide to the types of loan situations and the types of lenders who are usually interested in them. Try to contact lenders whose area of finance is as close to the particular requirements you’re looking for as possible – it’s the best place to start your search for funds. As you can see there are a number of different lenders in dozens of different categories, many of who would relish doing business with you, if they just knew you were out there. If you want to find out who's-who – ASK THEM! Handling Complex Loan Proposals Business and commercial loans, construction loans, new business and venture capital financings, income producing properties and other major projects require more complex paperwork and documentation. You will need the services of a competent accountant and perhaps the assistance of a good attorney or a team of advisors which could include a market research firm to do a feasibility study (if required), architect and general contractor if your client’s project requires construction or major alterations, appraiser, or a structural engineer for a report on an existing building, even a soil specialist or geologist for property located on or near a hillside location. In situations like these you should work up a brief summary of your loan proposal for use as a general mailing to lenders you have already determined would be appropriate to see if you can generate any interest. Although the actual project proposal may contain mounds of paperwork, even the most complex project can be summarized in one or two pages. Lender Supporting Documentation Once you find a lender interested in your loan proposal, you will have to supply the facts and figures in the form of documentation to back them up. If speed is important, while you are in the process of searching for a lender, start to prepare any supporting documentation that will most certainly be required so that you will be prepared as soon as you do find a lender who expresses interest. Different types of loans require different documentation. Identifying Lenders We hope we have convinced you that it is important to establish personal working relationships with a variety of lenders if you hope to ultimately expand your financial brokerage business. Your advertising is going to bring in a large variety of financing requests. If you arbitrarily tell them, “we don't do that', a golden opportunity could well be lost - forever. How successfully you accomplish the placement of each and every financing request that comes your way may well determine how successful you will become, (provided you

learn which requests are truly un-fundable so youâ&#x20AC;&#x2122;re not beating a dead horse). It is in your own best interest to periodically make a mailing to lenders in your local area, as well as lenders who specialize in particular funding, to establish new lender contacts and keep abreast of local rates and terms. To assist you in accomplishing this task, we have devised a sample cover letter, and lender profile questionnaire (similar to one we have often received from brokers), to allow you to make a mailing to prospective lenders in your area. SAMPLE LENDER PROFILE LETTER (On your letterhead) Dear Sirs, Our financial service firm specializes in the area of loan brokerage. We originate a variety of good loan opportunities in our area. If your institution would be interested in reviewing some of our prospective loan proposals, we would appreciate the opportunity to do business with you. Since we do not wish to waste your time with loan situations that do not interest you, we would appreciate it if you would fill out the enclosed Lender Profile form so that we may know exactly the types of financings, which would be of interest to you. If you already have broker information prepared or have your own credit application, wholesale rate sheet or other printed information containing this information, we would appreciate it if you would send it to us along with the filled out Lender Profile Form at your earliest convenience. I have enclosed a postage-paid return envelope for your convenience. If you have any questions pertaining to this correspondence, please feel free to contact me personally by phone at the number above. We look forward to forming a close personal relationship with your company, which can hopefully be mutually rewarding and profitable for both of us. Very truly yours,

YOUR NAME HERE

THE PRESENTATION Now you are approaching the final stage. You've advertised followed up your responses, explained the programs and gathered the information needed for the fund or credit application. You've checked your work, made sure each section is complete, and transferred all totals from the Schedules into their appropriate places. You are half-way home to a submission! But don’t stop there. Your client is building confidence in you that you want to live up to. Display your thoroughness and professional attitude by explaining what is needed to complete the application package. Presentation Materials. You will need to take all of the information you have generated from this manual and place it in a professionally bound manner. You will also need to collect the following information and have it readily available but not in the main binder.           

Schedule of Client’s Assets Clients Personal Financial Statements Business Tax Returns (last two years) Personal Tax Returns of Principal owners(last two years) Client’s Company Memorandum and Articles of Association Partnership Agreement, etc. Copies of Orders or Invoices Client’s Current Business Profit & Loss Statement Account Receivable Report Client’s Customer Testimonials Client’s Trade References

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Client’s Banking References and last three months statements Client’s Title Documents and Valuation Reports (equipment, real estate, etc.) Client’s Asset Appraisals Patents, Trademarks or Licenses, where relevant

Presentation Tips

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First impressions are lasting, make a good one. Bind the materials in such a way that allows for easy reading. Tab each section for quick and direct access. Keep your information concise and to the point, no more than 50 pages. Pictures are worth a thousand words, include appropriate ones. Support assumptions with facts, not mere assumptions.

Summary of Action Points • Ensure client’s business is dully incorporated and registered for Taxes etc. • Organise secretarial aspects of Clients Company. • Prepare client’s business plan. • Compile up-to-date accounts (if already trading). • Prepare financial projections. • Determine the client’s cash requirements. • Determine the types of funding and equity required by client. • Seek offers in writing of grants, loans, etc. • Identify the most appropriate type of lenders. • Formulate basis for a deal and 'exit' mechanism. • Locate possible lenders/investors through accountants, lawyers, stockbrokers, financial institutions, investment funds, Internet and family/personal contacts and the Finance Sources directory

HOW TO SECURE FUNDS FROM DONOR ORGANISATIONS In contrast to business or personal loan requests extensively discussed above, another type of client that you will come across as a finance broker is the GRANTSEEKER. These are mostly non-profit and non-governmental organisations. They are popularly termed NGOs or Development trusts. Development trusts are different from most small businesses: they are not owned by any set of individuals, and do not distribute any profits. They do, however, have to find ways of constantly raising funds and earning money, because unlike public bodies they have no

direct access to taxes. And while grants may be available, few funding regimes stretch for more than a few years. They sometimes require services brokers like you to secure that much needed funds from donor agencies and organisations. Raising money for such organisations is a topic for another whole book. We shall however attempt to give some guidelines in this section. Grant seekers looking for foundation funding should approach the process like a courtship, at least that's how one program officer for a leading international foundation describes it. Developing a personal relationship with a funder is key to winning its support for your client’s program. Approaching a funder with a grant proposal is like "a dating process that can lead to a lasting relationship with a foundation. Grant seekers, need to thoroughly research potential funding partners in order to determine the best match — in terms of common interests and goals — as well as to reduce the number of rejections and "bitter divorces. The first stage of the research is to determine the funders’ type and availability — are they passive, proactive, prescriptive or peremptory? Passive funders are the majority of small family foundations. They do not publicize their existence but they do fund unsolicited proposals. Flexibility is the great benefit of these foundations. They can fund any good idea that comes in the door. Proactive foundations are those that have some strategic vision, while still reviewing and funding unsolicited proposals. These funders publish annual reports and grant brochures and often have Web sites to advertise who they are and what they do. Prescriptive foundations have interests in specific areas and invite applications based on a request for proposals. They may still review unsolicited requests, but are less likely to fund them. Peremptory funders are those focused solely on their own strategic missions and programs. They can run with a big idea, but they know where every dime is going for the next five years and couldn't fund the cure for cancer if it came in the door. It "wouldn't be worth your stamp" to approach these funders. You will find in the Directory of Money Sources section of this manual, a comprehensive listing of local and international donor and grant making organisations. Screening Potential Funders

The next step is to screen funders based on their past giving practices. Look for those who have funded programs similar to your clients. Grants made in the past are a foundation's real track record. Once you have identified a list of candidates, focus your energies on your best prospects. Get their annual report, grant making brochure and any other information they put out," he advised. Potential applicants should also be sure to get a listing of the funder's program officers or focus-area vice presidents. This can be difficult, he acknowledged, because in their effort to protect program officers, some foundations are very secretive. If you are able to get the name of the relevant program officer — the individual at the foundation responsible for overseeing grant making in a particular funding category — do not hesitate to call. Try to establish some sort of relationship with the program officer. It is harder to turn down a proposal if he or she can put a voice — even harder if they can put a face — to a proposal. It's a matter of psychology. And while you're establishing relationships, get to know the receptionist. The receptionist is the most important person in any foundation. In many cases, the receptionist or office assistant sets the program officer's calendar and can place you on it for a meeting — or not. He or she can put through your phone call — or not. Good rapport with a receptionist can get your proposal shuffled to the top of the "to be reviewed" pile. When asking for a meeting with a program officer, treat receptionists professionally. Being nice can pay big dividends. Once you get to the proposal-writing stage, you will find the "foundation-insider" advice below quite useful. • Avoid "third-rail" words that will immediately kill your proposal. While the key words are different for every foundation, proposal writers can crack the code with a careful reading of foundation guidelines. If a funder doesn't support endowments or 'bricks and mortar,' don't even let the hint of these words into your proposal. • Have a friend read your proposal before submitting it to a foundation. No one knows as much about your idea as you do. This makes it easy to gloss over acronyms or concepts you may consider to be common knowledge. Things that are mentioned but not explained annoy program officers. We like to think that we know everything and hate to shatter that illusion. "Spare" the program officer and "let your friend be the one to ask the dumb questions." A program officer may just put the proposal in the reject pile, rather than take the time to find answers to questions. • Give the foundation a lengthy timeline. If a program needs immediate funding, a foundation grant may not be the best solution. Foundations are notoriously slow, leave plenty of time between the submission of the proposal and the time the program would begin.

• Be prepared to make revisions. No program is ever funded in exactly the form it was proposed. One of the conceits of program officers is that they 'add value' to your ideas with suggestions for improvements. It never hurts to be appreciative of the foundation officers' input. • Approach more than one foundation to support the project. You also have to hedge your bets. Because of the long review process, it does not make sense to wait for one rejection before approaching another foundation. Just be up-front about who you approach and the grants you win. • Follow up on a rejection. Find out what kind of 'no' you received. Did you just barely miss receiving the grant or were you entirely off-base? Try to determine whether you should resubmit for the next funding round. Be persistent, no one will want to talk to you if your proposal has been declined — it's just not a pleasant conversation. If you are able to talk to the program officer, do not be defensive. Ask where your proposal ranked on the quality scale and what you might do differently in the future. Aside from providing help with the program or proposal, the conversation builds a relationship and helps your chances for the next funding round. It's a human process. • Sorting Through the Good, the Bad and the Rest Promising project ideas can often be "lost" inside bad proposals making it important for grant seekers to express themselves clearly and explain their projects well. Many program officers find it easier to recommend funding for a sub-par idea wrapped in a well-crafted proposal than for a great program obscured by a rough proposal. It is always easier to fund a good proposal with a bad idea because it has everything required — a needs statement, goals, a continuation plan — to write a report and send it forward [for funding approval]. If the proposal isn't good, the program officers might need to work with you- the applicant, which takes the time they don't have. As a broker prepare a grant seeking proposal, you must learn how to succinctly translate your client’s ideas into proposal format. A good proposal not only describes the organization's idea in an intelligent manner, but includes the pieces needed to show why the project is needed in the community, how it will operate and that the organization has the know-how to run the project. Applications must also explain how the organization will determine whether the project is successful and how it will continue to provide services when grant funds have run out. Certain elements — the needs statement, project goals and objectives, organizational background statement, evaluation plan and continuation plan can make or break a proposal. To help you prepare your client’s grant seeking proposals as you enter the competitive world of foundation grant seeking, summarized below are what can easily be considered to be attributes of a good proposal.

• Innovation. While projects do not need to be "wild and crazy new," they should be new for the community, and the proposal should point this out. Foundations like to believe they provide the venture capital for society. • Comprehensiveness. Complex problems need a comprehensive response. If a project won't solve the problem there is no reason to fund it. The proposal needs to show that the applicant has taken all sides of a problem into account in designing the program and joining with appropriate partners. • Experience. Proposals must demonstrate the applicant's expertise in their field, while showing an understanding of the applicant's weaknesses. • Preparation. The proposal should show that the applicant has done its homework, both about the foundation and the project, and should provide context for the project. Describe what others have done and where the project fits in with the latest ideas in the field. • Cooperation. Applicants must make it clear that the project is being done with, not to, the target population. Programs put into place without significant input from those whom they are meant to serve are rarely successful. Beneficiary participation in the project's planning and implementation needs to be more than token. • Beneficiaries. When writing your proposal, keep the beneficiaries front-and-center. Don't focus on the organization's internal needs. • Commitment. Foundations want to support projects that are a priority for an organization; the budget should show where the applicant is investing its own money and in-kind resources such as dedicated staff or office space. This shows a commitment to the project. Applicants must also demonstrate that the organization is determined to make the project happen whether they receive that particular foundation's support or not. • Evaluation. Many foundations will require that projects be evaluated. However, saying up-front that the project will be evaluated so it can be improved shows commitment. • Continuation. Proposals should provide a plan for continued funding for the project beyond the grant period. Having a continuation plan will put a proposal ahead of about 75 percent of the other applicants. However, the plan needs to call for more than another foundation grant. Funders like to see continuation plans that include a diversity of funding sources. • Impact. A project that is purely local is okay, but if it could serve as a model, foundations get excited. A proposal that includes a plan for disseminating the project to a broader audience will also be ahead of the game, he said. An Extra Edge for Your Grant Proposal Having your grant seeking proposal noticed by grant officers or reviewers can be a difficult task. The following advice may increase your organization's chances.

When you submit a grant proposal you would hope that your proposal is the one that is most favorably looked on when the funding decision is made. Here are some hints gleaned from a number of foundation grant makers on what makes a good proposal and one that will be favorably considered. 1. Make sure that you have a proposal that clearly states what your client want to fund in the first paragraph. 2. Don’t try to stretch the facts to get your client’s proposal funded if it does not fit the criteria of the foundation or granting agency. Look around for a funder who is already interested in your client’s project. 3. Leave no question unanswered. If a proposal immediately brings some obvious questions to mind, it may be easier for the funder to deny your request than to go through the steps to get these obvious questions answered. 4. Assume your proposal will be read by a reviewer who wants to do something else and is looking for an excuse to set your proposal aside. Be concise and be compelling. 5. Write like you talk. We are all more passionate when we talk and this will put more emotion into your writing. Avoid the archaic, flowery and meaningless wordiness that comes from writing before you have the proposal all thought out. 6. Use the simple whole declarative sentence. It tells it like it is and leaves no confusion about what you mean. 7. Use plain English. This is no time for the thesaurus. If you force the reader to use a dictionary, they will not be impressed; they will save themselves the work and set your proposal aside (or worse). 8. Never ever, lie or exaggerate in your proposal. They’ll figure it out and then wonder what else you have fudged. You may never find out why you proposal was rejected but your credibility will be gone with that funder for years to come. If you are going to help 500 people, don’t say it will be 1,000. 9. Keep a sense of humor. People who think they have the answers to every problem are constantly bothering grant makers. Just state the facts regarding your proposal and let the funder decide the merits of your proposal. They will appreciate your confidence in their judgment. 10. If you aren’t funded, find out why and try to remedy the objections before you try again. But do try again. 11. Submit your proposal two weeks before the deadline. As such, it will be the first one read and will be the benchmark for all of those to follow.

12. One week after your proposal arrives, call and ask if there is any other information they need. If the answer is â&#x20AC;&#x153;Noâ&#x20AC;? you will know your proposal is complete. If they do require anything else, you have time to get it in before the deadline. 13. No matter how many times a foundation or an agency has funded you, never, never, never submit a half-done proposal. This shows you are taking the funder for granted. A new reviewer may not know about you and you will have to go back to the beginning and start over. It is best to always assume someone who is totally unfamiliar with you or your organization will read your proposal. 14. Make sure your proposal is easy to read. Both type face and sentence structure should be easy to follow. Additionally, the page organization is important to readability. Wide margins all around the page and a balance of text and white space are less overwhelming than page after page of text. A few diagrams, charts or photos can make a more readable proposal if they are pertinent. 15. Finally, donâ&#x20AC;&#x2122;t take anything for granted. No matter how many times the same agency or foundation has funded you, read your proposal over and over again. Mistakes can sneak in the best proposal and such mistakes reflect on you. Having your grant proposal noticed by grant officers or reviewers can be a difficult task. We hope that these ideas will give your great proposal that little bit extra that it takes to be recognized and funded. Please, do more research on this topic over the internet, just as you will be learning on the job.

IN CONCLUSION Now that you have read through this manual, you are ready to increase your income applying the techniques, methods and ideas we have outlined. We hope you have found~ the material presented clear and concise, and that you are able to plunge right in the business of financial brokerage with the highest expectations. BigHeart Limited prides itself on one thing--service. We are here to serve both you and your clients. We know that when you are able to give your clients the best service available--you will be compensated accordingly by having the competitive edge to bring in more business - and more commissions!

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