Short Term Loans and Lines of Credit

Size: px
Start display at page:

Download "Short Term Loans and Lines of Credit"

Transcription

1 Short Term Loans and Lines of Credit Disadvantaged Business Enterprise (DBE) Supportive Services Program The contents of this training course reflect the views of the author who is responsible for the facts and accuracy of the data presented herein. The contents do not necessarily reflect the official views or policies of the State of California or the Federal Highway Administration. This course outline does not constitute a standard, specification, or regulation.

2 Business Credit What is Business Credit Financial Instruments Exchange Transactions Promise to repay at some later date Leveraging Business Credit Establish and maintain good credit history. 2

3 Business Credit Leveraging Business Credit Companies, banks and other lenders may examine your business credit to determine your creditworthiness Once vendors or lenders do extend you credit, it s critical that your payments are prompt. Vendor payment reports are one of the best ways a business can improve its credit history. 3

4 Preparation Obtain and Review Personal and Business Credit Reports and correct any errors on it There are three credit reporting agencies: Experian, TransUnion and Equifax. Check all three A copy of your credit report is available from all three credit reporting agencies at no charge, once per year, per individual at 4

5 Preparation Business Licenses & permits: Depending on your city and state, you may be required to have certain business licenses and permits. Opening a business checking account is an important first step toward separating your personal credit from your business credit profile. Look for lower minimum balance requirements and lower transaction costs when evaluating a business checking account agreement. 5

6 Preparation Once you have established a credit rating for your business, you must also monitor it for accuracy. Check your credit report quarterly to ensure that it contains no errors. If you find there are errors or discrepancies on your credit report(s), contact the credit reporting agency/agencies directly about resolving the issue(s) 6

7 Preparation It is strongly recommended that you stay current on all personal accounts (i.e; no late payments, collections, tax liens) prior to approaching a lender. 7

8 Financial Documents Getting Organized Tax Returns: A lender will ask for 1-3 years of personal and, if applicable, business, federal tax returns. Tax returns are the key determinant of an entrepreneur s and/or business historical financial position, assets, liabilities, and profitability. 8

9 Financial Documents Getting Organized Prior bank statements, personal and business (if applicable), will provide a history of how monthly cash flow is managed. 9

10 Financial Documents Getting Organized Year-to-date financial statements, or interim financials, will provide information on business performance at any given time. They will typically be requested to measure the performance of a company before the end of its fiscal (or tax) year. It is important for all businesses to keep up-todate and accurate financial records especially when applying for a business loan. 10

11 Financial Documents Getting Organized Plan your startup company by writing a business plan, or at minimum, a strong executive summary. Existing businesses can write a strategic plan, revise their existing business plan or, executive summary. 11

12 Lenders Conventional Lenders Conventional lenders typically have stricter lending criteria where collateral and an above-average credit scores are required. They offer a diverse selection of credit-score driven products. Banks are primary examples of conventional lenders. Typically, less documentation is required and decision time on a loan request can be much shorter than for an alternative lender. 12

13 Lenders Entrepreneurs seeking financing for their startup or existing businesses should visit their local bank first. Banks offer a diverse range of financing products and ancillary services. They also have strong referral networks which include a listing of alternative lenders (including community lenders) within the area. Above average credit scores required 13

14 Lenders Alternative Lenders Alternative lenders are non-banking institutions. They include for-profit companies such as venture capitalists that provide advances to businesses based on future sales, invoices, contracts, receipts, and non-profit community lenders and microlenders that provide non-traditional financing, loans and/or grants. 14

15 Lenders Alternative Lenders Alternative lenders have more flexible lending criteria than conventional lenders (e.g., banks). For example, collateral may not be required, or credit scores may not matter as much as the overall credit history. Many are not-for-profit institutions that lend limited dollar amounts to businesses operating within their region. 15

16 Lenders The application process can be more document-intensive than a bank, and the turnaround time on a loan decision may be longer. Applicants have to show that with the infusion of loans and grants, their business will remain at the break-even point or become more economically successful. Borrowers Must Be Thoroughly Organized and Prepared. 16

17 Evaluating Loan Applicants 4 C s of Credit Capacity: are you able to repay the loan? Capital: what are you worth? Conditions: what external factors impact your business, and how? Character: will you repay the loan? 17

18 Evaluating Loan Applicants Working Capital Working capital is equal to current assets. Net Working Capital equals current assets less current liabilities The liquidity of current assets affects the terms and availability of short term credit The most liquid assets are cash, money market funds and account receivables 18

19 Evaluating Loan Applicants Other Factors Considered Judgments against your company Owner s investment in the business Direct or related experience in the industry of the business you plan to launch is highly recommended. This criterion holds most true for start-up businesses. Most alternative lenders will require industry experience before applying for a loan if the business is a start-up. 19

20 Evaluating Loan Applicants Use of loan proceeds. Provides details on how the loan money will be spent. It is recommended the start-up or expansion costs be known first to determine the amount the entrepreneur will be able to financially contribute and how much will need to be financed. 20

21 Evaluating Loan Applicants Short term creditors are ultimately concerned with a borrower s ability to pay its bills as they become due and therefore want to be assured that the business is liquid. Liquidity is a firm s ability to meet its maturing short-term (debt to be paid within one year) obligations. Poor liquidity may lead to higher cost of financing (credit risk) and inabilitiy to pay current obligations as they become due. 21

22 Business Credit Cards General Requirements Although some major credit card companies require that companies be in business for onetwo years before extending credit, shop around and see if you meet the requirements for any business credit card. When you meet with the bank manager who specializes in small business credit cards, explain that you have been working to improve your business credit rating. 22

23 Business Credit Cards Many credit card companies require a Social Security Number to establish a business card. However, you may be able to work around this or use your Employer Identification Number (EIN) instead when applying for a business credit card. If you have established a good business credit history and the bank is friendly to small businesses, you are more likely to be successful in your endeavors. 23

24 Business Credit Cards Advantages of Business Credit Cards One of the advantages of business credit is that it is not negatively affected by adding more credit accounts. If you have the need and ability to maintain, consider opening a second business credit card account. Also different from personal credit, a business s PAYDEX score is not lowered when merchants check your business credit history or when you open more business credit accounts. 24

25 Business Credit Cards In business, a company s credit record is not considered established and solid by many, until it has at least five trade accounts, at least three credit cards, and at least two small loans fully paid off. 25

26 Business Credit Cards Choosing a Business Credit Card Look at your needs, choose a card that s right for you and learn the best way to use it. A fixed 0% introductory APR rate makes entertaining client, scheduling travel arrangements and buying office supplies even easier. Reward points. Annual fees 26

27 Business Credit Cards Credit Limits Do not get hung up on your business credit limit. Once you start using the cards regularly and paying for your purchases monthly, your limits should increase. After your company has been around for two years, you ll be able to more easily apply for a major business credit card. Having business cards and developing excellent habits to manage them, such as timely payments, can positively impact your company s business credit rating. 27

28 Business Credit Cards Do not get hung up on your business credit limit. Once you start using the cards regularly and paying for your purchases monthly, your limits should increase. After your company has been around for two years, you ll be able to more easily apply for a major business credit card. Having business cards and developing excellent habits to manage them, such as timely payments, can positively impact your company s business credit rating. 28

29 Business Loans Overview Principle (loan amount) usually $25K and up. Interest (prime +credit risk) Repayment Terms 90 days or longer Loan Fees (% of amount borrowed) are typically range between.05 5% Guarantees of Key Owner Must have a legitimate business purpose in order to secure the loan. In Business for at least two years. 29

30 Business Loans Types of Loans Available Secured Loans Secured by either personal or business assets such as inventory and A/R. Unsecured Loans Uncollateralized loans. Requires excellent business and personal credit ratings. Typically carry higher interest rates than secured type loans. Installment Loans- Fixed monthly payments of principal and interest. Tailored to meet seasonal working capital needs. Sample Bank Loan Request (see handout) 30

31 Business Loans Commercial Finance Loans - When credit is unavailable from a bank, the company may have to go to a commercial finance company, which typically charges a higher interest rate than the bank and requires collateral. Typically, the value of the collateral is greater than the balance of the loan and may consist of accounts receivable, inventories, and fixed assets. Commercial finance companies also finance the installment purchases of industrial equipment. 31

32 Business Loans Lines of Credit (Revolving) Under a revolving line of credit, the bank agrees to lend money up to a specified amount on a recurring basis. The bank typically charges a commitment fee on the amount of the unused credit line. Credit lines are typically established for a one-year period and may be renewed annually. 32

33 Business Loans The bank typically charges a commitment fee on the amount of the unused credit line. Credit lines are typically established for a one-year period and may be renewed annually. You can determine if the preferred line of credit is adequate for your company's present and immediate future needs by considering the current and expected cash requirements of the business. 33

34 Business Loans You should use a line of credit if the company is working on large individual projects for a long time period and will obtain minimal or no payments until the job is completed. The disadvantages of lines of credit relate to the collateral requirements and the additional financial information that must be presented to the bank. 34

35 Business Loans The advantages of a line of credit are that it offers easy and immediate access to funds during tight money market conditions and it enables the company to borrow only as much as it needs and to repay immediately when cash is available. Banks also may place restrictions on the company, such as setting a ceiling on capital expenditures or requiring a minimum level of working capital. 35

36 Business Loans When the company borrows under a line of credit, it may be required to maintain a compensating balance (a noninterest-bearing account) with the bank. The compensating balance is stated as a percentage of the loan and effectively increases the cost of the loan. A compensating balance may also be placed on the unused portion of a line of credit, in which case the interest rate is reduced. 36

37 Business Loans Use lines of credit to provide seasonal working capital, purchase inventory, finance receivables, take advantage of trade discounts and manage cash flows. 37

38 Business Loans SBA Loans The Small Business Administration (SBA) has created a program of governmentguaranteed loans designed to help give small businesses that may not otherwise qualify for credit get the funds they need. SBA loans make it possible to qualify businesses more easily and provide them with more flexible terms than conventional loan options, letting you preserve working capital for other expenses. 38

39 Business Loans Qualifying for an SBA loan is easier than qualifying for other loans. First, the SBA allows higher loan-to-value ratios. Depending on your loan request, you may be able to borrow up to 100% of your financing needs. SBA loans can help growing businesses purchase or renovate real estate, acquire fixed assets such as heavy machinery or specialized equipment, or supply working capital for ongoing financing needs. 39

40 Business Loans SBA s microloan program provides loans of up to $50K to help small businesses. SBA loans are for businesses that are owneroperated; for profit; organized as a sole proprietorship, corporation or professional partnership; within the size guidelines designated by the SBA; unable to secure other credit under reasonable terms. 40

41 Business Loans SBA Express / Patriot loans available for amounts up to $350,000; available as a line of credit or term loan; designed to provide easy access to working capital and fund equipment purchases; loans in excess of $100, 000 secured by business or personal assets; fixed or variable rates not to exceed 6.5% over prime rate; maximum term of 7 years; fully and partially amortizing payment options; SBA fee doe apply to all loans. 41

42 Business Loans Conclusion Discuss your loan package with your bank representative to ensure it s complete before submitting it Federal Reserve Bank of New York Small Business Borrowers Poll found that 63% of loan applicants in 2011 were able to get at least part of the credit they sought. 42

43 Letters of Credit General A Letter of Credit is a letter from a commercial bank guaranteeing that a buyer s payment to a seller will be received on time and for the correct amount. Letters of credit make it possible to reduce risk (of non-payment) when you buy and sell around the world. To pay on a line of credit, banks only verify that shipper (seller) has performed in accordance the trade agreement. 43

44 Letters of Credit Sample Letter See Handout 44

45 Business Leasing Operating Lease Operating Lease Month to month - The company leases property that is owned by the lessor, who may be the manufacturer of the asset or a leasing company that buys assets from the manufacturer to lease to others. The lease payments under the contract are typically not adequate to recover the full cost of the property. Operating leases usually contain a cancellation clause that allows the lessee to return the property prior to the expiration date of the agreement. The life of the contract is less than the economic life of the property. 45

46 Business Leasing No liability is recorded on the books of the lessee at the commencement of the lease agreement term. Capital lease This type of lease usually does not provide for maintenance services. It is non-cancellable, and the present value of future rental payments equals to purchase price of the equipment leased. The life of the contract approximates the life of the property. 46

47 Business Leasing True Tax Lease Get 100% financing for new and used equipment, including some soft costs, plus low monthly payment terms, and postpone your decision to purchase the equipment until the end of the lease. 47

48 Business Leasing TRAC Lease (Terminated Rental - Adjustment Clause) A lease for new and used commercial trucks, tractors, vans and trailers that let you borrow the entire purchase price, including some soft costs, and get lower monthly payments with a guaranteed purchase option at the end of the term. 48

49 Business Leasing Advantages of Leasing No immediate cash outlay is required. Business leases let you finance the entire purchase price, including up 20% for soft costs of business equipment or commercial vehicles. Leases require little or no down payment, so you keep more of your own money while still ensuring your business has the equipment it needs to operate. 49

50 Business Leasing You can take advantage of low monthly payments and several end-of-term purchase options that give you the flexibility you need to make the right financing decision. Leasing is a satisfactory way to meet temporary equipment needs and provides flexibility in operations Usually there is a purchase option that allows the company to obtain the property at a bargain price at the expiration of the lease. This allows the flexibility to make a purchase decision based on the value of the property at the termination date. 50

51 Business Leasing The lessor's expert service is available. Leasing typically imposes fewer financing restrictions than are imposed by lenders. The company's obligation for future rental payment need not be reported on the balance sheet if the lease is considered an operating lease. However, capital leases must be stated in financial statements. Leasing eliminates equipment disposal costs. Leases may be available as a line of credit. 51

52 Business Leasing Disadvantages of Leasing Higher costs in the long run than purchasing the asset; the lessee does not build equity. The interest cost of leasing is typically higher than the interest cost on debt. If the property reverts to the lessor at termination of the lease, the lessee must either sign a new lease or buy the property at higher current prices. Also, the salvage value of the property is realized by the lessor. The lessee cannot make improvements to the leased property without the permission of the lessor. 52

53 Account Receivable Financing Using Receivables for Financing A/R serve as security for the loan as well as the source of repayment. Receivables are at least $25,000 Sales are at least $250,000 Individual receivables are at least $100. Customers are financially strong 53

54 Account Receivable Financing Factoring of A/R involve the sale of accounts receivable to a bank or finance company without recourse. The finance company assumes all credit and collection risks Remissions by customers are made directly to the factor Cost of factoring (Commission) 54

55 Account Receivable Financing Advantages of Factoring Advantages of factoring are that it offers immediate cash, reduces overhead because the credit management process is performed by the factor, and it strengthens the company s balance sheet. 55

56 Account Receivable Financing Disadvantages of Factoring Disadvantages of factoring include both the high cost and negative impression left with customers as a result of the change in ownership of the receivables factored. 56

57 Account Receivable Financing Assignment of Receivables In an Assignment (pledging) arrangement, ownership of the accounts receivable is not transferred. Instead, receivables are given to a finance company with recourse. 57

58 Account Receivable Financing The finance company usually advances between 50 and 85% percent of the face value of the receivables in cash; your company pays a service charge and interest on the amount(s) advanced and any resulting bad debt losses and continues to collect customer remissions. 58

59 Account Receivable Financing Advantages to Assignment of A/R The assignment of A/R has the advantaged of providing immediate cash, making advances available on a seasonal basis, and avoiding negative customer feelings. 59

60 Account Receivable Financing Disadvantages to Assignment of A/R Disadvantages include the high cost, managing the A/R collection process and the bearing of all credit risk. 60

61 Inventory Financing Using Inventory for Financing Typically takes place when the company has completely used its borrowing capacity on receivables. Requires marketable, nonperishable, and standardized goods that have quick turnover and are not subject to rapid obsolesence. 61

62 Inventory Financing Amount financed is about 75% of value of raw materials and finished goods. The drawbacks of inventory financing include the high interest rate and restrictions place on inventory. 62

Ipx!up!hfu!uif Dsfeju!zpv!Eftfswf

Ipx!up!hfu!uif Dsfeju!zpv!Eftfswf Ipx!up!hfu!uif Dsfeju!zpv!Eftfswf Credit is the lifeblood of South Louisiana business, especially for the smaller firm. It helps the small business owner get started, obtain equipment, build inventory,

More information

Solutions Made Simple

Solutions Made Simple Alternative Financing 1 Solutions Made Simple Unlocking The Alternatives March 3, 2011 Presented By: 2 Karlene Sinclair-Robinson Author / Entrepreneur / Speaker / Business Consultant Tel: 703-372-3248

More information

SMALL BUSINESS DEVELOPMENT CENTER RM. 032

SMALL BUSINESS DEVELOPMENT CENTER RM. 032 SMALL BUSINESS DEVELOPMENT CENTER RM. 032 FINANCING THROUGH COMMERCIAL BANKS Revised January, 2013 Adapted from: National Federation of Independent Business report Steps to Small Business Financing Jeffrey

More information

SCORE. Counselors to America s Small Business SMALL BUSINESS START-UP FINANCING OVERVIEW

SCORE. Counselors to America s Small Business SMALL BUSINESS START-UP FINANCING OVERVIEW SCORE Counselors to America s Small Business SMALL BUSINESS START-UP FINANCING OVERVIEW One key to a successful business start-up and expansion is your ability to obtain and secure appropriate financing.

More information

How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute

How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute Other free books by BizMove that may interest you: Free starting a business books Free management skills

More information

3. Seasonal or cyclical working capital to finance the temporary cash shortfalls due to the nature of the firm s normal business cycle.

3. Seasonal or cyclical working capital to finance the temporary cash shortfalls due to the nature of the firm s normal business cycle. 11.437 Financing Community Economic Development Class 5: Working Capital Financing I. Three different meanings of term working capital 1. Excess of current assets over current liabilities 2. Firm's investment

More information

Chapter16. Managing Short-Term Liabilities (Financing)

Chapter16. Managing Short-Term Liabilities (Financing) Chapter16 Managing Short-Term Liabilities (Financing) 1 Learning Outcomes Chapter 16 Describe the characteristics of the various sources of short-term credit, including Accruals trade credit bank loans

More information

How to Finance Export Receivables. By Michael D. Farstad Export Finance Lender

How to Finance Export Receivables. By Michael D. Farstad Export Finance Lender How to Finance Export Receivables By Michael D. Farstad Export Finance Lender Table of Contents New Products Working Capital Supply Chain Finance Guarantee Program Global Credit Express Loan Guarantee

More information

Borrowing Money for Your Business

Borrowing Money for Your Business Borrowing Money for Your Business After you have developed a cash flow analysis and determined when your business will make profit, you may decide you need additional funding. Borrowing money is one of

More information

Understanding Financial Statements. For Your Business

Understanding Financial Statements. For Your Business Understanding Financial Statements For Your Business Disclaimer The information provided is for informational purposes only, does not constitute legal advice or create an attorney-client relationship,

More information

FINANCING 101234 567890 123456

FINANCING 101234 567890 123456 FINANCING 101234 567890 123456 FINANCING 101 With a typical Hyundai Finance lease, you re covered for normal wear and use without having to pay additional charges at the end of the term. And while it s

More information

Financial. Management FOR A SMALL BUSINESS

Financial. Management FOR A SMALL BUSINESS Financial Management FOR A SMALL BUSINESS 1 Agenda Welcome, Pre-Test, Agenda, and Learning Objectives Benefits of Financial Management Budgeting Bookkeeping Financial Statements Business Financing Key

More information

Using Credit to Your Advantage

Using Credit to Your Advantage Hands on Banking Using Credit to Your Advantage Credit Reports, Credit Scores and Dealing with Debt The Hands on Banking program is a free public service provided by Wells Fargo. You may also access the

More information

5.3.2015 г. OC = AAI + ACP

5.3.2015 г. OC = AAI + ACP D. Dimov Working capital (or short-term financial) management is the management of current assets and current liabilities: Current assets include inventory, accounts receivable, marketable securities,

More information

Equipment Leasing Terms

Equipment Leasing Terms Equipment Leasing Terms This Glossary of Equipment Leasing Terms will help you understand the "Leasing Language" so when you are ready to acquire equipment you can make an educated decision. Accelerated

More information

Preparing Agricultural Financial Statements

Preparing Agricultural Financial Statements Preparing Agricultural Financial Statements Thoroughly understanding your business financial performance is critical for success in today s increasingly competitive agricultural environment. Accurate records

More information

Overview of Financial Solutions

Overview of Financial Solutions Overview of Financial Solutions The Etra Advisory Group provides solutions to businesses for growth, expansion, cash flow, refinance and acquisition. We cover the world of business financing that banks

More information

WHAT IS BUSINESS CREDIT?

WHAT IS BUSINESS CREDIT? 1 WHAT IS BUSINESS CREDIT? Why Do I Need Credit? Establishing a good credit rating is an important financial priority for every business. Having good business credit means that owners of businesses can

More information

Small Business Administration

Small Business Administration Financing the SBA Way Wayne Bell District Director Wichita District Office June 6, 2012 1 Agency History SBA What it is Federal Agency Created in 1953 Purpose To help potential and current small business

More information

Business Financing. An Article by Michael L. Messer and Thomas L. Hofstetter SCHENCK, PRICE, SMITH & KING, LLP

Business Financing. An Article by Michael L. Messer and Thomas L. Hofstetter SCHENCK, PRICE, SMITH & KING, LLP Business Financing An Article by Michael L. Messer and Thomas L. Hofstetter SCHENCK, PRICE, SMITH & KING, LLP Even in these challenging economic times, businesses still have a need to grow and to obtain

More information

Financial Management for a Small Business

Financial Management for a Small Business Table of Contents Welcome... 3 What Do You Know? Financial Management for a Small Business... 4 Pre-Test... 5 Benefits of Financial Management... 7 Budgeting... 7 Discussion Point #1: Budgeting... 7 Bookkeeping...

More information

RENAISSANCE ENTREPRENEURSHIP CENTER First Finance Class (FIN-1)

RENAISSANCE ENTREPRENEURSHIP CENTER First Finance Class (FIN-1) Finance 1 (FIN-1) RENAISSANCE ENTREPRENEURSHIP CENTER (FIN-1) Learning Outcomes At the conclusion of this class, you should: Know what will be covered in the six finance class sessions. Have reviewed some

More information

SMALL BUSINESS LOAN GUIDE JANUARY 2014. A guide to help small business owners navigate the loan application process

SMALL BUSINESS LOAN GUIDE JANUARY 2014. A guide to help small business owners navigate the loan application process JANUARY 2014 A guide to help small business owners navigate the loan application process TABLE OF CONTENTS Contents WHY THIS GUIDE? 1 EQUITY INVESTMENT 2 CASH FLOW PROJECTIONS 4 WORKING CAPITAL 6 COLLATERAL

More information

Commercial Credit Report Pro Guide

Commercial Credit Report Pro Guide Page 1 Reading the Commercial Credit Report Pro Get up to double the business credit information with our Advantage series reports including data from Experian, Dun & Bradstreet and Equifax. Too many times

More information

AFM 391 Case Concepts

AFM 391 Case Concepts AFM 391 Case Concepts a. Why do companies lease assets rather than buy them? 1. 100% financing at fixed rates. Leases are often signed without requiring any money down from the lessee, which helps to conserve

More information

Business Start-Up Basics II

Business Start-Up Basics II Business Start-Up Basics II P R E B U S I N E S S P L A N P R E P A R A T I O N Presented by: SBDC Business Advisors Lisa Hutson Ana Badillo Susan Patton Agenda 1. Determine financing needs a. Discuss

More information

The Insider s Guide to Leasing

The Insider s Guide to Leasing The Insider s Guide to Leasing Table of Contents 1 The Power of Leasing 2 The 11 Advantages of Leasing 4 Cash Flow & Credit 6 Upgrading & Adding Equipment 7 Tax & Reporting Advantages 8 The Three Types

More information

CHAPTER 27. Short-Term Financial Planning. Chapter Synopsis

CHAPTER 27. Short-Term Financial Planning. Chapter Synopsis CHAPTER 27 Short-Term Financial Planning Chapter Synopsis 27.1 Forecasting Short-Term Financing Needs The first step in short-term financial planning is to forecast the company s future cash flows. This

More information

The FFCFC 504 Loan Program: A Unique Alternative for Small Business Fixed Asset Financing

The FFCFC 504 Loan Program: A Unique Alternative for Small Business Fixed Asset Financing Commercial Lenders The FFCFC 504 Loan Program: A Unique Alternative for Small Business Fixed Asset Financing The FFCFC 504 Loan Program is designed to help small business owners expand through the purchase

More information

Financial. Management FOR A SMALL BUSINESS

Financial. Management FOR A SMALL BUSINESS Financial Management FOR A SMALL BUSINESS Welcome 1. Agenda 2. Ground Rules 3. Introductions FINANCIAL MANAGEMENT 2 Objectives Explain the concept of financial management and its importance to a small

More information

Getting a loan to Start your Business What do you need? What does a lender look for?

Getting a loan to Start your Business What do you need? What does a lender look for? Getting a loan to Start your Business What do you need? What does a lender look for? Small Business Lending and Support Program Ø Community Capital New York is the leading not-for-profit small business

More information

Know Before You Borrow. NerdWallet s guide to what you should know before applying for a small-business loan

Know Before You Borrow. NerdWallet s guide to what you should know before applying for a small-business loan Know Before You Borrow NerdWallet s guide to what you should know before applying for a small-business loan Contents 03 Chapter 1 Why do you need a small-business loan? 04 Chapter 2 What types of small-business

More information

UNDERSTANDING WHERE YOU STAND. A Simple Guide to Your Company s Financial Statements

UNDERSTANDING WHERE YOU STAND. A Simple Guide to Your Company s Financial Statements UNDERSTANDING WHERE YOU STAND A Simple Guide to Your Company s Financial Statements Contents INTRODUCTION One statement cannot diagnose your company s financial health. Put several statements together

More information

GrowFL and SunTrust Bank Present: How To Utilize The SBA Loan Programs To Improve Cash Flow And Grow Your Business

GrowFL and SunTrust Bank Present: How To Utilize The SBA Loan Programs To Improve Cash Flow And Grow Your Business GrowFL and SunTrust Bank Present: How To Utilize The SBA Loan Programs To Improve Cash Flow And Grow Your Business GrowFL Webinar Series Date: March 5, 2012 Presented by: Hetal Engineer, SunTrust VP hetal.engineer@suntrust.com

More information

Building and Protecting Business Credit

Building and Protecting Business Credit Building and Protecting Business Credit Responsible credit management is essential to small business success. It can help your business get the money it needs when it needs it and at a good rate. Strong

More information

THE ABC S OF BORROWING

THE ABC S OF BORROWING THE ABC S OF BORROWING All businesses, no matter what size, need to raise money at some time. Small business owners may be able to dip into their personal savings or borrow money from friends. More likely,

More information

Accounts payable Money which you owe to an individual or business for goods or services that have been received but not yet paid for.

Accounts payable Money which you owe to an individual or business for goods or services that have been received but not yet paid for. A Account A record of a business transaction. A contract arrangement, written or unwritten, to purchase and take delivery with payment to be made later as arranged. Accounts payable Money which you owe

More information

You can select the equipment by working with a vendor or a manufacturer, which offers leasing.

You can select the equipment by working with a vendor or a manufacturer, which offers leasing. Why Should I Lease Equipment? As businesses prepare to compete and grow in a new millennium, many are searching for proven new ways to address their equipment financing challenge. The old ways won't meet

More information

So You Want to Borrow Money to Start a Business?

So You Want to Borrow Money to Start a Business? So You Want to Borrow Money to Start a Business? M any small business owners cannot understand why a lending institution would refuse to lend them money. Others have no trouble getting money, but they

More information

Key Points to Borrowing Money

Key Points to Borrowing Money Key Points to Borrowing Money Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn't always easy. Before you approach your banker for a loan, it is

More information

Equipment Leasing Purchasing Guide

Equipment Leasing Purchasing Guide Equipment Leasing Purchasing Guide Introduction to the Equipment Leasing Buying Process What s inside: Trends Terms Leasing Types Choosing a Dealer Equipment leasing has become an increasingly popular

More information

Welcome. 1. Agenda. 2. Ground Rules. 3. Introductions. Loan To Own 2

Welcome. 1. Agenda. 2. Ground Rules. 3. Introductions. Loan To Own 2 Loan To Own Welcome 1. Agenda 2. Ground Rules 3. Introductions Loan To Own 2 Objectives Identify various types of installment loans Identify the factors lenders use to make home loan decisions Identify

More information

Why Should I Lease Equipment? A White Paper from Advanced Office Equipment

Why Should I Lease Equipment? A White Paper from Advanced Office Equipment Why Should I Lease Equipment? A White Paper from Advanced Office Equipment Why Should I Lease Equipment? As businesses learn to compete and grow in a new millennium, many are searching for new ways to

More information

PRESENTS. Top 5 Financing Options for Auto Repair Shop Owners

PRESENTS. Top 5 Financing Options for Auto Repair Shop Owners PRESENTS Top 5 Financing Options for Auto Repair Shop Owners TABLE OF CONTENTS Financing Options for Auto Repair Shop Owners 3 Unsecured Business Loans 4 Equipment Leasing & Financing 5 Business Line of

More information

SSBCI PROGRAM PROFILE: COLLATERAL SUPPORT PROGRAM. May 17, 2011 State Small Business Credit Initiative (SSBCI) U.S. Department of the Treasury

SSBCI PROGRAM PROFILE: COLLATERAL SUPPORT PROGRAM. May 17, 2011 State Small Business Credit Initiative (SSBCI) U.S. Department of the Treasury SSBCI PROGRAM PROFILE: COLLATERAL SUPPORT PROGRAM May 17, 2011 (SSBCI) U.S. Department of the Treasury What is a Collateral Support Program? A Collateral Support Program is designed to enable financing

More information

LOAN APPLICATION. Name of Business (Legal Name): Address: City, State, Zip: Business Phone: Federal Tax ID #:

LOAN APPLICATION. Name of Business (Legal Name): Address: City, State, Zip: Business Phone: Federal Tax ID #: LOAN APPLICATION Name of Business (Legal Name): Business Phone: Federal Tax ID #: Fax: Principals Name: Phone: Social Security #: Type of Business Sole Proprietorship Corporation Partnership Date Established

More information

SOLUTIONS TO END-OF-CHAPTER PROBLEMS. Chapter 17

SOLUTIONS TO END-OF-CHAPTER PROBLEMS. Chapter 17 SOLUTIONS TO END-OF-CHAPTER PROBLEMS Chapter 17 3 360 17-1 Nominal cost of trade credit 97 30-15 0.0309 24 0.7423 74.23%. Effective cost of trade credit (1.0309) 24-1.0 1.0772 107.72%. 17-2 Effective cost

More information

How Bankers Think. Build a sound financial base to support your company for future growth

How Bankers Think. Build a sound financial base to support your company for future growth How Bankers Think Build a sound financial base to support your company for future growth Presented by: Lisa Chapman Business Planning, Social Media Marketing & SEO 615-477-8412 Questions to Consider First

More information

FHA Home Loans 101 An Easy Reference Guide

FHA Home Loans 101 An Easy Reference Guide FHA Home Loans 101 An Easy Reference Guide Updated for loans on or after January 26, 2015 Congratulations on Starting Your Journey to Home Ownership This guide offers a quick look at vital information

More information

SMALL BUSINESS OWNER S HANDBOOK

SMALL BUSINESS OWNER S HANDBOOK SMALL BUSINESS OWNER S HANDBOOK PART II: FINANCIAL PLANNING FOR SMALL BUSINESSES Introduction Financial Planning Methods of Financing Your Business Other Types of Funds & Financing How to Approach Lenders

More information

Finding sources of capital. Secured and unsecured borrowing Selling equity Government programs Frequently overlooked sources

Finding sources of capital. Secured and unsecured borrowing Selling equity Government programs Frequently overlooked sources Finding sources of capital BusineSS Coach series Secured and unsecured borrowing Selling equity Government programs Frequently overlooked sources Business Coach series The fundamentals of finance The situation

More information

SCORER Counselors to America's Small Business. Structuring the Loan Request Types of SBA Loans Available How to Get the Banker to Say Yes

SCORER Counselors to America's Small Business. Structuring the Loan Request Types of SBA Loans Available How to Get the Banker to Say Yes SCORER Counselors to America's Small Business READY TO TALK TO THE BANKER Structuring the Loan Request Types of SBA Loans Available How to Get the Banker to Say Yes The Banker will expect you to provide

More information

NAVIGATING TODAY S CREDIT JUNGLE ALTERNATIVES

NAVIGATING TODAY S CREDIT JUNGLE ALTERNATIVES NAVIGATING TODAY S CREDIT JUNGLE AN OVERVIEW OF SBA FINANCING ALTERNATIVES November, 2011 Timothy D. Dixon Head of Small Business Administration (W) 216-514-5431 timothy.dixon@citizensbanking.com 1 Discussion

More information

CDA BLF LOAN APPLICATION

CDA BLF LOAN APPLICATION CDA BLF LOAN APPLICATION Name of of Business (Legal Name): Address: City, State, Zip: Business Phone // Fax: Federal Tax ID#: Principals Principal 1 Principal 2 Name: Address: City, State, Zip: Phone:

More information

Financing Downtown Businesses

Financing Downtown Businesses Financing Downtown Businesses Presented by: David Kircher 1 Wisconsin Business Development Finance Corporation Certified Development Company Authorized to work with SBA 504 Program Fixed Asset Financing

More information

ALTERNATIVE FINANCING SOURCES FOR YOUR SMALL BUSINESS

ALTERNATIVE FINANCING SOURCES FOR YOUR SMALL BUSINESS 7605B/7601 ALTERNATIVE FINANCING SOURCES FOR YOUR SMALL BUSINESS Revised October 1999 University of Wisconsin System This publication has been developed by the Wisconsin SBDC in partnership with the U.

More information

Federal Reserve Bank of Atlanta. A Guide for Specialized Credit Activities

Federal Reserve Bank of Atlanta. A Guide for Specialized Credit Activities Federal Reserve Bank of Atlanta A Guide for Specialized Credit Activities CONSUMER LENDING According to the Federal Reserve Board of Governors, seasonally adjusted consumer credit outstanding including

More information

Accounts Payable Accounts Receivable Amortization Annual Interest Rate Annual Percentage Rate Attorney Fees Bridge Financing

Accounts Payable Accounts Receivable Amortization Annual Interest Rate Annual Percentage Rate Attorney Fees Bridge Financing Accounts Payable Accounts payable are business debts that must be paid off within a relatively short period of time, as opposed to long term debt such as mortgage loans and equipment loans. Accounts payable

More information

Creating a Successful Financial Plan

Creating a Successful Financial Plan Creating a Successful Financial Plan Basic Financial Reports Balance Sheet - Estimates the firm s worth on a given date; built on the accounting equation: Assets = Liabilities + Owner s Equity Income Statement

More information

Notes. CIMA Paper P1. Performance Operations

Notes. CIMA Paper P1. Performance Operations Chapter 5 extract from our ExPress notes for use with the current video. A full set of P1 ExPress notes can be downloaded free of charge at www.. CIMA Paper P1 Performance Operations For exams in 2011

More information

Plan and Track Your Finances

Plan and Track Your Finances Chapter 9 Plan and Track Your Finances 9.1 Finance Your Business 9.2 Pro Forma Financial Statements 9.3 Record Keeping for Businesses Ideas in Action Electronic Safekeeping Katelin Shea addressed the unmet

More information

OLR RESEARCH REPORT ANALYSIS OF STATE SMALL BUSINESS LOAN GUARANTEE PROGRAMS. By: Michelle Kirby, Associate Analyst

OLR RESEARCH REPORT ANALYSIS OF STATE SMALL BUSINESS LOAN GUARANTEE PROGRAMS. By: Michelle Kirby, Associate Analyst OLR RESEARCH REPORT February 19, 2013 2013-R-0054 ANALYSIS OF STATE SMALL BUSINESS LOAN GUARANTEE PROGRAMS By: Michelle Kirby, Associate Analyst You asked for an analysis of state small business loan guarantee

More information

GROWING. FINANCIAL PARTNERSHIPS Discover the Difference with DLC Expert Financial Loan Programs Provided through EQUIS CAPITAL FINANCE COMMERCIAL

GROWING. FINANCIAL PARTNERSHIPS Discover the Difference with DLC Expert Financial Loan Programs Provided through EQUIS CAPITAL FINANCE COMMERCIAL GROWING FINANCIAL PARTNERSHIPS Discover the Difference with DLC Expert Financial Loan Programs Provided through EQUIS CAPITAL FINANCE COMMERCIAL Acquisition Term Bridge Permanent Short Term Mezzanine Acquisition

More information

VIRGINIA SMALL BUSINESS FINANCING AUTHORITY LOAN GUARANTY PROGRAM. Application Instructions

VIRGINIA SMALL BUSINESS FINANCING AUTHORITY LOAN GUARANTY PROGRAM. Application Instructions VIRGINIA SMALL BUSINESS FINANCING AUTHORITY LOAN GUARANTY PROGRAM Application Instructions GENERAL INFORMATION: The Virginia Small Business Financing Authority's (VSBFA) Loan Guaranty Program is designed

More information

1. Planning - Establishing organizational goals and deciding how to accomplish them

1. Planning - Establishing organizational goals and deciding how to accomplish them 1 : Understanding the Management Process Basic Management Functions 1. Planning - Establishing organizational goals and deciding how to accomplish them SWOT analysis - The identification and evaluation

More information

How should banks account for their investment in other real estate owned (OREO) property?

How should banks account for their investment in other real estate owned (OREO) property? TOPIC 5: OTHER ASSETS 5A. REAL ESTATE Question 1: (December 2008) How should banks account for their investment in other real estate owned (OREO) property? Detailed accounting guidance for OREO is provided

More information

Understanding Vehicle Financing

Understanding Vehicle Financing Understanding Vehicle Financing Understanding Vehicle Financing With prices averaging more than $31,000 for a new vehicle and $17,000 for a used model from a dealership, you might consider financing or

More information

Plan and Track Your Finances

Plan and Track Your Finances Plan and Track Your Finances 9.1 Financing Your Business 9.2 Pro Forma Financial Statements 9.3 Recordkeeping for Businesses Lesson 9.1 Financing Your Business Goals Estimate your startup costs and personal

More information

R a i sing C a pital: H ow To Get M o n e y F o r a Small B u s i n e ss

R a i sing C a pital: H ow To Get M o n e y F o r a Small B u s i n e ss R a i sing C a pital: H ow To Get M o n e y F o r a Small B u s i n e ss In addition to drive, ambition and a great deal of planning, starting and expanding a small business generally requires capital.

More information

GrowFL and SunTrust Bank Present: Business Acquisitions and Partner Buyouts How SBA Loans can be leveraged to help

GrowFL and SunTrust Bank Present: Business Acquisitions and Partner Buyouts How SBA Loans can be leveraged to help GrowFL and SunTrust Bank Present: Business Acquisitions and Partner Buyouts How SBA Loans can be leveraged to help GrowFL Webinar Series Date: September 4, 2012 Presented by: Hetal Engineer, SunTrust VP

More information

SOURCES OF CAPITAL. 1. KINDS OF MONEY When you plan the capital requirements of your new firm, you can consider two forms of money.

SOURCES OF CAPITAL. 1. KINDS OF MONEY When you plan the capital requirements of your new firm, you can consider two forms of money. SOURCES OF CAPITAL New businesses must be capitalized carefully. Entrepreneurs must identify their start-up capital needs and their cash flow through their break-even point. The total of the two, plus

More information

Funding Your Business

Funding Your Business Page 12 County of Bucks Community Services Division Lynn T. Bush, Executive Director and County Chief Clerk Community and Business Development Department Vitor A. Vicente, Director Neshaminy Manor Center

More information

Debt Refinancing Under the 7(a) Program. Lynn G. Ozer Executive Vice President Government Guaranteed Lending

Debt Refinancing Under the 7(a) Program. Lynn G. Ozer Executive Vice President Government Guaranteed Lending Debt Refinancing Under the 7(a) Program Lynn G. Ozer Executive Vice President Government Guaranteed Lending Debt Refinancing SBA-guaranteed loan proceeds may not be used to refinance debt originally used

More information

11.437 Financing Community Economic Development Class 6: Fixed Asset Financing

11.437 Financing Community Economic Development Class 6: Fixed Asset Financing 11.437 Financing Community Economic Development Class 6: Fixed Asset Financing I. Purpose of asset financing Fixed asset financing refers to the financing for real estate and equipment needs of a business.

More information

Financial support at the Speed of Business

Financial support at the Speed of Business Commercial Business and Real Estate Consultants Financial support at the Speed of Business SBA 504 LOAN PROGRAM For smarter Commercial Financing of: Real Estate Buildings Mix use properties Machinery Equipment

More information

Applying for a Business Loan A Cardinal Bank Lender s View. Components of an Application Package

Applying for a Business Loan A Cardinal Bank Lender s View. Components of an Application Package Applying for a Business Loan A Cardinal Bank Lender s View By James N. Estep, AVP, Business Lending Contents Loan Interview Expectations Types of Business Loans Preferred Business Attributes Components

More information

BaltimoreMICRO - Revolving Loan Fund

BaltimoreMICRO - Revolving Loan Fund BaltimoreMICRO - Revolving Loan Fund sbrcbaltimore.com FACT SHEET Description and purpose Administered by the Baltimore Development Corporation (BDC), the purpose BaltimoreMICRO is to provide existing

More information

Chapter 18 Working Capital Management

Chapter 18 Working Capital Management Chapter 18 Working Capital Management Slide Contents Learning Objectives Principles Used in This Chapter 1. Working Capital Management and the Risk- Return Tradeoff 2. Working Capital Policy 3. Operating

More information

Non-traded financial contracts

Non-traded financial contracts 11-1 Introduction Financial contracts are made between lenders and borrowers Non-traded financial contracts are tailor-made to fit the characteristics of the borrower In business financing, the differences

More information

Lease vs. Buy. Lease. Benefits of Leasing Various types to meet your needs. Optimize cash flow. No loan. Maintain credit.

Lease vs. Buy. Lease. Benefits of Leasing Various types to meet your needs. Optimize cash flow. No loan. Maintain credit. www.stma.org Lease vs. Buy Deciding if you are going to lease or buy equipment depends on your situation. In general, leasing is more appropriate for businesses with limited capital or need equipment upgrades

More information

Chapter 019 Short-Term Finance and Planning

Chapter 019 Short-Term Finance and Planning Multiple Choice Questions 1. The length of time between the acquisition of inventory and the collection of cash from receivables is called the: a. operating cycle. b. inventory period. c. accounts receivable

More information

Where to Turn When Banks Say No? MGI Pagán-Ortiz & Co., CPA, PSC

Where to Turn When Banks Say No? MGI Pagán-Ortiz & Co., CPA, PSC Where to Turn When Banks Say No? MGI Pagán-Ortiz & Co., CPA, PSC Factoring Definition FACTORING COMPANIES, typically buy a business's accounts receivable at a discount and collect the receivables themselves.

More information

Course 4: Managing Cash Flow

Course 4: Managing Cash Flow Excellence in Financial Management Course 4: Managing Cash Flow Prepared by: Matt H. Evans, CPA, CMA, CFM This course provides an introduction to cash flow management. This course is recommended for 2

More information

Understanding Credit. The Three C s of Credit. What is a Credit Bureau?

Understanding Credit. The Three C s of Credit. What is a Credit Bureau? Understanding Credit By definition, the word credit has to do with trust. This is why credit impacts so many financial issues in our lives including the extension of a loan or credit card, how high an

More information

ALTERNATIVE FUNDING SOURCES FOR YOUR BUSINESS

ALTERNATIVE FUNDING SOURCES FOR YOUR BUSINESS ALTERNATIVE FUNDING SOURCES FOR YOUR BUSINESS Alternative Funding Sources Poor financial management is one of the biggest reasons why more than half of small businesses don t survive. This is particularly

More information

A roadmap for funding your business

A roadmap for funding your business A Citibank Resource for Your Business A roadmap for funding your business Jupiterimages/BananaStock/Thinkstock Successfully launching a new business takes a good deal of skill and hard work. It also requires

More information

Using Credit to Your Advantage.

Using Credit to Your Advantage. Using Credit to Your Advantage. Topic Overview. The Using Credit To Your Advantage topic will provide participants with all the basic information they need to understand credit what it is and how to make

More information

BdC Corporate Credit Department Information Document. Introduction

BdC Corporate Credit Department Information Document. Introduction BdC Corporate Credit Department Information Document Introduction The Banco di Caribe Corporate department aims to offer the best quality service and the most appropriate solutions to its customers whether

More information

Financing Options for Your Small Business. Show me the money!

Financing Options for Your Small Business. Show me the money! Financing Options for Your Small Business Show me the money! Purpose: Commercial Financing Basics Potential Methods of Commercial Finance Overview of U.S. Small Business Administration Key Lending Programs

More information

Entrepreneur Academy: SBA 504 & 7(a) Loan Programs & Updates

Entrepreneur Academy: SBA 504 & 7(a) Loan Programs & Updates Entrepreneur Academy: SBA 504 & 7(a) Loan Programs & Updates Wendy J. Jeffers Sr. Lending Officer: SBA Programs wjeffers@sbacsav.com Mobile: 912.398.3090 or 888.287.2137 In full operation since September

More information

MORTGAGE TERMS. Assignment of Mortgage A document used to transfer ownership of a mortgage from one party to another.

MORTGAGE TERMS. Assignment of Mortgage A document used to transfer ownership of a mortgage from one party to another. MORTGAGE TERMS Acceleration Clause This is a clause used in a mortgage that can be enforced to make the entire amount of the loan and any interest due immediately. This is usually stipulated if you default

More information

BA 351 CORPORATE FINANCE. John R. Graham Adapted from S. Viswanathan LECTURE 5 LEASING FUQUA SCHOOL OF BUSINESS DUKE UNIVERSITY

BA 351 CORPORATE FINANCE. John R. Graham Adapted from S. Viswanathan LECTURE 5 LEASING FUQUA SCHOOL OF BUSINESS DUKE UNIVERSITY BA 351 CORPORATE FINANCE John R. Graham Adapted from S. Viswanathan LECTURE 5 LEASING FUQUA SCHOOL OF BUSINESS DUKE UNIVERSITY 1 Leasing has long been an important alternative to buying an asset. In this

More information

Syndicated Revenue Loans. Secured Lines of Credit

Syndicated Revenue Loans. Secured Lines of Credit Syndicated Revenue Loans. Syndicated Revenue Loans are Revenue loans grouped together through a syndicate. Typically these loans are given while a revenue loan is still outstanding, but the business owner

More information

Chapter Sources of Short-Term Financing

Chapter Sources of Short-Term Financing Chapter Sources of Short-Term Financing Chapter 8 - Outline PPT 8-2 Sources of Short-Term Financing Trade Credit from Suppliers Net Credit Position Chartered Banks in Canada Types of Short-term Loans Interest

More information

Module 1: Corporate Finance and the Role of Venture Capital Financing TABLE OF CONTENTS

Module 1: Corporate Finance and the Role of Venture Capital Financing TABLE OF CONTENTS 1.0 ALTERNATIVE SOURCES OF FINANCE Module 1: Corporate Finance and the Role of Venture Capital Financing Alternative Sources of Finance TABLE OF CONTENTS 1.1 Short-Term Debt (Short-Term Loans, Line of

More information

Lending 101 The Basics

Lending 101 The Basics Lending 101 The Basics Overview Loan categories Credit types Different loan types Interest rate Applying for a loan Credit & credit reports Simple loan tips Test Loan Categories Secured loan - a loan that

More information

Types of Leases. Lease Financing. FINC 3630 Yost

Types of Leases. Lease Financing. FINC 3630 Yost Lease Financing Types of Leases Operating Leases Financial Leases or Capital Leases Sale and Leaseback Arrangements Combination Leases Synthetic Leases Operating Leases Payments include maintenance and

More information

Dealing With Your Banker &

Dealing With Your Banker & Dealing With Your Banker & Other Lenders Your financing The success or failure of your business will depend on whether or not you have enough capital to: buy the equipment and inventory you need; pay overhead

More information

FundingEdge / Power2Fund

FundingEdge / Power2Fund Factoring Defined In the world of finance, factoring is a transaction in which a business sells its account receivables to a third party--called a "factor"--in return for immediate cash, generally working

More information