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Score Workshops

Score Workshops. Live your dream. Score can help. Financing Your Business. V2.3-1. Score Local Chapter 116 www.score-suncoast.org 941-955-1029. Score National Headquarters www.score.org 1-800-634-0245. Special Thanks To Our Bank Sponsors . 4 Manasota SCORE Workshops. Visual #1.

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Score Workshops

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  1. Score Workshops Live your dream. Score can help. Financing Your Business V2.3-1 Score Local Chapter 116 www.score-suncoast.org 941-955-1029 Score National Headquarters www.score.org 1-800-634-0245

  2. Special Thanks To Our Bank Sponsors

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

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

  5. 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”

  6. 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

  7. 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”

  8. 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

  9. 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 yourBusiness Plan?

  10. Business Plan Outline (Typical) 3 5 7 9 11 13 16 20 24 26 • 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 . . . . . . . . . . . . . . . . . .

  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. Personal Equity • 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 • Peer to Peer Loans (Prosper.com)

  15. SBA Basic Loans Limited guarantees to qualified lenders Loan Amount Prime Plus Repayment Criteria 4.25% < $25,000 (Express) < 7yrs Character 4.75% < $25,000 (Express) > 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. SBA 504 Loans Limited guarantees to qualified lenders • 504 Loan – Fixed Assets -Land plus new building construction - Renovate existing buildings - 10% Down - 40% CDC 100% SBA guarantee & 2nd lien - 50% Bank Loan secured with first lien - up to 20 year repayment • $ Limited to jobs created

  17. Grants • Very Very Limited Availability! • Most provided for research - Institutions of Higher Learning • Sources for Grants: Grants.gov Gulf Coast Community Foundation (941) 486-4600 Angel Capital – startups in FL (941) 544-2686 Venture Capital – Brokerage Firm • Disabled Veterans

  18. Other Sources BusinessFundingResource.com Venture Capital Lenders in Area 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 • Comerica - Andrew Reeves (951-7333) • Bank of America - Leslie Woodard (952-2791) • Regions Bank - John Stump (329-4236) • Bank of Venice - Mark Wilcox (485-3699) • Community Bank • John Hanlon (756-0099) • Horizon Bank - Jeff Chapin (753-2265) • Fifth Third Bank - Chris Perkins (343-2077)

  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. 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 3.00% - Operating Costs 2.00% • PROFIT 1.50% • 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 • To find the office nearest you, call • SCORE toll-free at 1-800/634-0245, • or visit www.score.org and click • on “Find SCORE.” Other Workshops • Business Planning • Marketing & Sales • Starting or Buying a New Business Live Your Dream. SCORE Can Help.

  30. Small Business Start-up and Management Guide Lots of valuable information for only $15 Score Workshops Live your dream. Score can help. Score Workshops • Starting/Buying New Business • Building Your Business Plan • Financing Your Business • Marketing & Sales Visit www.score-suncoast.org For dates & location

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