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Home My WebLink About World Language Initiative-MT Loan Presentation PROSPERA 406.587.3113 1 prosperamt.org e 865 Technology Blvd. Suite A, Bozeman, MT 59718 BOZEMAN REVOLVING LOAN FUND LOAN REQUEST PRESENTATION DATE: July 17, 2024 PREPARED BY: Sally Vering 1. BORROWER NAME: World Language Initiative-Montana 111 South Grand Ave., Ste. 202 Bozeman, Montana 59715 2. SUMMARY OF LOAN REQUEST: Purpose: One-Time Bridge Loan / funding through receipt of confirmed grants. Loan Amount: $50,000 Interest Rate: 9.50% Fixed Term: Interest-only monthly payments of$395.83 for three (3) months (August, September, and October 2024) Balloon Payment of$50,000 due November 5, 2024 Collateral: 15t Lien position on all business assets, including accounts and A/R. Life Insurance: N/A Business Insurance: Gallatin Development Corp. d/b/a Prospera Business Network added as Lender Loss Payee on business insurance. 2% Loan Fees: $1,000 One-Time Service Fee: $500.00 Closing Costs: UCC Lien ($7) 3. BUSINESS DESCRIPTION: World Language Initiative-Montana (WLI-MT) was founded as a 501(c)3 organization in 2017 and is located in the Emerson Center for Arts and Culture, Suite 202. WLI-MT strives to create accessible pathways to multi-language learning and heightened global awareness. Through making language & culture education available, Montanans will have improved access and desire to celebrate diversity in their communities. WLI-MT offers programs in 7 languages; Spanish, English, French, German, Arabic, Mandarin and Japanese. Recently in response to the significant increase of Spanish speaking residents in the Gallatin Valley, and the demand that this has created for English and Spanish language resources and programming, WLI-MT is launching additional classes and programs to meet the needs of the community. These programs include a new 6-week drop-in Spanish class beginning 7/25/24. WLI- MT is also working with local businesses, nonprofits and government organizations, like the Gallatin County Health Department, to provide customized Spanish classes for staff to allow them to build skills needed to work with the clients that utilize their services. WLI-MT has two revenue streams: A) Education a. Adult Programming— Small group classes, tutoring and customized programs for businesses and professionals b. Youth Programming — Small group classes, summer camps, and customized programs B) Fundraising a. Sponsorships d. Give Big Gallatin Valley b. Donations e. Grants c. Annual Campaign f. Events Management Team Ann Swann, Executive Director (July 2023 —present) Ann's expertise spans education, family engagement, event management, database administration, donor and volunteer cultivation, human resources, project oversight, and business partnerships. Her versatile skill set ensures comprehensive, effective and thoughtful approaches to her work. Ann holds a Bachelor of Science in Elementary Education from the University of North Florida, along with a certificate from Indiana University School of Philanthropy. Kristina Allison, Director of Programs Kristina has been working in the field of education in a variety of capacities for over 15 years, most recently teaching English to international students at Montana State University. Her previous career was in social work, where she worked for several years in public schools and facilitating workshops for parents and educators in behavior-management techniques. She has also taught French to children in the Bozeman area. Program Managers, Program Coordinators and Language Coaches WLI has a team of 8 exceptional employees who further WLI-MT's mission to create language and culture education opportunities for K-12 students and assist community members of all ages on their journey towards language acquisition. 2 4. BORROWER OVERVIEW: Business World Language Initiative-Montana Legal Entity Domestic Non-Profit Organization Primary Contact: Ann Swann Business Address: 111 South Grand Avenue, Suite 202, Bozeman, MT 59715 Business Phone: 406 414-6419 Email: Ann.Swan n wlimt.or Date Established July 19, 2017 TIN: 82-2212916 Business Activity: Lan ua a and culture education Management Team: Ann Swann, Executive Director Kristina Allison, Director of Programs Current Jobs: 20 Projected Job Creation net new): Potential for additional hires depending on growth. 2023/24 Annual Revenues: $314,472 2023/24 Net Income: $21,767 Eligibility Factors: • Business located in eligible area. • Existing job retention. • Working capital. • Business was declined for a loan from private lending sources. 5. PROJECT SOURCES AND USES, INCLUDING SOURCE OF INJECTION: Uses of Cash Working Capital to stabilize cash flow $50,000 Total Uses of Cash $50,000 100% 6. SOURCE OF REPAYMENT: Primary Cash Flow from Business Secondary Liquidation of Assets / Bank Account 7. STRENGTHS AND WEAKNESSES Strengths: • Reputation of Borrower— in business for 7 years • WLI-MT to receive significant grant dollars of$90,000 by September 30, 2024 o $20,000 - Murdock Charitable Trust 0 25,000 - ESSER Grant/State of Montana Office of Public Instruction 3 o $45,000 - Bozeman School District • $1,500/student (30) for BELLA Summer Camp • Repayment ability Weaknesses: Delay of grant funds / unknown economic factors 8. FEASIBILITY OF IMPACT ANALYSIS (JOBS & COMMUNITY BENEFIT): These funds will stabilize WLI-MT's cash flow until it receives significant grant dollars which are critical to its operations. This loan will ensure WLI-MT continues to meet payroll and pay its utilities and other day-to-day expenses that cannot be deferred. WLI-MT will be able to continue to work with grantors that provide support via reimbursement grants and continue to create programs for our community that provide critical world language education for youth and adults. WLI-MT is unable to secure commercial financing due to insufficient collateral ratio and LTV. By a majority vote of the WLI-MT Board of Directors, the Executive Director has been granted authority to apply for this loan and if approved sign the loan documents. 9. COLLATERAL ANALYSIS SUMMARY: Since WLI-MT is a non-profit, it does not have much collateral. The collateral analysis is as follows: Available Market Equity Collateral Type of Collateral Value Source after reduction Cover a a LTV 15-inch MacBook Pro $1,500 Actual $750.00 (2023) Value Epson Projector $450 Actual $225.00 Value IMac 21.5, 8 GB (two) $900 Actual $450.00 Value 55" Vibe Whiteboard (2023) $3,199 Actual $1,600.00 Model #S155 Value Checking Account $44,000 $22,000 Balance as of 7/14 Total Collateral Value: $25,025 .50 200% 4 10. FINANCIAL ANALYSIS: WLI-MT has no existing debt, and this will be their first loan, and there are no existing liens filed with the Secretary of State. Prospera will be the first (and only) lienholder on WLI-MT's business assets. Because the majority of WLI-MT's income is reimbursement grant funding at this time, cash flow does not keep pace with the expenses of the 2024 summer programs. To receive grant reimbursements for expenses, WLI-MT must file reports with the various programs and await payment which can take up to ninety (90) days. WLI-MT is slated to receive $90,000 in grant funds by September 30, 2024. WLI-MT has provided official documentation from each grantor confirming the scheduled grant payments. WLI-MT indicates its desire to repay this loan immediately upon receipt of the grant funds. Accordingly, Prospera is amenable to a one-time bridge loan to assist WLI-MT through the transition period. WLI-MT's financial history is below. In 2022-23, there was a change in leadership at which time the outgoing and current Executive Director were simultaneously on the payroll. Accordingly, expenses were greater on top of decreased revenue. Of importance is WLI-MT's fiscal year ends July 31St while one of its key programs, BELLA summer camp, is in session. The summer camp is funded by grant dollars ($45,000) issued after completion of the program and report submissions. Due to the organization's grant submission, review, and processing timelines, there is a delay in program reimbursements and a lag in cash flow. Accordingly, the "losses" are quickly recouped upon receipt of the scheduled grant payments. 5 WORLD LANGUAGE INITIATIVE - ANALYSIS Fiscal Year: 08/01-07/31 2023 24 Financials 2020 21 2021 22 2022 23 thru 2024 25 TR TR TR 7 12 Proiected Sales (Programs) $55,568 $58,513 $50,069 $90,735 $ 161,903 Contributions, Grants& Fundraising $212,802 $248,366 $182,465 $223,726 $ 251,900 Less COGS Gross Profit $268,370 $306,879 $232,534 $314,461 $ 413,803 Other Income 473 1,961 8,691 11 - Total Income: $268,843 $308,840 $241,225 $314,472 $ 413,803 Less wages and benefits: $161,816 $172,785 $212,268 $262,854 $ 327,220 Less Operating Expenses: $68,191 $72,277 92,310 73,385 $ 86,562 Net Income $38,836 $63,778 $(63,353) $(21,767) $ 21 Ordinary Business Income: 38,836 63,778 (63,353) (21,767) $ 21 Add: Depreciation &Amortization EBITDA $38,836 $63,778 $(63,353) $(21,767) $ 21 With this loan, WLI-MT's cash flow will be stabilized, allowing business operations and programs to continue unaffected. WLI-MT will readily meet Prospera's loan repayment terms. 11. LOAN AGREEMENT COVENANTS: 1. First lien position on furniture, fixtures, and equipment, including bank accounts and A/R. 2. Gallatin Development Corp. d/b/a Prospera Business Network added as Lender Loss Payee on business insurance. 12. CONDITIONS of APPROVAL: 1. Sign up for ACH to make loan payments. 6