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Small Business Financing
Presented by:Kristin Slice,
Business AnalystAmerica’s SBDC
Maricopa
Sources of Small Business Financing
IV. Financing a Small Business
U.S Small Business Administration – Office of Advocacy 2014
The most common sources of start-up funds are owner’s and relatives’ savings coupled with credit cards and vendor credit lines.
Sources of Small Business Financing
IV. Financing a Small Business
U.S Small Business Administration – Office of Advocacy 2014
The most common sources of start-up funds are owner’s and relatives’ savings coupled with credit cards and vendor credit lines.
57% is personal or bootstrapping. 38% of start up funding comes from friends and family.
Financing Basics
• Debt vs. Equity• Family & Friends• Angels• Venture Capital• Crowd Funding• Sweat Equity
Financing Basics
• Debt vs. Equity• Family & Friends• Angels• Venture Capital• Crowd Funding• Sweat Equity
Angel Investors
• Friends and family and f___s• Successful people you know• Professional Angel Investor• Angel Groups• Angel Funds
AngelsAngel is lower amounts ($100k-$2M) with lower company valuations (startup likely under $2M valuation).
Angels take less active role in mgt decisions than a VC might seek. Angels are typically individuals who have done well on their own and seek to give back to some degree.
Incubators and Competitions - Venture Madness - InnovateHER
Angel
Remember….only ___ % of businesses get angel funding.
Angel
Remember….only ___ % of businesses get angel funding.
.91% - Entrepreneur Magazine, 2013
Financing Basics
• Debt vs. Equity• Family & Friends• Angels• Venture Capital• Crowd Funding• Sweat Equity
What type of funding is missing…
What type of funding is missing…Any guesses why???
What type of funding is missing…
Grants!!!
Any guesses why???
What type of funding is missing…
Grants!!!
Any guesses why???
Banks / Debt Equity
Banking• National • Regional • Community
What is an SBA Guaranteed Loan?
Alternative Lending• Micro Lenders• Crowdfunding• Factoring• Asset Based
5 Key Borrowing Questions
• How much do you need?• What will you do with it?• When will you pay it back?• How will you pay it back?
- Where’s the the cash flow • What if something goes wrong?
Five C’s of Credit
• Capacity – Cash Flow & Profits
• Collateral – Assets available
• Capital – Skin in the Game
• Conditions – Economic Conditions
• Character – Credit History, Trust
The Loan Application• Business Plan• P&L and Balance Sheet - Current / 2 years• Accounts Receivable Schedule• Accounts Payable Schedule• Business Debt Schedule• Cash Flow Projections -12 months / 2 years• Revenue Forecast - Current / 2 years• Tax Returns - Biz & Personal - 2 years• Personal Financial Statement• Capital Requirement / Use of Funds
How we help:
The Turn Down• What does NO really
mean?• Turning no to yes?• It’s not personal• Persistence is the key to
success
What if the answer is Yes?
• Negotiations• Commitment Letters• Documentation
Lets talk about the elephant in the room…
In Summary- Find out how much money you
need and put together a plan.
- Find the right funding source
- We are here to help you
Financing for your Small Business Workshop
Presented by:Kristin Slice
America’s SBDC Arizona@kristinslice
