Lender Strategy

1. Lender Selection Criteria

Evaluation Framework

The following criteria will be used to evaluate and score potential SBA lenders for the Luxa Salon Suites financing:

Scoring Scale

Each criterion scored 1-5:

• 5 = Excellent: Exceeds expectations
• 4 = Good: Meets all expectations
• 3 = Acceptable: Meets minimum requirements
• 2 = Below Average: Some concerns
• 1 = Poor: Does not meet requirements

Total Possible Score: 25 points (weighted)

Dealbreakers (Automatic Disqualification)

• Not an SBA-authorized lender
• No experience with loans under $500K
• Requires collateral beyond SBA standards
• Does not serve Virginia market
• Processing time exceeds 120 days

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2. Lender Comparison Matrix

Virginia SBA Lender Comparison

*Rates from 2025 data; current rates will be higher due to Prime increase

Lender Profile Details

Tier 1: M&T Bank (Primary Target)

• Headquarters: Buffalo, NY (major Virginia/DC metro operations)
• SBA Status: Preferred Lender Program (PLP)
• 2025 Volume: 260+ SBA loans (one of the largest in the region)
• Average Loan Size: ~$153K (aligns with our $228K request)
• Strengths: Top regional SBA lender, proven track record, delegated authority
• Considerations: May have longer queue due to volume
• Contact: sba@mtb.com or local branch

Tier 1: TD Bank (Primary Target)

• Headquarters: Cherry Hill, NJ
• SBA Status: Preferred Lender Program (PLP)
• Ranking: #1 East Coast SBA lender by unit volume
• Strengths: High volume = streamlined process, preferred lender status
• Considerations: Large bank may be less personal
• Contact: tdbank.com/small-business/sba-loans or local branch

Tier 2: MainStreet Bank (Secondary)

• Headquarters: Fairfax, VA
• SBA Status: Preferred Lender Program (PLP)
• Focus: Northern Virginia, DC metro small business lending
• Strengths: Regional focus, relationship-oriented, may offer better terms
• Considerations: Smaller volume may mean longer processing
• Website: mstreetbank.com

Tier 2: Virginia Credit Union (Secondary)

• Headquarters: Richmond, VA (branches statewide)
• SBA Status: SBA Lender (verify current status)
• Focus: Virginia member-focused lending
• Strengths: Local knowledge, community focus, potentially competitive rates
• Considerations: May have loan size limitations, membership requirement
• Website: vacu.org

Supplemental Programs (If Eligible)

Loudoun County EDA Programs

• Eligibility: Businesses locating in Loudoun County
• Programs: Loan programs, grants, workforce development
• Advantage: Can supplement SBA loan, favorable terms
• Contact: bfreedman@loudoun.gov / loudoun.gov/eda
• Action: Verify eligibility based on owner demographics and location

Virginia Small Business Financing Authority (VSBFA)

• Eligibility: Virginia small businesses
• Amount: Varies by program
• Terms: Below-market or guarantee programs
• Advantage: State-backed supplemental funding
• Action: Verify if target sites qualify for any current programs

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3. Outreach Plan

Three-Tier Outreach Strategy

Tier 1: Primary (Contact First - Week 1-2)

Target: M&T Bank and TD Bank simultaneously

Rationale:

• Both are Preferred Lenders (faster processing)
• Highest approval rates and volume in the region
• Contacting both creates competitive dynamic

Week 1-2 Actions:

1. Visit local M&T branch, request SBA lending contact
2. Visit local TD branch, request SBA lending contact
3. Schedule pre-qualification meetings at both
4. Compare initial feedback on loan viability

Tier 2: Secondary (Contact Week 2-3)

Target: MainStreet Bank and Virginia Credit Union

Rationale:

• Smaller lenders may offer better rates or service
• Provides leverage in negotiations with Tier 1
• Local CU may have community-focused benefits

Week 2-3 Actions:

1. Contact MainStreet Bank SBA department
2. Visit Virginia Credit Union, inquire about SBA lending
3. Compare terms to Tier 1 offers

Tier 3: Supplemental (If Applicable)

Target: Loudoun EDA and Virginia state programs

Rationale:

• Non-competitive with SBA (supplemental funds)
• Could reduce SBA loan amount needed
• Favorable terms if eligible

Week 3-4 Actions:

1. Contact Loudoun County EDA at (703) 777-0426
2. Verify eligibility for local business programs
3. Contact VSBFA for state-level supplemental programs
4. If eligible, apply simultaneously with SBA application

Outreach Timeline Summary

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4. Lender Conversation Script

Initial Contact Script

Introduction:

"Hi, my name is [Owner Name]. I'm planning to open an independent salon suites business in South Riding, Virginia, and I'm exploring SBA 7(a) financing options. I'd like to schedule a meeting to discuss pre-qualification for a loan."

Key Talking Points

Business Overview

"Luxa Salon Suites will be an 18-suite facility providing private, move-in-ready spaces for independent beauty professionals. The salon suites model has proven demand in our market - existing competitors in the area have waitlists."

Project Scope

"We're looking to finance approximately $228,000 for leasehold improvements and equipment. The total project cost is around $320,000, with a 20% equity injection from personal funds."

Experience/Background

"I bring [relevant experience/background]. We've completed extensive market research, financial modeling, and business planning over the past [timeframe]."

Financial Position

"Our projections show a debt service coverage ratio of 1.54x at stabilized occupancy of 85%. Break-even is at 62% occupancy. We have $150,000 in available capital, with $57,000 designated for equity injection and $35,000 for working capital reserves."

Questions to Ask the Lender

Process & Timeline

1. "What is your typical timeline from application to funding?"
2. "Are you a Preferred Lender with delegated SBA authority?"
3. "What documentation do you require for initial pre-qualification?"

Terms & Pricing

1. "What interest rate spread over Prime do you typically offer for loans in this range?"
2. "Are there any origination or closing fees beyond SBA standard fees?"
3. "What are your prepayment terms?"

Requirements

1. "What DSCR do you require? (Note: We project 1.54x)"
2. "Do you require collateral beyond personal guarantee and business assets?"
3. "Do you have experience with salon or personal services businesses?"

Relationship

1. "Will I have a dedicated loan officer/relationship manager?"
2. "What happens if I need to draw funds in stages during build-out?"
3. "Do you offer any business banking benefits for SBA borrowers?"

Red Flags to Watch For

• Excessive collateral requirements (beyond PG + lease assignment)
• Rates significantly above Prime + 6% (exceeds SBA caps for this loan size)
• Processing time >120 days (indicates capacity issues)
• No experience with service businesses (may not understand the model)
• Reluctance to discuss terms upfront (may indicate unfavorable terms)

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5. Contact Tracking Template

Lender Contact Log

Meeting Notes Template

Lender: ________________________ Date: //___ Contact: ________________________ Location: ________________________

Discussion Summary:

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Rate/Terms Quoted:

• Interest Rate: Prime + _____%
• Term: _____ years
• Fees: $_____
• Processing Time: _____ days

Documentation Requested:

• _________________________
• _________________________
• _________________________

Next Steps:

1. ---

2. ---

Overall Impression (1-5): _____ Recommended for Application? [ ] Yes [ ] No [ ] Maybe

Comparison Summary (Complete After All Meetings)

Selected Lender: ________________________ Rationale: ________________________

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6. Next Steps

Immediate Actions (Pre-Outreach)

1. Verify Credit Status: Check SBSS score before lender contact (target 165+)
2. Prepare Elevator Pitch: Practice 2-minute business overview
3. Gather Basic Documents: Have personal financial summary ready for discussion
4. Identify Local Branches: Map M&T and TD Bank locations near South Riding

Week 1 Actions

1. Contact M&T Bank and TD Bank to schedule pre-qualification meetings
2. Research specific loan officers who handle SBA at each institution
3. Prepare questions list for initial meetings

Success Criteria

• Pre-qualification from at least one Tier 1 lender
• Rate quotes from minimum 2 lenders for comparison
• Clear understanding of documentation requirements
• Realistic timeline for application through funding

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Lender Outreach Strategy Complete Phase 12: Funding Strategy - Plan 01 Task 2 Complete