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
Advice from CPAs
Bank loans are the most common
source of financial support
Explore alternative funding options
Your CPA can help!
Interest payments and repayments
due within a specific time
A standard bank loan
Raise capital by selling interest to investors
No guaranteed return
Investors share in company’s wealth
May also insist on sharing management and control
Which financing option is best for you?
Do you want total control of your business?
Do you want to leave a legacy?
Eventually, do you want to sell your business?
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
Customer or Supplier
Provides discounts for up-front payments
Generates cash for your business
Factoring or Accounts Receivable
Factoring agreement can be complicated
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
Initial Public Offering (IPO)
Common route for selling stock
Less complex because investors are pre-selected
“Angels” take an equity stake in your company
Your company MUST be seen as a good risk:
Have a business plan
Your CPA can help you identify your goals
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
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
Explanation and operation of business
Description and qualifications of management
Miscellaneous attachments for details
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
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
Thank you and good luck!