Can I Sign Ohio Banking Form

Can i industry sign banking ohio form now

okay we're recording and so uh without further ado i would like to have uh tommy and then rrl take the stage thank you stuart domi you up and running yeah i'm ready okay well i'll introduce myself i am r.l condra i am the senior vice president for government relations for the national cooperative bank i years ago i'm a former senate staffer for the senate agriculture committee that oversaw the usda rural development programs and i've done congressional affairs for around close to 20 years now i moved from the hill to the national cooperative business association that's where i met stewart and that's where i started learning more about cooperatives so i have to admit i've never heard of before i joined ncba i've never heard of a co-op well i've heard of i never heard of a food co-op before i've heard of well actually let me back up a little bit i went to the university of arkansas and there's a very uh great food cooperative there but i'd never step foot in there so for 10 years i've learned ozark natural foods this is the name i have for 10 years now i've learned a lot about food co-ops and have become really a a a fighter for for food co-ops to access capital through the small business administration programs and we'll talk more about that later and um so i'm just really glad to be here oh now with the national this is my eighth year with the national cooperative bank and i do government relations for the bank so i am not a lender i don't do lending domi is the lender but i work uh hand in hand with with people like domi to figure out how we can make more loans to food co-ops so i'll turn it over to tommy thank you very much rl and uh good morning good afternoon everybody um thank you stuart and jackie for jacqueline for having us here um it's um it's nice to be here um i like talking about food cops i like talking about uh financing or lending to food co-ops but uh let me give you a little bit about uh a background about myself so my name is damie odettoa i started with uh ncb in 2008 prior to that i typically say i was on the dark side i used to work with bank of america and uh some of the other big banks but uh my eyes opened and a friend of mine said hey why don't you come to this little bank um in dc it's not what you're used to but uh they do great stuff so i came to ncb in 2008 and i said all right i'll do uh a year with ncb and then move on to other things but um i came to ncb and um i'm still here 12 years after um it's either uh they they like me or i like what i'm doing i think it's a mix of of both um like rl said i um lend to i'm a lender i land on the east coast there are three of us there's brian meisenhamer who works on the in the midwest um brian is also on the board of uh the fci and um there is sylvia bettencourt sylvia works on the west coast um and um she is about um two years at the bank um so having said that i'm going to go and talk i'm not going to assume everybody knows about ncb so i'm going to give a little bit of a background of who we are and uh what we do so we um lend to co-ops and uh like-minded socially responsible organizations throughout the united states um we're organized under the um national consumer co-op bank act of 1978 were privatized in 1981 um as a full financial services company um in 1988 i believe um we became a full service bank deposit taken um with the purchase of uh a federally a federal savings bank in ohio in 2014 we converted to um a commercial charter bank which means that we're now regulated by the office of the controller general um today we're owned by three over three thousand uh of our members and um we have assets um in excess of uh three billion and if we add uh what we manage for investors our assets are over a billion dollars uh areas of focus include member-owned and member-driven organizations community-owned housing co-ops um community-driven healthcare solutions um retail-owned grocers and consumer-owned food co-ops like uh food co-ops um small business co-ops um consumer-owned credit unions and their service organizations and consumer focused enterprises we offer a bunch of products and services including real estate loans business term loans lines of credit sba loans cash management um deposits and also we do residential mortgages home equity lines of credit and typical consumer banking so since our inception and as um stewart mentioned we have always been an advocate and a strong supporter for the development of food co-ops it's a it's a it's a huge line of business for us we work with great organizations like the ncg fci um i mean i i always say when i talk to people um startups um i always ask them who are you working with because we know a lot of people in the sector and we go like i hope you're working with the fci um so that they're guiding you in in in what to do so before we talk about a specific um co-op or the structure i would like arrow to go into talking about the uh main street uh main street act when i first started working on legislative issues for co-ops i could name one member of congress that supported that supported consumer food worker type of co-ops it was really the rural electrics had their supporters the pharma the farm co-ops had their supporters but no one really understood much about food and worker co-ops that was 10 years ago and it has just really exploded with with you know the changes in our economy the changes in politics and in our government that are our country the way our cultures have changed and and looked at that cooperatives have really exploded onto the mainstream and especially in congress we have lots of now champions in in that in that body and an example of that is the main street act was passed and that was kind of putting the small business administration on notice from congress they've written letters in the past and encouraged him to support co-ops this legislation was able to outline some technical assistance and some measures within sba but the main takeaway was that it wanted a report it required a report from congress or from sba on how they will make loans to co-ops moving forward and conversions because there's a lot of businesses out there that there's interesting converting those business into to worker co-ops and so the the leadership on that was senator gillibrand of new york and many other members in the new york delegation and others i think there were there were like over 10 co-sponsors that bill in the senate and many more in the house and that was real standalone legislation that passed two years ago so that was a a really good feat for the the cooperative industry so thanks tommy thank you so um i i'm always torn between talking about the structure or the eligibility of um sba loans or the benefits first but i think uh yeah tommy i'm sorry to interrupt you number one you're going back into the talking about the lending aspect of food and then i'll talk about the history of sba is that how we're doing this yeah yeah i'm just going to go over the the eligibility first how i mean if you're what you need to consider to be eligible and then the benefits of being um having an sb alone okay so um i'm going to start by talking about the general you know eligibility of um qualifying for the um the the 7a or the 504 but mostly i'm going to talk about the 70 because that's what we that's what um maybe 90 of 95 percent of co-ops would qualify for so you have to first of all be the type of business that they provide guarantees for which we prior to this period we were not but now we are um we must meet the size eligibility we can um talk about that later on but there's a size component to this then the term of the loan must be within their within their requirements um we must also be able to identify that there is no source of credit for the business or the co-op anywhere else so we you know you can't come to the sba and say hey we want you to provide guarantees but then later on the sba finds out that you could have gotten that money from someone else so we have to be able to demonstrate that there is no credit anywhere else and um it must not be a passive passive company which means you have to be active you have to be able to you're you're in business um the loan must not be um refinance it's not it's it's not that way there's a loan here that there's in short it works with like the credit elsewhere you already have credit and then esri is coming in to refinance the loan that is not eligible most of the time now if it's an existing sba loan there are guidelines that would have to follow to be able to um qualify for that and then uh most importantly there has to be guarantee um from the owner or the owners so mario is this where you want to talk about um sure the sba background yeah sure so if you're to talking to our audience here if you're trying to start up a restaurant or a small business you would go to your your bank your local bank your community bank your credit union you would do what what you would do as an applicant as a potential borrower if they like what you they're you're discussing it's a start-up business a startup restaurant they would use the sba 7a loan program so that way they're taking a risk on you but they would go to sba and get a loan guarantee of your loan i think it i can't remember the the percentage is but i think can go up to 80 percent of a or 75 or 80 percent of a loan guarantee for that bank so let's say you had a million dollar loan it went bad the bank would get at least 80 percent back of that of their of their risk so what if you're a food cooperative this is where it gets a little a little hairy uh from the 1960s the sba had a specific regulation in place that specifically said consumer cooperatives aka food cooperatives were not eligible for sba loan programs and that was uh in place since the mid 60s the the cooperative industry sectors have were started working on changing this and making their pitch to the agency for decades and for almost 40 40 years 50 40 something years this was in place so no matter what you if you went to your bank or talked to sba they would say oh you're a food club we don't do food qualities they're ineligible a lot of people worked on changing this and including stuart reed here and many others on talking to congress talking to sba and there's a success story here i think three four five years ago the regulation was changed by sba they removed that regulation so technically at this time in 2021 food cooperatives are eligible for sba loans the loan guarantees there's a catch almost like a catch 22. there's a requirement at the agency that when dummy kind of handed to this that if you get a 7a loan that you have to provide a personal personal guarantee specifically any owner of a business that owns over 20 percent of the business has to sign a personal guarantee but we know that a food cooperative is made up of hundreds and thousands of members no one owns more than 20 percent of a business and there's really no one there to be able to sign a personal guarantee this argument has been made to the the agency and to congress the agency has come back and has always said that's our rule that's that's we were not budging that's our role and you can make any kind of case we i'm talking myself here you can make any kind of case you want to to the agency that's that's their statement we have taken that answer and we have pushed back for many years and the i'm looking at my notes here what what we found some middle ground here some wiggle room and we're going to talk about that a little bit later today but an entity guarantee can can be a part of that but i just want everyone to know that we are constantly talking to congress about this issue i actually testified in front of the house of representatives last year on this on this specific issue and as everyone else coveted hit and our world changed but now we've wrapped back up on our discussions with congress and these these things are are moving again these conversations and along with the agency and we're also hoping that with a a biden administration that there will be some more openness to talking about how to get access to capital to do cooperatives so uh i do want to talk about this later on today if if some of you this is eventually if when you get to the point where you need a loan you're going to need an sba loan so this is actually going to affect you probably most of you if you get to this point where you're going to need a loan they that you're it's going to be difficult because of the sba wrecks and if i'm happy to talk to you offline and online about how you can contact a member you're a member of congress to let them know because these discussions are really ramping up as we speak and i'm trying to think if i'm looking at my notes here if i see if i have forgotten anything about that uh no i think okay i think when we start talking about the entity guarantee later on domi i think we can go back to some of this so i'll pass it back to you alright just a quick uh question there if if people on this call and beyond that people that are working with fci across the country want to get involved in advocating for change here is there a place you can appoint them to get the information they need right so they will all have to call you that is right um i well how would you like to do it stuart i know i have the information i know kate latour at ncba does as well what do you suggest something together we can get it out okay okay we can do that great thank you all um before i talk about the co-op that we um that we have been able to secure the funding for uh i think we signed it january 17 2020. uh i'm going to talk about the benefits of um the sba financing now um we all know that starting a co-op is is tough it's difficult and if you're on this if you're on this um call that means you're either you know advising consulting for a co-op or you're part of a co-op so um you know how difficult that is um so coming from the side of the bank what we like to you know we don't want to lose our depositors money or members money so what we want to know is can we get repaid if anything happens if the company goes south if the clock goes south are we able to get uh the members monies uh back so that is why for startups and for you know a lot of these loans the sba guarantee is very very good for us because right now um to what um rl alluded to now they go up to 90 percent guarantee so in short if you need a loan for a million dollars 900 000 of that is guaranteed if we you know if we're able to put the structure together and and and the co-op qualifies so but for you for the co-ops or for the um um borrower um some of the benefits and and against the list is not exhaustive um is is flexible structures um you have a lower down payment uh compared to the traditional or conventional lending um the lower monthly payments um they're variable fixed rates that might be um that might be beneficial um the the term of the loan can go from five to 25 years um depending on what we're financing um for sba the loan proceeds must be very specific so what we're going to put the loan into the process into whereas leaseholds or working capital you have to be able to identify that and um in typical places you know working capital is maybe two years or or a line of credit before for the sba you can go up to seven years and then uh we have up to seven sorry up to ten years for business acquisition or equipment financing typical traditional financing is seven years and then we have 25 years for real estate then soft costs such as goodwill is also uh financed and you know franchise fees or closing costs they're also eligible you can roll that into your working capital which makes a lot of sense for um for our startups and um i think the last part of it is that it has to be guaranteed or you know there's a guaranteed portion of it and uh that is going to lead me into what we did last year for one of the co-ops that we we're we're working with right now um aaron made um irl talks about the fact that all loans have to be guaranteed by the owner of a co-op or the business this has been one of the greatest impediments to moving ahead or doing a business food co-op so how do you do that the last co-op we did um that we did the loan for the only club tha we've been able to do the loan for however 1200 members now am i going to on the right 1200 members to a co-op no so we have to look for a way that um we um we have to go around the personal guarantees or the guarantees of the owners so we all came together and we said you know the best thing for us to do is to look for a an entity that will be also an owner of the co-op and they will now guarantee the loan with some capital so what fredericksburg food co-op did was that they put 10 percent or we asked them to put 10 of the loan amount into the entity and we will now have that entity to guarantee the loan so uh for the sake of argument if you're looking for if your total project is let's say 4 million or 3 million and you're looking for a loan of 1.5 million dollars 10 of that is 150 000 so you capitalize the entity with that amount and we use that um entity to guarantee the loan so that was how we're able to get approval for fredericksburg food co-op to be the first co-op to have an sba guarantee um last year and i would call that a workaround they have two they have two options sba a personal guarantee which does not work at all or an entity can guarantee that loan so we took that definition of an entity and we were able to create a workaround that the agency was able to accept and how we how we move forward so um this we were were all you know there was a lot of back and forth um there was a lot of back and forth and um you know they were circling it first of all where what they call preferred um lenders which means we don't have to get approval from sba when we book a loan but so typical lenders that are not preferred lenders would have to send every loan to sba for approval before um before they tell the borrower that they are approved but we are preferred lenders we can do it in-house and just let sba know but for this case we had to send it to sba and uh there was a lot of back and forth by the end of the day just like um ariel said there was a workaround and it was approved uh january 17th uh 2020. and that would be the first food co-op loan ever made through the 57-year history of sba so that that was a groundbreaking thing and it's you know it's it it's it's not ideal for us it's not ideal for you but if we have to do this structure where it either we do a loan or we don't do a loan from it we're probably going to try to do the loan with the entity guarantee so um i am going to suggest because um you've been hearing or you've been listening to our online for a little bit um stewart do you want us to answer a couple of questions before we talk about anything else just yeah people have questions uh well there's around the entity there's a couple of questions but what is that entity in terms of its structure does it have a is it a voting member of the co-op is that how how does it relate to the co-op the co-op is an llc that is uh the entity or you mean not the co-op sorry the entity the ncc was an llc and it was capitalized by the i mean it could be of they could be so i don't know if i'm allowed to figure out how to say it here but you could be you know innovative in the way that you capitalize the the the entity i guess that's your other question right how do you capitalize it it could be um money from membership or it could be um there could be a way that we could roll and then do not try this but we could roll the amount into the loan we haven't tried that yet but it's something that we think we're thinking about now it could just be members come together and say we're going to do um 10 you know put the money there or it could be um it could be monies that we could roll into the loan so it would there's a small group of existing members inves put money into this llc entity to become the guarantor yeah okay and so it's for their personal money it could be that or it could be part of the money that has been raised from so if you raised like uh some co-ops can if there is a ton of money they can put that money into into the into the into the entity now is that money actually set aside an escrow or is it just guaranteed it is set aside so does it they're theoretically drawing a little interest or whatever one yeah yeah and is that that entity does it have any voting outside of the members that are part of the entity the entity itself have any any say in the co-op i am not totally sure about that that might be a question for the co-op but i know i don't think i'm i'm not i'm not sure okay my assumption would be not because unless they're structured as a limited cooperative association it wouldn't be possible to have a an outside investor with voting power let me jump in on this an entity guarantee we're talking about a federal agency with i'm just going to make this number up thousands of regulations definitions procedures there's nothing to this it's just an entity so we worked with this co-op we made it up they made it up we figured it out so this what we're explaining here is a way we did it once is the agency expects to have skin in the game somehow from the co-op whether that but and it has to be i would assume capital at some point maybe a foundation could be the entity that would guarantee your loan or something else but we we just made this up and they said okay and what our irl is absolutely correct there because we were that was one of the things that were kind of like stuck on like what what are we going to call the entity what are we what is the entity going to be like and um at the end of the day we created this entity and um i mean they created the entity and we went with it so it's safe to say that there isn't at this point there's clearly not just one way to do it and and everybody that's thinking about this can probably reinvent the wheel until we come up with a best practice is that obviously talking if you're going to talk to us about a loan making sure that what you're doing we're okay with and that we're comfortable with right right your lender would be critical whether it's yeah the other thing is the um is the um amount that we asked um that we you know ten percent we're thinking to ourselves you know like could could we have gotten away with five or seven and a half or ten you know we we these are things that we thought about and at the end of the day we came up with 10 and it worked so those are those that's one other thing that we we uh i don't want to say we got away with but we weren't absolutely totally sure it was it was the right amount but since it was the first loan we've ever done like this we want to make sure it was a well capitalized well-structured loan to make our argument sure okay thanks um there's some other detailed questions around the entity but i think we might have covered them in the general response and we'll have some more questions later in any case i would throw out that this is an opportunity tommy is the lender this is an opportunity for all of you to ask any type of basic lending questions or anything of that aspect this is a great opportunity domi's here pick his brain because this is what he does do you want to take questions more now or do you want to finish your presentation first and then go back to them i mean we can take questions now because uh i mean the only other thing that i have left is just to talk about the structure um the detail i'm not going to say detail about the structure of the loan that we did so why don't you do go ahead and do that because that might answer some of the questions that are pending just one minute okay so what we did like we said before was we created the entity um and sba so what happens is we lend the money and sba says if you lose anything on it we'll pay you 90 of it at this time it was 75 this was pre-coded because of kovid and the effect that kovit has had on the economy they've bumped that up to 90 so they can spore the economy but um when we did this loan prior to kovit it was 75 and um i i want to also say that the proceeds of the loan are need to be specific and that would also dictate the terms and collateral that we're going to use for for the structure but in this case we did uh it was for 1.4 million dollars there was a 10 guaranteed by the entity it was for typical this this would have been like seven years but we're able to uh do 144 months the first 12 months of that was interest only and then that will be followed by 132 months of uh principal plus interest sorry principal and interest um so it's a 120 month uh amortization um i think then one other thing that i need to talk about is the sba guarantee fee this is a good time to do the to do the loans because the fees have been waived i think they've been waived for the next uh six months please don't quote me i think that was the last thing i saw but um i think the fees have been waived for six months or they're about so if you do the loans right now um if you start the process and you're able to get the approval within six months the fees will be waived now some people will say well how much is the fees that doesn't matter it could be hefty um it could be up to three percent five percent it could be uh more than that so um it's it's um this is a good time for you to be able to do the loan to get away with that uh to to get away from paying the fees um and then you know typical collateral position we are the senior lenders so we are first um i was talking to when i saw this conversation we're talking about fci and ncg fca and ncg are very integral to what we do um they they they most of them work with you know either the resources in the in in the co-op sector so like colluminate ncg fci and when we get the information like i noticed when we started the conversation on start put something up that john muffet is going to do a pro forma conversation um when he comes from don moffett we have an idea of who it's coming from we know what questions to ask so that gives us um some level of comfort that you're already talking to people in the sector if you talk to and i'm not saying the people that you might be talking to are not good enough and i'm definitely not giving a shout out i'm just trying to say that it helps us when we know where your numbers are coming from when you're working with people in the sector so um if you want to you can you know start talking to people like fci or or or columnate or ncg um an ncg i must also say ncg did not prior to fredericksburg where they were not uh accepting and again people on the line that are part of ncg they can correct me um startups was not their strong sector to accept members but fredericksburg food co-op was accepted as an associate member i think and i think they might have been upgraded right now but that was also a comforting thing because their products and their inventory will be coming from ncg it's uh it's it's uh it's a good thing for us to to to know that um and i think the last thing i wanted to talk about was we got the cash collateral or the guarantee from the entity the 150 000 is at the bank it's earning interest and um it will be at the bank until such a time that we're comfortable with uh releasing the the the the guarantee now that is not typical um usually the guarantee is for the life of the loan but again we we can go back and ask if that can be removed one other thing i wanted to talk about is and i don't need to go into the nitty-gritty of it now for sba loans one of the things that you can take away as benefits is you don't have any covenants we're not going to hold you to minimum debt service or minimum leverage loans on leverage um tests secondly um there are no prepayment penalties um if it was a traditional conventional loan we will there might be a penalty if you prepay within the term of the loan but with um sba loans um we don't have any of that so that is one other benefit that you can add to the list that you might have written down so if you have any questions on the structure please let me know tommy i have i have a can you comment on this can you comment on we're talking to startups on this call how how difficult is it for us to do startups without a sba loan guarantee or an engine or in general just to kind of give everyone kind of an idea of it's an uphill challenge battle um thanks also it's an uphill battle like rl said and before fredericksburg again internally and externally doing fredericksburg was was tough and this was despite the fact that they were able to raise they i mean they raised they were the um highest num stores correct me if i'm wrong on this but they raised the most money in time and also the amount that they raised uh in a very very long time their local community was very supportive um their numbers grew over 400 per year um they had all the things going for them but then it was still difficult for them to get financing from us and it is difficult to finance startups because number one they're startups but number two food co-ops have been challenging in the recent past um and everybody knows that so where there are two headwinds that were facing here the fact that it's a startup on the second fact that it's a co-op um so it's been hard for us to to do startups but with sba you have a better chance of um of um getting have a better chance of getting the loan done with the sba all right are you ready for a few questions i'll take that for a yes we're ready yeah i i will say uh karen zimmerman who from ncb or ncg excuse me was on the call but she had to leave early for another meeting and i can answer in part uh about where ncg is now and its relationship with startups they are admitting strong startups before they open in a lot much more frequently and they're also admitting new co-ops after they open earlier than they did in the past they have a renewed commitment to working more with startups and i don't know if there's exact parameters on what it takes to be considered but for those of you that are in stage three you should be talking to them um definitely about when and if uh it's appropriate for you to apply for membership so uh okay a couple a couple of other questions um is the rate for the sba loan was uh what was fredericksburg able to get if you can share that um so i'm not i don't i'm not sure if i'm able to share that i'm not sure if it's whether it was below market rate or or at market rate it was very competitive it was actually let me even explain that it was um so we went out at a higher rate because it was pre-covered and when covered heat i mean everybody was like hey dude rates are cheaper right now the loan is not closed can you do something for us so we went back to we went back to um sba and were able to knock off 100 basis points so um i mean we are on your side we will will be profitable but at the same time um i mean it was competitive yeah okay i'm sorry i'm not i don't know if i'm meant to share their rates yeah no that's why i said if you can i understand that um it doesn't make any difference you you said something about a credit has to be unavailable from other sources and most co-ops have a whole package of financing including member equity maybe either member loans or preferred shares would those interfere with the potential for being able to get that whatever they still need in an sba loan guarantee so um when what i meant by credit elsewhere um thank you for that question so what i mean by credit elsewhere is most of the time what we coming to do is to finance the gap okay so you have member loans member equity grants everything that you can come up with and then there will be a difference between what you've been able to raise and what the cost of the project is that is where we come in we like to also see that there are other there are other um there are other sources of financing in the in in the loan in the capital stack we don't like to be the only ones um at the end of the day when we complete this loan when we fully fund it as you all know maybe you don't know but um the loan is not fully funded right now because fredericksburg is still completing their their building but uh when it's fully funded i'm i'm i'm i'm going to most likely share with some of the other uh cdfis which is what we do we like to have other members or other other sources of funding yeah zero size minimum maximum limit for sba guarantees no i mean all cops will i mean i t ink it's 5 million for 7a but all clubs at this point will guarantee would um be eligible that's great um and for co-ops that are thinking about this how early should they start talking to somebody at ncb if they're interested in pursuing a loan through you and with or without sba i guess but if it makes any or does it make a difference if they're looking at an sba loan guarantee is the answer different so if you're a startup i will say you should consider sbi guarantee again we are lending you the money but sba is just guaranteeing it and um hopefully we don't need the guarantee but it's a it's a it's it really shows everybody that you know you're interested in doing this and you're able to do it so i would say please look into um getting the guarantee if you're a startup secondly i would say um i i fredericksburg i started talking to them three years or four years before they opened oh boy so i mean it again we meet at different places that's why um you know first of all they're in virginia we're in virginia um rich who was the uh who's the chairman of the board was involved in a lot of co-op things so we met at different functions and the the the opportunity to talk about the project was was there but um i would also say that you should start talking as soon as possible um this loans took a while so um and then ncb has a pipeline that we're working on already so you'll be added to the pipeline so there are two things here your work on one side and then ncb's work and then you know how we can merge it i i would say as early as possible i mean you can just call in and say hey we're thinking of we're thinking of starting a food co-op and we're only 300 members and i'll say well nice to meet you and i'll put your name down but i'll say talk to you next year but at least i know your name i have your number i have the name of the company or the co-op we can talk about it anytime when i see an up and coming we can talk so or i mean that as early as as early as possible yeah and uh as dummy just mentioned offhand he's often that are usually these days at our up-and-coming conferences where you can talk to him in person uh rl i think has been at least one and uh you know although this year it's virtual um we will have some opportunities for conversations of the site so um those questions are coming right in so moving on um does it make any difference if you're leasing or purchasing your your site no okay it doesn't but i would um i would advise that um again i'm not you're i'm sure there might be people that are advising you and they occupy that space as your consultants but i would suggest that you lease first yeah before you buy and they're just complications when you're buying because there's another sba program called the 504 um that might come into play and um i'll just say lee's and so some of these groups have already committed to a purchase site or even have made the purchase so you know well that that's great for earl earlier in the process you know they've made me stuck in that choice at this point but um the uh yeah you know we've often given advice that a primary bank loan is only going to be 20 to 30 percent of the total startup budget that the bank is probably going to be willing to finance based on collateral and other issues does it if you have an sba loan guarantee does that change that could you borrow a greater portion of your uh total that's what that that changes that but not by much you know we're still willing to um we still like to see some debt other skin in the game you know but if we're being if we're getting a guarantee for 90 or even 75 percent um we can go a little higher i don't think i mean ira you can correct me if i'm wrong but i don't see where we've gone over 45 or 50 in the startup oh but that gives me a little idea that i learned from working at from working joining working at the bank just because the bank has a guarantee doesn't mean that the lenders are going to make a bad loan you got to have everything you you're going to have to have everything in order just like i would a traditional loan i always kind of thought in the back of my mind oh we'll we'll take a bigger risk or we'll we'll roll the dice on a you know on a loose app application but it's been very clear to me from the lenders that it's got to be a thorough um with along with the guarantee uh tommy does ncb do 504s as well as the 7a yes we do okay a couple of questions around your comment about lenders in a stack or get our sub including other secondary lenders in the program that that uh people want more information about what do you mean by that uh should they be finding those lender relationships is it or are you talking about just something you do with the loan after it's settled no it depends um so there is a way that you're going to come up excuse me there's a way you're going to come up with your capital right so you're you're going to have member equity which is the amount that you pay into the co-op so typically 100 200 300 dollars then there's going to be member loans right so the loans that you're able to generate from your capital and from your loan campaign then there are grants and uh opportunities from whoever is in your is in your neighborhood or i mean however you can come up with it and i'm putting that into the into the grant bucket so um fredericksburg was able to do about maybe about five percent of the capital stock from grants or maybe a little less than that so that is good you can also do that then we work with other cdfis cfne shared capital leaf um that can come in and also say hey listen we will take a sub position while you be the senior debt you know maybe they don't do that as much now but um we like to see that and sometimes when we finish the loan and this is fredericksburg's case i might participate with other subject other sub-debt providers so what i meant by the capital stack is the different sources of capital to fund the project okay well we've got time for just like one or two more depending on how extensive the answers turn out to be who's here from clipper city i'm not quite sure if i fully understand your questions so if you'd like to unmute and ask it uh directly that would be great sure i just have a question real quick about when you're qualifying for an sba loan um and you're a startup are you expecting to see active income when you're figuring out debt service or obviously most of us are getting funds from fundraising um sorts of endeavors what are you guys looking for uh for qualification of that so um thank you for that question and i think i made a little bit of a mention of it earlier on we're looking for a strong proof performer done or performed by um someone that knows what they're doing so um that was why i talked about don moffett and um colluminate working with co-ops when those performers come to us we're able to trust the numbers a little bit more um what we do is we go into the pro former and um discount what you've given us but we don't expect you to make money while you're not selling groceries so um we expect that the second year um or the first year sba expects you to have a minimum debt service of 1.15 so in essence if you owe a hundred dollars uh you're able to um come up with cash flow of 115 and i think for the covet i think they've moved that to the second year so not just so the first year is fine but the second year you have to meet a minimum of uh 1.15 i would just say too that these are questions that are going to be a little different for each co-op based on how you've raised money and what your expenses are something to talk to your banker about and whoever is doing your pro forma for sure can help answer some of those questions uh we are running at the last minute here so i'm just going to wrap things up quick thank you so much domi nrl this has been very informative and as i said before it will be recorded we've got lots more in the series coming up and hope to see all of you again soon thank you everybody thank you guys i just put my email address in um the chat box in case anybody has questions and uh please feel free to call myself or rl um arl you want to put your information chat too yeah well thanks everyone i really appreciate it go go co-ops go co-ops thanks george thank you thank you later yeah take good care