1. FINANCING YOUR BUSINESS
Workshop
V2.2
FINANCING YOUR BUSINESS

2. 4 Manasota SCORE Workshops
Handouts 1
Visual #1 #2 #3
Starting or Buying
a Business
Overview 2 3 4
Small Business
Start-up and
Management
Guide
Business
Planning
Marketing
& Sales
Financing
Available for $15

3. Workshop Objectives Financing Your Business
Determine amount of capital needed
Identify information needed by lender
Identify types and sources of funds
Present key credit approval criteria

4. How Much Capital is Needed?
3 Major Considerations
To open the business doors
To stay open until you make profit
To manage periodic “ups” and “downs”

5. 1. Capital to Open Doors Fixed Assets - Real estate, leases, equipment
Soft Costs Insurance, liability, legal, accounting supplies, compensation, utilities . . .
Inventory Product ready to sell

6. 2. Capital Until Making Profit
Monthly projection of cash flow Based on Business Plan
Add cash flow short fall for initial months
Operational working capital requirements - Until “cash in” exceeds “cash out”

7. 3. Periodic “Ups’ & “Downs”
Cash Flow projections for 12 months - After business becomes profitable
Analyze seasonal variances Anticipated profit fluctuations Unanticipated market changes
Determine additional capital that may be needed and when

8. Investor’s Primary Needs
Assurance that repayment will be made in timely manner as promised
Detailed Business Plan from which their decision will be made: YES (grant loan) NO (deny loan) – too high a risk
Have you begun developing your Business Plan?

9. Business Plan Outline (Typical)
Table of Contents (Easy Reference)
Executive Summary
Company Description & Mission
Products and Services
Marketing Plan
Operational Plan
Management and Organization .
Personal Financial Statement . . .
Start-up Expenses & Capitalization
Financial Plan
Appendices 3 5 7 9 11 13 16 20 24 26

10. Five C’s of Lending Character - Resume, references & experience
Credit Personal & Business credit reports
Capital Borrower’s investment in venture
Cash Flow - Ability to operate at sufficient level to repay
Collateral Assets pledged to secure loan

11. Projected Financial Statements
Opening Balance Sheet Assets and Liabilities
Projected Monthly Cash Flows For each of first 12 months
References Credit and Professional

12. Types of Capital
Equity Owners investment at stake Normally 30% or more
Credit & Debt - Borrowed funds and leases

13. Why is allocating personal equity such
Savings
Investments
Home Equity
Family and/or Friends
Partners
Life Insurance Cash Value
Angels/ SBDC’s
Combination of Above
Why is allocating personal equity such
an important decision?

14. Credit Financial Institution Loans Trade Supplier Credit
Seller Financing or Fixed Assets
Operating Lease Short Term or Long Term
Franchisor Loans
CDC and/or SBDC Loans

15. Limited guarantees to qualified lenders
SBA Basic Loans
Limited guarantees to qualified lenders
Loan Amount
Prime Plus
Repayment
Criteria
< $25,000
(Express)
4.25%
< 7yrs
Character
< $25,000
(Express)
4.75%
> 7yrs
Character
$25,000 to $50,000
3.25%
< 7yrs
Business Plan
$25,000 to $50,000
4.25%
> 7yrs
Business Plan
Over $50,000
2.25%
< 7yrs
Business Plan
Over $50,000
2.75%
> 7yrs
Business Plan

16. Limited guarantees to qualified lenders
SBA 504 Loans
Limited guarantees to qualified lenders
504 Loan – Fixed Assets Land plus new building construction Renovate existing buildings % Down % SBA % Bank Loan to 20 year repayment

17. Grants Very Limited Availability!
Most provided for research Institutions of Higher Learning
Sources for Grants: Grants.gov Gulf Coast Community Foundation (941) Angel Capital – startups in FL (941) Venture Capital – Brokerage Firms

18. Venture Capital Lenders in Area
Other Sources
Venture Capital Lenders in Area
BusinessFundingResource.com
Economic Development Corporation of Sarasota

19. Loan Package Cover Letter
Up-to-date Business Plan - Personal Financial Statement - Projected Financial Expectations - Credit References (Typically 3) - Professional References (Typically 3)
Specific Loan Request - Amount, Term & Sources of Repayment

20. Potential Lenders in Area
Bank of Venice Mark Wilcox ( )
Landmark Bank - Doug Johnson ( )
Horizon Bank Jeff Chapin ( )
Fifth Third Bank - Chris Perkins ( )
Comerica Andrew Reeves ( )
Bank of America Leslie Woodard ( )
AmSouth JJ Miranda ( )
Northern Trust Helen Nugent ( )

21. Loan Approval Criteria (6 P’s)
People (Honest, dependable & capable)
Purpose (Legitimate business need)
Payment within reasonable period - High probability of repayment
Protection (Repayment alternative source)
Perspectives (Profit needs & expectations)
Policy (Types of loans and acceptable risks)

22. 1. People Good Credit History Related Management Experience
Related Business Experience
Solid References - Character - Background - Dependability

23. How will your venture yield adequate
2. Purpose
Legal Type of Business
Logical Relation to background & experience
Productive Will yield cash for repayment
How will your venture yield adequate
cash for repayment?

24. 3. Payment Source of Prepayment - Tied to use of loan proceeds
Projected Financials - Reflect ability to repay on time
Collateral - Alternate sources for repayment

25. 4. Protection Pledge of Assets of Business Personal Guarantees
SBA Limited Guaranty for: Startups Low Equity Low Collateral Loans

26. 5. Perspective Risk/Reward Relationship Lender Profit and Loss
Interest Income 6.50%
Interest Expense %
Operating Costs %
PROFIT %
1 Bad Loan = Profit on 67 good ones!

27. 6. Policies
Bank’s philosophy
Bank’s risk strategy
No two banks alike

28. Examples of Types of Credit
Lines – Short term (90 day) projection
Term – Long term (Real Estate & Equity)
Revolvers – Accounts Receivable Financing
Operating Lease – Short term rental
Financial Lease – Long term rental
Credit Card – Convenient but very costly
Home Mortgage – Long term

29. Financing Your Business
Small Business
Start-up and
Management
Guide
Loads of valuable information
for only $15
Other Workshops
Business Planning
Marketing & Sales
Starting or Buying a New Business
Live Your Dream. SCORE Can Help.
To find the office nearest you, call
SCORE toll-free at 1-800/ ,
or visit and click
on “Find SCORE.”