Where’s The Money

1. Where’s The Money Dave McLaren Iowa Small Business Development Centers 641-782-1483 mclaren@swcciowa.edu

2. Are You Bankable? Putting together your financial package

3. Five C’s of Credit Rate Yourself on each of these • Capacity - The ability of your business to generate sufficient cash to service the debt is the most critical factor • Capital - The money you personally have invested in the business and how much you have at risk should the business fail • Collateral - Anything of value that can be used as security for repayment of the debt • Conditions - Intended purpose of the loan such as working capital, equipment, etc. Local economic conditions that could impact your business • Character - Your financial status and personal credit history, including your previous loan payment record

4. Your Financial Package • Personal history • Taxes • Child support • Felonies • Personal financial statement • What you own • What you owe • Personal net worth/equity • Personal credit history • Credit Score • Bankruptcy

5. Your Financial Package • Last three years of personal tax returns • Gross Income • Sources of income • Income after taxes • Last three years of business tax returns • Past trends • Basis for projecting ability to service existing and new debt • Business financial statements within 90 days current • Income Statement (P&L) and Balance Sheet • Used to project end of current year • Used to project ability to service existing and new debt • Collateral and personal guarantee

6. Your Financial Package • Financial Projections • Source and Use of Funds • What is the total amount of money needed from all sources? • What will the money be used for – Use Of Funds? • Where will the money come from – Source of Funds? • Three years projected financial statements • Income Statement (P&L) • Balance Sheet • Monthly Cash Flows for the first 12 months

7. Sources of Money • Local Bank/Lender • Federal • State • Regional/Local Revolving Loan Funds (RLF) • Your Equity/Cash • Grants

8. Start With Your Banker • Your local bank or credit union should be your first stop • They are your gateway to finding the money • They know you • They know the market • They understand local business conditions • You need the services they provide

9. Federal • Small Business Administration (SBA) - www.sba.gov and USDA RD www.rurdev.usda.gov/ia/, Loan Guarantee Programs • Bank/Lender applies to SBA/USDA for a guarantee on the loan • Bank/Lender makes the loan, determines interest rate and term

10. State Programs • Iowa Department of Economic Development • Targeted Small Business Program (TSB) - https://dia.iowa.gov/tsb/, low interest loan program for women, minority or those with a qualifying disability • Iowa Self Employment (ISE) – Iowa Vocational Rehabilitation - www.ivrs.iowa.gov/clients/selfemploymentoptions.html, provides financial support for self-employment of individuals with qualifying disabilities • Iowa Micro-Loan Program - www.iowamicroloan.org/ • $5,000 - $35,000 maximum • High interest rate • 6 Year term • May not be used for the purchase of real estate or as a line of credit.

11. Regional/Local • Revolving Loan Funds – provide “Gap” financing http://www.rurdev.usda.gov/SupportDocuments/IA_rlf.pdf • Low Interest rate • Up to 10 year term • Many require a participating bank

12. Revolving Loan FundsUnion County

13. Your Equity/Cash • Some “Skin” in the Game • If you are not willing or able to put any of your money at risk, Don’t ask someone else for their money. • How much “down”? Depends on many issues including • Collateral • Personal finances • Type of business • Risk

14. Grants • There are NO GRANTS for most for profit businesses and individuals • Don’t trust what you hear or read • Never pay someone in advance for the promise of a grants • Virtually all Federal Economic Development, Rural Development, or Small Business Development Grants are given to Non Profits that use the money to support small businesses, i.e. Revolving Loan Funds

15. Questions?