What are My Financing Options?

Transcription

1 Financing Your Business in Today s Economy Erica L. King, Presenter Finance Counselor 8 S. Michigan Suite 400 p (312) f (312) wbdc@wbdc.org What are My Financing Options? Debt Financing Equity Financing Account Receivables /Inventory Financing or FACTORING PO Financing Leasing Debt Financing Direct obligation to pay back Repaid with interest Frequent and periodic payments You retain ownership of your business

2 What is the Lender Looking For? Sufficient Cash Flow to repay the loan Collateral sufficient to secure the loan Capital to inject towards the project Character of the borrower Conditions of the Industry in which you plan to operate Equity Financing Investors buy part of your company by providing capital that your business requires Money not need to be repaid with periodic payments. Relinquish some control of the business What an Investor Wants? High growth companies with potential for high returns Ownership in the business Easily identifiable EXIT Strategy New product inventions or innovative changes to existing products Savvy Owners Investments starting ~$500K and up

3 Factoring Companies Purchase your accounts receivable and collect on the debts owed. Provide working capital funds based on the value of your receivables Short term financing Purchase Order Financing Companies Work in conjunction with factoring of receivables. Provide upfront production, manufacturing, or distribution costs based on executed contracts. Retains ownerships of goods while in production and/or in transit. Leasing Company rents various types of equipment to businesses. Initial deposit towards lease may be required Leasing company retains ownership of equipment

4 SBA Loan Programs -SBA 7(a) Guaranty Loan Program 1. Loan approved by SBA approved bank 2. Submitted to SBA for secondary approval 3. SBA agrees to guaranty portion of bank s losses Benefits of SBA Guaranty Programs Enhances your loan request Provides incentives to the bank to lend to your small business SBA Participation Programs Loan Programs (Building Acquisition and/or Improvements,Equipment Purchase, Business Purchase) 1 Loan approved by SBA approved bank 1. Loan approved by SBA approved bank 2. Application submitted to SBA for approval 3. Bank funds loan 4. SBA s CDC raises bonds to repay up to 40% of the bank loan

5 Benefits of a SBA Loan Participation Programs Reduces Borrower s required equity contribution. Can be as little as 10% of project. Reduces exposure to bank. Access to long-term fixed financing Lower blended loan rates WBDC Mission Statement The mission of the Women s Business Development Center is to provide services and programs that support and accelerate women s business ownership and strengthen their impact on the economy. Why is the WBDC here? WBDC helps to address issues facing women business owners: Entrepreneurial Training Services Entrepreneurial Training Services Access to markets Access to capital Access to information & resources Access to advocacy to affect change

6 Financial Assistance Debt and equity Training & counseling Financial Analysis Loan Packaging Review of business plans/investor presentations Linking to resources Entrepreneurial Training Services Start-Up Businesses Established Businesses 1. Workshops 2. Bridge Counseling 3. Individualized Business Counseling Special Initiatives & Programs Child Care Business Initiative Retail/Franchise Initiative L ti B i I iti ti Latina Business Initiative Asian Women s Business Initiative

7 Certification as a WBE Women s Business Entrepreneur Valuable if you want to work with government entities and corporations Takes 3 to 6 months for document reviews Fee based Really helps get your business in order! Can recertify every year. Access to Markets Corporations Meet the Buyer Meetings Annual Women s Business & Buyer s Mart Online matching Public Agencies WBE Certification PTAC Services Automatic bid matching services Assistance with certification Direction in locating contracting information Review of bid package prior to submittal.

8 Resources & Information Client Referrals Websites Newsletters Networks Conferences Upcoming WBDC Events Child Care Expo May 16, a.m. to 4 p. m. Location: Chicago Hilton and Towers Who s there: Vendors, Speakers Child Care Providers

9 Entrepreneurial Woman s Conference 23 rd Annual Entrepreneurial Woman s Conference and Women s Business & Buyers Mart Wednesday, September 16 and Thursday, September 17, 2009, at Chicago s Navy Pier. Over 200 public and private sector entities looking to buy goods and services from women business owners Upcoming Events Launch Pad: Telling it like it is! Small Business Panel Wed. 3/11, 8:30 a.m. Introduction to WBDC Services 3/12 5:45 p.m. Jump Start Series 3/18, 12:30 & 19, 5:45 Economic Forum 3/20 Raising Funds: Friends & Family 3/24 9 a.m. WBDC 8 South Michigan Ave., 4 th Floor Chicago, IL