Financing Demystified for Entrepreneurs & Investors Bank & Non-Bank Debt Financing
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Financing Demystified for Entrepreneurs & Investors
Bank & Non-BankDebt Financing
Two Biggest Challenges for SMB’s**:
Cash FlowCost of running the business
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*Resource “How the Economic Machine Works” by Ray Dalio: http://bit.ly/howeconomyworks**According to 2015 Federal Reserve Study
Small Business 10128,000,000 SMB’S in U.S.
Purpose of Leverage/Financing*
Failure Rate
Business Stages
From Les McKeown, Predictable Success
Financing Options
Financing Options
Two Choices
EquityDebt
Debt Financing
Borrowing money from a lender and agreeing to pay back that money at agreed-upon terms.
Loans * Lines of CreditCash advances * Factoring
Debt Financing:
Fun Fact: Acc. to SBA small businesses spend an average of 26 hours searching for and applying for credit (and are not always successful)
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Character (aka credit)
Capacity
Capital
Collateral
The 4 C’s of Lending
• Trade/Vendor Financing Unknown %• Credit Cards 60-80%• Personal Savings 21%
Loans & Lines of Credit
The three Most Commonly used forms of financing are…
Fun Fact: 63% of SMB’s hold some amount of debt*Acc to Federal Reserve Study
• Equipment Financing• Factoring/PO Financing*• MCA/ACH Financing*
Loans & Lines of CreditOther Common forms of Small Business Debt Financing…
Fun Fact: 70% of SMB’s want financing under $250,000*Technically not debt solutions
• ROBs – Rollover as Business Startup
• SBA Loans
Loans & Lines of CreditTwo more worth mentioning…
Fun Fact: 73% of companies over $10MM got fully funded but only 37% of companies under $100k got fully funded
SBA Example52,044 7(a) Loans$19.19 Billion$368,726 Ave Approval63,000 7(a) Loans$23.6 Billion$374,603 Ave Approval
Source: SBA.gov release number 14-66 & 15-03
FY 2014:
FY 2015:
Live Oak Bank or Berkshire Bank?
Business Stages
From Les McKeown, Predictable Success
Conclusion
Your Stage?
Debt or Equity?
The 4 C’s –what to do NOW?
Go For It!
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