How to access to capitol

How to Access to Capitol

3/20/2014 A Zeller-Nield

“What we’ve got here is a failure to communicate!” Cool Hand Luke

Though beaten, Luke refuses to stay down!


http://www.youtube.com/watch?v=1fuDDqU6n4o

You Speak Different Languages!The Entrepreneur• Risk Taker• Looks to the Future• Numbers = Sales &

Market Share• Product and Sales

Oriented

The Lender• Risk Averse• Looks to the Past• Numbers = Balance

Sheet and P&L• Performance to

Standards3/20/2014 A Zeller-Nield

Don’t Forget the Golden Rule

“He who has the GOLD

makes the RULES!”


Needs $3 million Needs $30,000

Banks like to make $3 million loans a lot more than $30,000 loans!

It takes the same amount of time & paperwork to underwrite both of these loans!


10,000,000 US small businesses seek funding each year.

Nat 2011 Small Business Finance Poll (survey)

White House Small Business Agenda, National Small Business Association – business less than $3 million in revenue

Success Rate of Small Business Owners’ Financing Search


Debt vs Equity Financing

DEBT• A loan• You are charged fees

& interest

EQUITY• A piece of your

business• Purchase or

investment in success of your business


What Are Your Choices?PERSONAL ASSETS• Savings• Mom & Dad, other family• Friends Please!

• Credit Cards• Home Equity Loans


What Are Your Choices?MICROLOANS ($500 TO $35,000)• Cal Coastal Rural Development• City/County CDBG programs• El Pajaro Community Development Corp.• Some Banks & Credit Unions• SBA preferred lenders• Credit Cards• Home Equity Loans


What Are Your Choices?SBA Loan Programs SnapshotRemember – SBA is not a direct lender.

SBA merely removes some of the risk for your bank/lender.

• Basic 7(a) Loan Guaranty ($2,000 - $5M)• 504 Loan Program ($500K - $10M)• Express (Advantage, Patriot, Export)• Loan Prequalification• Asset-based lending ($250K - $5M)


What Are Your Choices?

•Lines of Credit•State Programs•City/County or other Programs•Savings Accounts•Insurance Policies•Refinancing of Assets•Sale of Assets•Venture Capital•Angel Capital

Other Sources to Consider

• Factoring• Speed up customer

payments• Negotiate terms with

suppliers• Credit Card Advances• Loan Matching Sites like

BoeFly, Lendio• Peer to Peer Lending like

Prosper, LendingClub• Crowdfunding



The Loan Application Process• Get a Duns # - www.dnb.com• Chose your lender• Get Acquainted – present your concept/needs• Prepare a formal written proposal & complete lender’s

application• Discuss with lender – address concerns• Timeline can be instant to months, depends on

complexity of the loan• Lender takes your proposal before loan committee• Decision is made


Parts of a Loan Proposal• Executive Summary• Top Management Profiles• Business Description• Projections• Financial Statements• Purpose – Use of the Loan• Ask for Precise Amount• Repayment Plan


The Seven C’s of Lender Reviews

1. Credit

2. Capacity

3. Capital

4. Collateral

5. Character

6. Conditions

7. Commitment


Terms

• Type/Structure of the loan

• Collateral

• Term of loan (time frame)

• Repayment schedule

• Interest rate


SOURCE AND USESOURCE - Amount You Need

Amount Requested $

Owner's Investment $

TOTAL

USE OF FUNDS

Working Capital $

Equipment & Machinery $

Furniture & Fixtures $

Commercial Real Estate $

Leasehold Improvements $

Debt Restructuring $

TOTAL $


Financial StatementsBALANCE SHEET• How well is the company

managing its financial resources

• Snapshot of financial condition at an instant in time

• Good match of source and uses of funds

• The business report card!

PROFIT & LOSS STATEMENT

• How well the company buys and sells inventory or services to make a profit

• Reports financial results over a period of time

• Match of revenues and expenses


Operating CycleThe length of time, measured in days, cash remains in operations before it returns with a profit.

Days Receivable (A/R)+ Days Inventory (Inv.)- Days Payable (A/P)- Days Accrual (Acc.)= Operating Cycle


Ratios & Liquidity• Liquidity (Current & Quick/Acid Test)• Asset Management• Profitability• Market Value

SBDC Expert – Arturo Contreras


Negotiation

• Power in Negotiation

• The Negotiation Process

• What’s in it for the Lender??



Questions & Answers

Andrea Zeller-NieldCSUMB Small Business Development Center106 Lincoln AvenueSalinas, CA 93901Tel. 831 422-6232Email: [email protected]

Website: www.csumb.edu/sbdc

The UC Merced Regional Small Business Development Centers are funded by the U.S. Small Business

Administration, and center host institutions. All opinions, conclusions or recommendations expressed are those of

the author(s) and do not necessarily reflect the views of the SBA or the UC Merced Regional SBDC Network.


Please complete your workshop evaluation before you go!

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