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Advice from CPAs Securing Your BusinessFinancing.

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Presentation on theme: "Advice from CPAs Securing Your BusinessFinancing."— Presentation transcript:

1 Advice from CPAs Securing Your BusinessFinancing

2 Lending 101 Bank loans are the most common source of financial support Explore alternative funding options Your CPA can help!

3 Types of Financing Debt Financing –Most straightforward –Interest payments and repayments due within a specific time –A standard bank loan

4 Types of Financing Equity Financing –Raise capital by selling interest to investors –No guaranteed return –Investors share in company’s wealth –May also insist on sharing management and control

5 Financing Options Which financing option is best for you? Ask yourself: –Do you want total control of your business? –Do you want to leave a legacy? –Eventually, do you want to sell your business?

6 Key Sources of Funding Financial Institutions include: –Commercial banks – focus on the needs of small businesses –Community banks – accommodate both individual and commercial customers –Credit Unions – support vision of their members

7 Key Sources of Funding Customer or Supplier –Provides discounts for up-front payments –Generates cash for your business Factoring or Accounts Receivable –Immediate funding –Factoring agreement can be complicated

8 Key Sources of Funding Working Capital –Similar to a line of credit –Tied to company’s receivables Economic Development Groups –Offered through federal, state and local governments Friends and Family –Treat it as a business contract –Create a written agreement to avoid misunderstandings

9 A Brief Overview of Equity Financing Initial Public Offering (IPO) –Common route for selling stock Private Placement –Less complex because investors are pre-selected Private Investors –“Angels” take an equity stake in your company

10 Two Rules of Thumb Your company MUST be seen as a good risk: –Be prepared –Have a business plan Your CPA can help you identify your goals

11 Questions and Answers Why do you need financing? –Apply for capital with a specific purpose Is it urgent, short-term or long-term and how much do you need? –Be specific and detailed

12 Questions and Answers Do I have a realistic plan to generate funds to repay debt? –Present it as a recoverable risk How strong is your management team and support staff? –Identify your strengths and weaknesses in advance

13 An Effective Business Plan Executive summary Explanation and operation of business Description and qualifications of management Financial data Miscellaneous attachments for details

14 A Few More Tips ALWAYS be honest about your financial situation Be prepared to discuss any business problems you encountered in the past Offer preventative measures Your candor counts Work closely with a CPA

15 Review Define your goals Prepare your business for scrutiny Demonstrate your company is a good risk Prepare for questions and answers Consult with your CPA to determine which options are best for you

16 Thank you and good luck!

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