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Securing Your Business Financing. Advice from CPAs. Bank loans are the most common source of financial support Explore alternative funding options Your CPA can help!. Lending 101. Debt Financing Most straightforward Interest payments and repayments due within a specific time

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Presentation Transcript
slide1

Securing Your

Business

Financing

Advice from CPAs

lending 101
Bank loans are the most common

source of financial support

Explore alternative funding options

Your CPA can help!

Lending 101
types of financing
Debt Financing

Most straightforward

Interest payments and repayments

due within a specific time

A standard bank loan

Types of Financing
types of financing1
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

Types of Financing
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?

Financing Options
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

Key Sources of Funding
key sources of funding1
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

Key Sources of Funding
key sources of funding2
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

Key Sources of Funding
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

A Brief Overview of Equity Financing
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

Two Rules of Thumb
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

Questions and Answers
questions and answers1
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

Questions and Answers
an effective business plan
Executive summary

Explanation and operation of business

Description and qualifications of management

Financial data

Miscellaneous attachments for details

An Effective Business Plan
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

A Few More Tips
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

Review
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