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“Terrace Review — Wednesday, August 31, 1988 Fe

‘Business Beat. ‘Natural healing —

continued from page 7

our own lives as individuals, a world of balanced, healthy there to put your mind, -rather

Cor | mon probl em S in then in our communities, This people, who feel good, who than on the stuff coming off the - she believes will eventually af- don’t need to blame anybody,” ann

dirty pot?” .

retail financing

The major reason why a great number of retailers have their loan proposals reduced or, at the worst, turned down i is’ because of limited security, :

That is one of three categories in: which loan ‘applications by retail businesses can run into problems. The other two are. lack of equity and debt load.

There are’a number of factors involved

by Phil Hart in the problem of security. Manager, Terrace _—First, the vast majority of retail Federal Business businesses are conducted in leased. Development Bank premises, Leasehold improvements such _ ; | as painting, alterations and partitions are

not retrievable by the lender. Lighting -

fixtures, counters, shelving and signs usually are custom-made with limited, if any, resale value. Rent paid in advance also is unretrievable and the lessor has one of the first calls ona business’s assets.

A lender also has little control over the retailer’s inventory and may not even know if it still is on the premises, If a business fails because it couldn’t sell its inventory, what better chance does a lender have to sell it, even at cost?

In financing a retail business, lenders want to be sure that they

‘don’t lose their money and they appraise the security for a loan

by three different methods.

The “Going Concern Value”’ is an estimate of the business based on its capitalized earnings which assumes that a selling price sufficient to cover the loan will be obtained if the business is.sold as an on-going concern.

- **En Bloc Value”’ is an estimate of the price at which the assets could be sold, without alteration or removal, if the business ceas- ed to operate.

The ‘‘Current Liquidation Value’’ is the estimate of the price the assets might be expected to realize on a forced sale or on the winding up of the business. This is based on the assets being sold individually and is the method the majority of lenders use in ap- praising the security of a loan.

Assets usually are the security for a loan and the majority of retail operations have limited assets available as security. That is, therefore, the major reason why most retailers generally have dif- ficulty obtaining financing.

Few lenders, meanwhile, will-state a ratio of equity to borrow- ings, but there must be a sufficient investment in the business by the principals to ensure their continuing commitment. If there is not, lack of equity is likely to result in a loan denial.

Debt load — monthly loan payments as well as the regular commitments of such operating expenses as rent, heat, light, advertising, insurance, telephone, salaries and continuing inven- tory purchases — must not be so high that sales will not cover the total amount,

Lack of equity and debt load are factors which lenders con- sider when evaluating a business as a viable concern. But security is what they use to protect their loan in case they have misjudged and the business fails.

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Business Management Seminar _

Motivating

Personnel

By the end of this seminar you will understand what personnel motivation really means, including its whys and wherefores, and learn how to build your own plan for improving EMPLOYEE MOTIVATION.

FBDB’s Management Seminars are stimulating and thought-provoking ‘workshops. Through the case-study method, participants. can assess their management approach and techniques in given situations. Group - discussions and presentations enable participants to benefit from each other's experience. .

This Seminar will be held:

Tuesday, September 13, 1988 7:00 p.m. to 10:00 p.m. INN OF THE WEST, TERRACE

Registration fee for this 3-hour Seminar- Workshop is $50 and includes all reference material and our after-seminar service.

REGISTER NOW WITH FEDERAL BUSINESS DEVELOPMENT BANK 4641 Lazelle Avenue, Terrace, B.C. V8G 188 Telephone 635-4951 OR FILL-IN AND RETURN REGISTRATION FORM

to the above address Selon la demande, nos séminairas sont offerts en francais.

MOTIVATING YOUR PERSONNEL

Fill-in and return registration coupon to the above address. Please make your cheque or money order payable to: Federal Business Development Bank.

Participant(s) name(s) Name of Business

Postal Code Telephone J :

q

Federal Business Banque fédérale a Development Bank de développement Oaks

Your success is our only business!

Canad