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Guarantors/Obligors <br />We recommend that the EDA require personal guarantees from both shareholders. <br />Nereson and Kutches have outstanding credit and strong financial statements. The Experian <br />credit scores for Nereson and Kutches are 758 and 859 respectively. These scores are <br />considered to be in the low risk category. Nereson's personal financial statement reflects a <br />significant net worth that is more than adequate to cover the loan amount. <br />Collateral <br />The primary lender for this project is Bremer Bank. The bank plans to approve the financing <br />for this project using the SBA 7(a) loan program. In this structure, the bank/SBA will have a <br />first lien position on all business assets. The Ramsey RLF loan will be in a second collateral <br />position. While this can be looked at as an unsecured loan, given the credit of the <br />borrowers and there historical performance in other business ventures, I feel that this is a <br />risk worth taking. <br />Kev Risks <br />• Startup Business <br />• No historical cash flow to determine repayment ability <br />Kev Strengths <br />• Experienced management team <br />• Strong personal balance sheet <br />• Outstanding credit <br />• Sound business plan <br />Recommendation <br />Recommend approval as presented subject to <br />1. Bremer Bank/SBA approval <br />2. Equity requirements met by owner <br />3. Clear title <br />4. Execution of a loan agreement <br />5. Personal guarantees of owners <br />• Page 2 <br />