Customer Background and Request Information  Teague Electric is owned by Ryan Bealmear (80% ownership) and Joe Lewis (20% ownership).Joe is the company president and soninlow to Ryan.Ryan intends to give 20% of the company to Joe & his wife (and Ryan's daughter), Stephanie, over the next five years until Joe & Stephanie wholly own the company.  Teague is looking to move banks.They have enjoyed their relationship with First National Bank of Kansas City but need a larger bank to accommodate both their existing debt and the purchase of a new office building for their operations.  Currently Teague has a $1,625M RLOC used to fund operating expenses during the turn of receivables.The line is secured by All Business Assets of the company and is monitored by a monthly borrowing base.They would like to increase this line to $2MM.  Teague is wanting to purchase an office building located at 9812 E. 56th St, Raytown, MO 64133.The purchase price is $750M. Financial Supplemental Information  Ryan Bealmear bought out his former partner, Aaron Rodriquez, in late 2018 and took out a bank loan, through the company, to do so.That loan required 84 payments of $25,718.12 per month.Teague paid the debt off in mid2020.  Teague also received a PPP loan in 2020 and it has been forgiven by the government as planned.  Forecast Variables: Sales Growth % 6.3 Gross Profit Margin % 20 Operating Expense % 12 Accounts Receivable Days 45 Accounts Payable Days 35 Capital Expenditures 1,500,000 Loan Policy Guidelines:  Borrowing base certificate formula are as follows: o 80% maximum advance against eligible accounts receivable o Ineligible accounts receivable include:  Tainted/Crossaged Accounts - more than 10% of the total receivables is 90 days past due.This account is to be eliminated from the borrowing base calculation.  Concentrations - receivable accounts for more than 20% of the total receivables.Any amount over the 20% is to be eliminated from the borrowing base calculation.  Foreign Accounts o 50% maximum advance against eligible inventory  Eligible - Finished goods and raw materials.It should be noted that raw materials may be considered on a case by case basis with the marketability of the raw goods taken into consideration when determining the advance rate.Accounting methods for LIFO and FIFO should also be considered as this could affect the valuation of the inventory.  Ineligible - Work in progress unless reasonable valuations and marketability can be determined.  Office Building Financing - The primary repayment source for loans secured by office buildings (single or multi tenant) should be rental income or cash flow from the owneroccupied tenant. o OwnerOccupied - Substantiated by more than 50% of the building being occupied by an entity or entities with an ownership structure primarily the same as the ownership structure as the borrower. The related entity(s) that occupies the building are to provide guarantees on the subject note.The only exception to this may be in the case when one spouse is the sole owner of the operating entity and the other spouse is the sole owner of the real estate entity.This structure is typically seen in professional organizations.In this circumstance the property will still be considered owner occupied.A formal lease agreement will be required between the operating entity and the real estate entity with an assignment of leases and rents to be taken as additional collateral. o NonOwnerOccupied - Substantiated by more than 50% of the building being occupied by an entity or entities not related in ownership to the borrower.Tenant financial information may be required on properties that are special use or the repayment of the loan is contingent on the occupancy of the tenant. o Terms:  Max amortization of 25 years.  It is recommended that lenders use discretion for amortization on buildings that are 20 years or older.Buildings of this age should be amortized based on the overall structural condition and need for both cosmetic and structural improvements.  Preferred maturity of up to five years with maturities up to 10 years acceptable with variable rates.  Cash out requests are not a typical component of Bank lending.However, they will be considered on a casebycase basis for qualified borrowers and properties.For loan requests that include a cash out component, the lender should give consideration to the purpose of the request, intended use of the funds, and if the cash out is based on original equity, longterm appreciation in the value of the property, or appreciation in value due to potential shortterm economic conditions.Cash out requests may be subject to reduced LTV guidelines (or LTC/LTV ratios). o Loan to Value  Purchase of property - lesser of 90% of cost or 85% of appraised value.Equity contributed must be in the form of cash or unencumbered marketable assets.  Refinance of property - 85% of appraised value.  Loans with funds for improvements - if funds for improvements constitute more than 25% of the property's value the loan is to be considered construction and will be coded as a construction loan. o Debt Service Coverage Requirements  Non owneroccupied properties are to exhibit a DSC of 1.20x after distributions to allow for sufficient equity to remain in the property to allow for repairs and maintenance or leasing commissions to be paid.  Owneroccupied properties may not require a DSC of 1.20x as long as the majority owner and related entity guarantee the note, and the global DSC is 1.20x or greater

What is the weakness of the company?