get your business funded

© 2012 CAPBuilder Network Group All rights reserved

GET YOUR BUSINESS FUNDED

2© 2012 CAPBuilder Network Group All rights reserved

Marc Parham, Radio Show Host, MC/Speaker, Infopreneur


BEFORE YOU LOOK FOR FUNDING


Determining Your Financing Needs

• Do you need more capital or can you manage existing cash flow more effectively?

• How do you define your need? • Do you need money to expand or as a cushion against risk?

• How urgent is your need? • You can obtain the best terms when you anticipate your

needs rather than looking for money under pressure.


Determining Your Financing Needs

• How strong is your management team? • Management is an important element assessed by

lenders.• How does your need for financing mesh with your business plan?

• If you don't have a business plan, make writing one your first priority. All capital sources will want to see your business plan for the start-up and growth of your business.


SOURCES OF FUNDING


SOURCES OF FUNDING

• Micro-Lenders ($500-$50,000)• Banks ($50,000 - $250,000, $$$)• SBA ($50,000 - $250,000, $$$)• Family and Friends ($$$$)• CROWD FUNDING• Private/Angle Investors ($$$$)• Venture Capital ($$$$)• Retirement funds

http://www.sba.gov/


Micro lenders• Microloans are small loans (typically, in the range of $5,000 to $25,000)

• Many micro lenders are non-profits

• In the U.S., microloans generally carry higher interest rates

• There are 5 sba backed lenders in ga


Micro lenders• Albany Community Together• ACE Loans• Atlanta MicroFund• DeKalb Revolving Loan Fund• Small Business Assistance Corporation


Small Business Administration loan

• offers two types of loans that can help entrepreneurs get the capital they need to start their business:

• the 7(a) guarantee small business loan • Purchasing a business or working capital

• the 504 fixed-asset small business finance program. • Commercial real estate or heavy

machinery/equipment


Friends and family

• If you have a friend or relative with some spare cash, you have another potential way to finance your business.

• Borrowing from friends and family presents an interesting alternative to traditional forms of financing

http://www.businessnewsdaily.com/5950-family-friends-startup-funding.html


Angel investors• Generally occurs in a company's early stages of growth, with investors expecting a 20 to 25 percent return on their investment.

• They can provide tactical benefit to the company they are investing in.


Venture capitalists

• For small businesses that are beyond the startup phase and already have revenues coming in

• Venture capitalists focus on specific industries,

• Venture capitalists have a short leash and often look to recover their investment within a three- to five-year time window.


Crowdfunding• Crowdfunding on websites like Kickstarter,

Indiegogo and others that are geared more toward businesses

• These sites allow businesses to pool small investments from a number of investors instead of forcing companies to look for a single investment.

• businesses are able to raise money without giving up an equity stake in their business.

• raise money in exchange for rewards or products. Other sites have an equity-based model in which businesses do give up a bit of their share.

http://www.businessnewsdaily.com/6106-equity-crowdfunding-tips.html


Types of funding


Types of Financing • There are two types of financing:

• equity financing and debt financing. • When looking for money, you must consider your company's

debt-to-equity ratio—the relation between dollars you've borrowed and dollars you've invested in your business.

• The more money owners have invested in their business, the easier it is to attract financing.


Equity Financing• Equity financing (or equity capital) is money raised by a

company in exchange for a share of ownership in the business.

• Ownership is represented by owning shares of stock outright or having the right to convert other financial instruments into stock.

• Equity financing allows a business to obtain funds without incurring debt, or without having to repay a specific amount of money at a particular time.


Debt Financing • Debt financing means borrowing money that must be

repaid over a period of time, usually with interest. • Debt financing can be either short-term, with full

repayment due in less than one year, or long-term, with repayment due over a period greater than one year.

• The lender does not gain an ownership interest in the business, and debt obligations are typically limited to repaying the loan with interest.


Ability to Repay • The ability (or capacity) to repay the funds you receive from a lender must be justified in your loan package.

• Banks want to see two sources of repayment—cash flow from the business as well as a secondary source such as collateral.

• The lender reviews the past financial statements of a business to analyze its cash flow.


Credit History • When a small business requests a loan, one of the first things a lender looks at is personal and business credit history.

• So before you even start the process of preparing a loan request, you want to make sure your credit is good.


Collateral • When a financial institution gives a loan, it wants to make sure it will

get its money back. • That’s why a lender usually requires a second source of repayment,

called collateral—personal and business assets that can be sold in case the cash generated by the small business isn’t sufficient to repay the loan.

• Every loan program requires at least some collateral.


Steps To funding Your Business

1. Write A Business Plan2. Determine Funding Need3. Research Available Funding Options4. Setup Initial Meeting To Discuss5. Complete Loan Application Process


SUMMARY• Know what you want the money for• Make sure you can pay it back• Get the right type of money for your business

• Have the right documents• And yes…Have a plan!