Alternative Financing Strategies for Small to Mid Size Businesses Presented by Neisha Pereira VP Operations of 1st PMF Bancorp (U.S. Parent) Contact: neisha@pmfbancorp.com / (310) 858-6696 x206 Summary Background & Services of 1st PMF Bancorp Background on Baoli Investments (PMF’s China subsidiary) Alternative Funding Strategies: Trade Finance Minority Loans And Guarantees CASE STUDY Foreign Trade Financing 1st PMF Bancorp Founded in 1985 Commercial Bank Lender for SME (Small Medium Size Enterprises) United States Ex-Im Bank Lender Certified Minority Lender (minority certification is required by National Minority Development Council (www.nmsdcus.org ) st 1 PMF Bancorp Services PMF LENDING & BUSINESS SERVICES: A. Providing Working Capital Solutions to Medium Sized Businesses as Direct Lender: -Trade Financing -Minority Loans for businesses -Receivable & Purchase Order Financing B. Credit and Receivable Management Services: - Credit Evaluations on U.S and Chinese Firms - Complete On-Line Accounting for all Clients - Collection and Legal Support in US and China, if needed - Invoice Guarantee against Customer Non-payment (China & U.S.) C. New Customer Introduction through the Minority Program (i.e. Home Depot, Honeywell, etc…) Baoli Investment’s Services Baoli was setup in China in 2004 (as PMF’s WOFE) Provides support/consulting services to U.S. Companies -Sourcing Suppliers (i.e. locate, qualify, negotiate price, inspect goods, finance via PMF, etc… Provides Supplier Due Diligence Services/ Credit Reports on Chinese Companies Provides Legal and Staff Support for China market Websites: www.pmfbancorp.com.cn www.pmfbancorp.com What is Trade Financing? The financing of goods/product from one country to another usually performed by intermediary bank/trading company. Trade Finance Strategy (1) Issues PO Chinese Supplier (4) Goods (2) Issues PO for Imported Product Importer (4) Goods/Invoice U.S. Customer (3) WITHOUT PMF: Importer makes CASH PAYMENT in advance (no trade financing & hurts cash flow) PMF (3) WITH PMF: PMF MAKES PAYMENT/GUARANTEE (with PMF approved PO Trade Financing) (5) Payment to PMF Bancorp lock box Results of PMF’s Trade Financing OUR CUSTOMERS ARE ABLE TO: Purchase/ Finance more imported goods without impacting domestic working capital Professionally manage foreign purchase of goods via our Chinese Structure: ---i.e. Inspections of goods, Support Staff, Legal, etc…. Implement Risk Management tools (i.e. L/C, D/A, Invoice/Guarantee with Open terms, etc.) Minority Loan Program -Unique PMF Program Certified Minority Lender via National Minority Business Dev. Council Requires certification via the Southern California Minority Business Development Council (http://www.scmbdc.org/join/check.asp) Requires SME to be working with one of the corporate members Requires SME to justify use of funds Loans amortized over 4 to 10 yrs Loans up to $1 million Requires Limited Financials strength Requires proof Management capabilities for order Requires Approval by Certified Lender (i.e. PMF Bancorp) PMF’s typical Client: -Not traditionally Bankable due to insufficient collateral -Annual Sales between $500,000 to $20 million -May have weak Cash flow -May have weak 2nd Collateral Source -May have Negative Profits/Equity (trends must be positive) -Must have positive Sales Outlook -Must have Quality Purchase Orders and/or Receivables to drive this transaction -Must have Experienced Management with track record Case Study: Trade, A/R Finance and Minority Loan SITUATION: •PMF’s “MANUFACTURING MINORITY CLIENT”: first approach PMF producing tools for big box stores and had annual sales of $2 million U.S. (also no profits for the last 2 yrs due product shift, but….); •Client’s International Sales were rapidly growing; •Additionally, Client needed Loan to produce tooling for 5 products • Supplier Terms and Customers demanding 60 to 90 day Terms PMF’s SOLUTION: •Provided Trade Financing and PO Financing to accelerate and ease cash-flow so suppliers could be paid early for “supplier discounts” and company could continue to grow sales •To provide eligibility on financing International (A/R) Customers •To provide Guarantees to Foreign Suppliers •To provide Minority Loan for tooling in China RESULTS: •1 year later, PMF provided cashflow to grow CLIENT’s sales from $2 to $5 million without any losses. Thank you… and for questions contact: Neisha Pereira, VP Freda Liang, General OPERATIONS 1st PMF Bancorp Neisha@PMFbancorp.com 001(310) 858-6696 x206 Manager in China Baoli Investments Freda@PMFbancorp.com 0086(755)83734304