• Date: July 13, 2011
• Guests: Adrianne Murchison and Peter Cox
• Listen to show.

Today’s guests are editors of a new online local news site – Patch.com.  Adrianne Murchison is editor of the Sandy Springs site and Peter Cox is editor of the Dunwoody site.  We will join them shortly for a very interesting conversation.  

But, first we start today with our Business Tip of the week – Financing is Back - Somewhat 

Recent Past – Banks attached by regulators and many failed. 

1.  Rules on overseeing banks changed.
   1.  Financial meltdown brought in regulators
   2. From pushing subprime debt to attacking it (10/07-09)
   3. Waiting down loans that were insolvent
   4. Waiting down loans that were still performing
2. Easy money disappeared
   1.  Underwriting for meetings tightened or disappeared overnight
   2. Regular business underwriting – tightened
   3. Banks forced to reduce B/S – to live within capital.
3.  Recovery has been slow
   1.  Regular business cycle – stopped
   2. Banks failed, stalled or began to recover
   3. Fed has supported banks w/ 0% money
   4. Has caused yield on bonds to be close to 0%
4.  Fed is withdrawing from the market
   1.  Tired of supporting banking economy
   2. Must begin to rein in – excess cash printed to avoid catastrophe
   3. Not offering free dollars
5.  Banks must have yield – cost of money and 4% interest rate yield.
   1.  Causing them to come back into lending
   2. Reorganizing customers –taking limited risks
   3. Trying to work out problem loans with other banks.
6.  Back open for business !!??

Present

1.  Need for yield 
2. Must underwrite to higher standards
   1. 30-40
   2. % equity
   3. Yield imp – must price risk
   4. Realize personal guarantees limited in value
   5. Appraisals of assets high
3.  Risk based loans not back yet
   1. Alternative lenders – ABL, Hard Money, Indust.
   2. SBA still active 

To Apply 

1.  Have your package applying very detailed and complete.
2. Two people involved with bank – loan officer and underwriter.
   1.  Loan officer will sell your story to loan committee
   2. Underwriting will test your credit, the collateral and forecasts.  Will be worried about fed audit of him.
   3. If you technically qualify, it may still need selling from your loan officer.
   4. Have an informed and educated loan officer that knows you and your business to champion your loan.
3.  Be ready to give accurate and timely financial reports to bank after the loan closes.
4. Understand “covenants” – promises to perform in your loan.
5. Banks will not and cannot be as flexible as they once were.  Too much danger.  Too many auditing and criticizing their behavior.

To Match Loan to Need 

Different types of loans 

• Term loans: 1-5 years, with fixed monthly payments
• Working Capital LOC – fluctuating during years – 1 month of year usually ‘0’.  Renews annually
• Asset Based loans – secured by A/R and inventory
• SBA – to buy equipment or real estate and guaranteed by U.S. government
• Mortgages on real estate – build to suit.
• More exotic loans 

Cash forecast should match your needs to type of loan you are requesting. 

The Good 

• U.S. comp earnings is up
• Stock market normally follows earnings
• Interest rates still low 

The Bad 

• Europe flaring up again
• Financial stress in Greece and Italy is shaking bond markets.
• More pressure on Germany, Great Brittan, France to support.
• Banks in Europe weaker than U.S., in more danger 

Will watch and see what fall out is to U.S. markets.

The Ugly 

D.C. is wrestling over debt reduction policy.  It’s like rearranging the deck chairs on the Titanic! 

• Democrats – protecting entitlements
• Republicans – refusing new taxes
• President – wanting sacrifice from both 

Not Discussing: 

• Debt driven economy
• August receipts expected – 170 billion
• August expenses expected – 315 billion
• August deficit – 135 billion 

• Debt repayments
• $500 billion principal
• $40 billion interest 

Borrowing needs August only - $635 billion 

Can’t continue – totally dependent on credit card company – China, Japan, Middle East. 

Now with the third segment of our show, I’m please to introduce Adrianne Murchison and Peter Cox both with patch.com. 

1. Tell us about Sandy Springs Patch and how it came to be?
2. The way we get the news has changed due to many factors – social media, smart phones etc. How has the Patch evolved in order to be a part of it? 
3. What is the underlying mission of The Patch? 
4. The business plan seems to quickly gained popularity and market share, why do you think this is? 
5. As the news has evolved and offers more channels for immediate and timely news delivery, what are the most positive effects of this? What are the drawbacks? 
6. What do you think the future of the news world holds? 
7. How do you see the Patch as being a leader and forerunner in that future news world? 
8. How can people connect to your media outlet and be a part of the audience?