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Securing Your Business Financing

Securing Your Business Financing. Lending 101. Bank loans are the most common source of financial support Explore Alternative funding options Your CPA can help!. Types of Financing. Debt financing Equity financing. Debt Financing. Most straightforward

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Securing Your Business Financing

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  1. Securing Your Business Financing

  2. Lending 101 Bank loans are the most common source of financial support Explore Alternative funding options Your CPA can help!

  3. Types of Financing Debt financing Equity financing

  4. Debt Financing Most straightforward Interest payments and repayments due within a specific time A standard bank loan

  5. 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

  6. Financing Options Ask Yourself: • 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?

  7. 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

  8. Key Sources of Funding (Continued) Customer of Supplier: • Provides discounts for up-front payments • Generates cash for your business Factoring or Accounts Receivable • Immediate funding • Factoring agreement can be complicated

  9. Key Sources of Funding (Continued) 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

  10. A Brief Overview of Equity 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

  11. 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

  12. 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

  13. More 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

  14. Elements of an Effective Business Plan Executive summary Explanation and operation of business Description and qualifications management Financial data Miscellaneous attachments for details

  15. 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

  16. 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

  17. Thank you!

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