Documenting Cash and Estimating Fair Market Value (FMV) on Business Assets for ISE Match

Documenting Cash and Estimating Fair Market Value (FMV) on Business Assets for ISE Match

Guidance forCounselors

The Administrative Rules for the Iowa Self-Employment Program (ISE) state thatfor all requests for ISE Financial Assistance (FA), “the client must demonstrate a dollar-for-dollar match based on the amount of funding needed. The match may be provided through approved existing business assets, cash, conventional financing or other approved sources.”This form provides a structured approach to help counselors organize and document ISE Match so the information can be completed in an accurate, timely, and efficient manner. Please contact the Business Development Specialist assigned to your area with questions.

Section 1: Cash

A.Begin with Amount of FA requested from ISE(must not exceed $10,000): $ ______

B. State the amount of cash available to contribute to this business: $ ______ Providea copy of your bank statement to document cash. If it is a loan,please provide a copy of the loan agreement.

C.Subtract Cash from Amount FA requested from ISE (A minus B):$ ______

NOTE: If $0, i.e. FA Request $10,000 and Cash available is $10,000), go directly to Section 6. Summary of Information Provided.

If greater than $0, this is the amount which needs to be documented with business assets at Fair Market Value (FMV).

Definition of FMV: FMV is an estimate of the fair market value of a property based on what a knowledgeable, willing, unpressured buyer would be willing to pay; and what a knowledgeable, willing, and unpressured seller would be willing to accept, with no actual or perceived conflict of interest.

This estimate is based on a combination of factors including: original purchase price, condition of item, examples of similar products and circumstances, and depreciation.

Value for ISE Match: FMVminus amount (loan balance) owed on that “non-cash” asset. For example: FMV ($10,000) minus amount owed ($6000) = Value for ISE Match. ($4000).

Client should begin by thinking about a list of the assetsowned and plans to use in the business. Beginthe list with the item with the highest value that will be used for the ISE match. The goal is to exceed the remaining ISE match value needed with the fewest items, thereby requiring less time and effort to document. (e.g. If a vehicle is essential for the business, in many cases, it will be the most highly valued item.)

Then complete the rest of this form, continuing until the total remaining amount of ISE FA requested (calculated above) is exceeded by ISE Match.Then go to Section 6: Summary of Information Provided.

Note:In most cases, an “on-site review”will be required to verify the existenceand condition of the assets stated. If it is determined that a written paid appraisalis needed,counselor and BDS will determine how to proceed. The determination to complete paid appraisals should not be done until client has provided all other documentation needed in ISE Progress Checklist: Step 1 and BDS has recommended proceeding to ISE Progress Checklist: Step 2.

Section 2: VehicleMust be an essential part of a business. If more than one item, copy this blank page, complete for each item and number each page at the bottom.

Some business types may automatically qualify to be used for ISE match, based onthe “Vehicle Criteria for Financial Assistance” List on the ISE website. If the business type(NAICS code) is NOT on the list, a case-specific determination will be made, based on each situation.

To determine NAICS code for a business, go to click on NAICS, and enter the type of business.If the vehicle or business clearly does NOT qualify, (e.g. an online store,) proceed to Section 3: Long-Term Assets.

Description of Item:Year Made:

Brand:

Make/Model:

Serial number:

Condition of Item (please circle): ExcellentGoodAveragePoor

Include Value from ______(Include copy of this documentation.)

SubtractAmount of Loan Balance Remaining:$ ______

Value of Vehicle for ISE Match:$ ______

Example: Business on ISE Vehicle List: NAICS 6216 Home Health Care Services. 2001 Honda Accord Sedan, 4D Ex. Clean

Retail $7,000 Less Amount Owed$0. Value for ISE Match $7,000

Page ___ of ___Total Pages for Section 2, VEHICLES

Section 3: Long-term Assets Continue until amount of Match exceeds FA requested.

If more than one item, copy this blank page, complete for each item and number each page at the bottom. If the list is extensive, BDS may otherwise choose to use the “Detailed Worksheet”, and include as an attachment.

Description of Item:Year Made:

Brand:

Make/Model:

Serial number:

Condition of Item (please circle): ExcellentGoodAveragePoor

Choose only one of the following that best fits client’s situation: (If“no receipt”, state “NR”)

a. If purchased New this year: Provide Purchase Price ______, and copy of receipt.

b. If purchased New in a previous Year: Provide Year Purchased ______Purchase Price______, and copy of receipt.

c. If purchased Used this year: Provide Purchase Price______, and copy of receipt.

d. If purchased Used in a previous year: Provide Year Purchased______Purchase Price ______, and copy of receipt.

e. Other (i.e. asset was donated or acquired at no cost). Provide Year Acquired ______and state circumstances:

If No Receipt (NR), check the rationale used, and provide written documentation:

___Depreciation: (Straight-Line)

# of Year Recovery Period. 7 year: Office Furniture, Fixtures, Equipment. 5 Year: Computer Equipment. 3 Year Computer Software.

___Comparable Sales: Include copies of listings from internet sites or other sources.

___Potential Expert Evaluation/Appraisal. If this is provided at no cost, include a copy.

If there will be cost for this service, and counselor or client have a particular person/business in mind, PROVIDE AN ESTIMATE OF FMV and include the contact informationof the potential appraiser here:

Use of ISE Technical Assistance (TA) funds may be considered for this purpose. Before any actual work can be done, a written proposal/estimate of the cost is required. BDS recommendation and counselor, supervisor approval/authorization is also necessary.

___Other:

Based on Optionsand Rationale Chosenfrom above, Enter Estimate of FMV:$ ______

Subtract Amount of Loan Balance Remaining: $ ______

Value for ISE Match: $ ______

For example: 2010 HP Laptop Computer, purchased new in 2010 for $1000. See attached eBay listing for specs.

Comparable Sales: FMV $800, less $0 balance owed. Value for ISE Match $800.

Page ___ of ___Total Pages for Section 3, LONG-TERM ASSETS

Section 4: Inventory(Items Purchased or created for resale). Valued at Cost.Continue until amount of Match exceeds FA requested.If more than one item, copy this blank page, complete for each item and number each page at the bottom. If the list is extensive, BDS may otherwise choose to use the “Detailed Worksheet”, and include as an attachment.

Description of Item:Year Made:

Brand:

Make/Model:

Serial number:

Condition of Item (please circle): ExcellentGoodAveragePoor

Choose only one of the following that best fits client’s situation: (If “no receipt”, state “NR”)

a. If purchased New this year: Provide Purchase Price ______, and copy of receipt.

b. If purchased New in a previous Year: Provide Year Purchased ______Purchase Price______, and copy of receipt.

c. If purchased Used this year: Provide Purchase Price______, and copy of receipt.

d. If purchased Used in a previous year: Provide Year Purchased______Purchase Price ______, and copy of receipt.

e. Other (i.e. asset was donated or acquired at no cost). Provide Year Acquired ______and state circumstances:

If No Receipt (NR), check the rationale used, and provide written documentation:

___Comparable Sales: Include copies of listings from internet sites or other sources.

___Potential Expert Evaluation/Appraisal. If this is provided at no cost, include a copy.

___Other:

Based on Options and Rationale Chosen from above, Enter Estimate of FMV:$ ______

Subtract Amount of Loan Balance Remaining: $ ______

Value for ISE Match: $ ______

For example: Business is Retail Furniture NAICS 442110. 2010 La-Z Boy Chair purchased new in 2010 for $250.

See attached invoice for specs. Condition: Excellent. FMV $250, less $0 balance owed. Value for ISE Match $250.

Page ___ of ___Total Pages for Section 4, INVENTORY

Section 5: Supplies(Items NOT Purchased or created for resale). Continue until amount of Match exceeds FA requested. If more than one item, copy this blank page, complete for each item and number each page at the bottom. If the list is extensive, BDS may otherwise choose to use the “Detailed Worksheet”, and include as an attachment.