COMMERICAL LENDING PROGRAM

Starting a Small Business - Accepting the Challenge

For many reasons, economic and otherwise, more and more Canadians are exploring the opportunities that exist in operating their own small business. You should be aware, however, that most small businesses fail, usually within their first three years, either because the owner was inexperienced, the product's market was not as large as expected or, more often than not, a proper plan was not in place at the beginning.

It is for this reason that Tribal Wi Chi Way Win Capital Corporation will not discuss any business proposal without an accompanying Business Plan. In addition to providing valuable information, your Business Plan also demonstrates how serious and committed you are toward making your business successful.

Business opportunities for Manitoba Aboriginals have never been better. Training, educational facilities and tuition assistance are readily available, and now, with the assistance of Tribal Wi Chi Way Win Capital Corporation, more and more Aboriginal men and women can begin to realize their potential and fulfill their dreams.

SPECIFIC POLICIES & ELIGIBILITY REQUIREMENTS OF TRIBAL WI CHI WAY WIN CAPITAL CORPORATION

As with any financial institution, Tribal Wi Chi Way Win has put into a place a number of policies that are designed to eliminate any misunderstanding by prospective borrowers and ensure that those most qualified receive the assistance they require.

The five specific policies are:

1. All loan applications must be accompanied by a formal Business Plan that includes monthly income, expense and cash flow projections for a minimum of the first year as well as annual projections for a maximum of five years.
    
2. All loan applications involving new ventures must be accompanied by a Market Study.
    
3. All loan applicants must have at least 10% equity in the respective project.
    
4. All loans are approved on the basis that the proposed venture will generate adequate cash flows to maintain a realistic repayment program.
    
5. Where a loan is granted in conjunction with financing or funding from other sources, no monies will be released until the approvals of the other funding sources have been reviewed and confirmed, and that all conditions related to those approvals have been met.

Lending Limits

Tribal Wi Chi Way Win Capital Corporation has established specific limits on the size of available loans.

1. The maximum loan available from Tribal Wi Chi Way Win Capital Corporation to any single borrower at one time will not exceed $175,000.
    
2. Loans to a "borrower" will include the total of loans and/or guarantees where the borrower is a sole proprietorship, a partnership, a corporation or any related affiliation of the same.
    
3. Any loans to any single borrower at any one time must be secured by collateral such that the loan represents a maximum of 75% of the realizable market value of that security. For example, to borrow $100,000 the individual or corporation must have at least $25,000 available in personal or corporate assets to use as a lending security.

Who is eligible to borrow?

Generally, Tribal Wi Chi Way Win will make loans available to:

1. Any member of the participating Tribal Councils or independent First Nations (see list below) who wishes to start, expand or acquire a commercial business in Manitoba, providing the prospective borrower is of the age of majority (18 years) and is a resident of Manitoba.
   
   Island Lake Tribal Council
   Keewatin Tribal Council
   West Region Tribal Council
   Interlake Reserves Tribal Council
   Swampy Cree Tribal Council
   Norway House First Nation
   Nelson House First Nation
   Cross Lake First Nation
   Fisher River First Nation
   Sagkeeng/Fort Alexander First Nation
   Jackhead First Nation
   Waywayseecappo First Nation
    
2. All sole proprietorships, partnerships, and corporations that are approved by Tribal Wi Chi Way Win Capital Corporation and where a Status Indian has a controlling interest and where all such entities will be resident and/or registered in Manitoba and will be owned by First Nations member(s).
    
3. All prospective borrowers must provide a minimum 10% in equity and be able to demonstrate how the equity balance will be provided.

You are NOT eligible for a loan if...

Tribal Wi Chi Way Win Capital Corporation will not grant loans where the borrower is:

1. Insolvent, in receivership or bankrupt;
    
2. Has an offence pending under the Criminal Code;
    
3. Has an outstanding statement of claim and/or has an outstanding judgment issued by a court of law; or
    
4. Is unable to provide a minimum of 10% equity in the project.

Eligible Loans

The following loans are eligible for consideration by Tribal Wi Chi Way Win:

1. Direct Term Loan - Direct Term Loans will be provided for the purpose of acquiring fixed assets to be used for business purposes. These loans are generally amortized over a two to ten year period.
    
2. Working Capital Loans - Working Capital Loans will be provided for the purpose of improving the working capital position of a business where there is securable equity in the fixed assets of the business. Working Capital Loans are normally amortized over a one to two year period.
    
3. Bridging Loans - Bridging Loans may be made available to provide bridge financing while the borrower is awaiting payment or funding from a third party. Some examples include:
   
   1. Government grants and funding - to provide interim financing, pending receipt of the proceeds of grants or other funding, where approval has been received and all the conditions have been satisfied.
       
   2. Construction - to provide advances against completed work on construction projects where there is repayment from mortgage loans or other secure financing.
4. Franchise or Dealer Fees - Tribal Wi Chi Way Win may make loans available for Franchise or Dealer fees subject to the viability of the proposed venture.

The following types of loans are not eligible for consideration by Tribal Wi Chi Way Win Capital Corporation. They include:

1. Consumer loans, including automobiles, home improvements, debt consolidation, etc., where the proceeds are for personal use.
    
2. Loans to finance leasehold improvements where the primary security is the actual leasehold, or where realizable security is not available.
    
3. Loans to finance the cost of goodwill or when collateral security is not available.
    
4. Fluctuating operating loans to finance accounts receivable and inventory are not eligible. The requirements would normally be met by means of Line of Credit guarantees to a chartered bank.
    
5. Loans for Agriculture, Trapping, Fishing or Arts and Crafts.

THE PRINCIPLES OF GRANTING CREDIT

The granting of credit is a unique process that calls upon a series of factors- some subjective, others based upon facts and experience.

The four principles that prospective borrowers should be aware of include:

1. Confidence: Tribal Wi Chi Way Win must have reasonable confidence that the borrower will be both willing and able to fulfill his or her obligations.
    
2. Willingness: A fundamental understanding of the character of the individual borrower or principals is essential to sound lending practices.
    
3. Ability: A number of elements must be considered, including the prospective borrower's financial capacity, economic conditions, specific industry trends, and the capacities of the business and/or principals. These are assessed individually and collectively to determine ability.
    
4. Futurity: Every credit transaction brings with it a measure of probability and subsequent risk. Some measure of potential loss must be considered when making the decision to grant credit.

GRANTING CREDIT TO AN INDIVIDUAL

When an individual applies for credit from any financial institution, including Tribal Wi Chi Way Win Capital Corporation, a number of important factors are taken into consideration. These factors help the institution to make a qualified judgment and determine if the prospective borrower represents a suitable risk.

As a prospective borrower it may assist you to understand the process and, as a result, enhance your chances for a successful outcome. There are four primary elements, the Four C's that are considered before an individual is granted credit. These are:

1. Character - Determining someone's character is difficult, but the decision receives considerable weight in the loan granting process. This is important because poor management contributes to most business failures. Other considerations related to Character include a person's related experience, or going into a business they know nothing about. Coupled with this is a lack of management experience, or the contribution an outside resource person might make to their success.
   
   A person's management ability can often be demonstrated by their past record in other areas, such as:
   
   
   1. His or her past history of business-related experience.
       
   2. His or her past history of lawsuits, bankruptcies or insolvencies.
       
   3. General management experience.
       
   4. Age.
       
   5. General reputation in the community or within an organization.
       
   While many of these factors seem to rely on the individual judgment of the credit officer, they are all important and are taken into consideration.
    
2. Capacity - Capacity is closely associated with Character. In other words, 'Does the prospective borrower have the capacity to operate a successful business?'. While financial statements provide an historical picture, factors such as experience judgment, marketing knowledge and human resource abilities all add points to the scoreboard marked "Capacity'.
    
3. Capital - The prospective borrower's financial position is a critical consideration in the decision to lend money. The greater the financial stability and commitment, the less the risk will be to the lender.
    
4. Conditions - Conditions, or circumstances, refers to the outside situations that might affect a person's ability to maintain the repayment program. So, while these conditions might be beyond the control of the business owner, they can't be ignored. One example might be a business that could be affected by the weather.
   
   Like an individual, there are factors that impact on the decision to lend money to a business, too. These are:
   
   
   1. The name of the business.
       
   2. The legal structure of the business.
       
   3. History of the business.
       
   4. The Nature of the business and its method of operation.
       
   5. The location of the business.

BUSINESS PLAN RESOURCES

A number of sites on the internet provide resource materials that will allow the client to develop a workable business plan. These include templates for both the business plan itself and the marketing plan.

Popular Business Topics - The Aboriginal Business Service Network (ABSN) provides these links in order to assist in informing the prospective business owner on various questions and business plan preparation.

Business Plan Template - Downloadable template documents for writing your own business plan. Templates are in MS Word (business plan document) and MS Excel (financial appendices) with example documents in PDF (Portable Document Format, open with Adobe Reader)

How do I apply?

For additional information or to apply contact:

Tribal Wi Chi Way Win Capital Corporation
419 Notre Dame Avenue
Winnipeg, Manitoba R3B 1R3
Phone: (204) 943-0888 Fax: (204) 946-5318
Email: info@twcc.mb.ca
Toll Free: 1-800-568-8488

You may also click here to download the application form.