Solano SBDCFairfield, CA

“Thank you SBDC for everything and helping us with the loan process. We owe you for that.”

Sam Yam

COMPANY PROFILE: Mr. Yam approached Solano College SBDC in April 2007 for assistance with writing his business plan to buy an existing business. He previously owned and operated a donut shop for 10 years which he had recently sold. Mr. Yam planned to relocate is family to Anacortes, Washington and buy an existing 20-year-old candy shop. He planned on using the same business model, employees, etc. with the exception of also selling donuts and extending hours to 24/7. He had spoken with the current owner and developed financial projections. Current owners were selling with plans to relocate elsewhere.

CHALLENGES: Client needed assistance with the completion of projected income and expenses and projected cash flow in order to apply for necessary loans. Client owned his home and worked with Pacific Bank for $875,000 loan to secure a conventional loan secured by his house. However, his initial conventional real estate loan was declined. Client was referred to the SBDC financial consultant to assist him with securing a SBA loan to finance the purchase of the business. Their first challenge was to adjust his projections so that he could resubmit for an SBA loan at another bank.

ACTIONS TAKEN: The SBDC assisted the client in obtaining two years of prior operating statements from the business being purchased and showed the client how to project the future income based on the existing company’s operating statement and then completed the cash flow projection and statement of assumptions. The SBDC and the client worked together to prepare a two year income and expense projection, two year cash flow projection, break-even analysis for year one, pro forma balance sheet, and statement of assumptions to support projections. The documents were then presented to Whigbe Island Bank for consideration for a SBA 504 loan.

RESULTS: With the updated financial projections, the client was awarded $379,700 from Whigbe Island Bank as the bank portion of a SBA 504 loan. Owner Investment was $179,700 with the total project cost of $875,000. Ameritrust Certified Development Company (CDC) provided $316,240 in funding for the SBA 504 portion of the loan. Mr. Yam purchased the Anacortes Chocolate Factory located in Anacortes, Washington for a total of $875,000. With purchase of the business, the client also retained the 4 current employees.

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Funded in part through a cooperative agreement with the U.S. Small Business Administration. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA or HSU Sponsored Programs Foundation.