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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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Advice from CPAs

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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

A standard bank loan

Types of Financing


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


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


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


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


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


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


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


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


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


Executive summary

Explanation and operation of business

Description and qualifications of management

Financial data

Miscellaneous attachments for details

An Effective Business Plan


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


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


Thank you and good luck!


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