Financing Sources

1
Financing Sources

• Eduardo López
• Small Business Development Center

2
Financing

• Options
• Equity Financing
• Debt Financing
• Other Financing Sources

3
Equity Financing

• What is Equity Financing?
• You sell ownership of your business
• You make the deal

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Equity Financing

• Savings
• Use your own money
• Going Public
• Private business sells ownership
• Venture Capital Funds
• Corporations who invest money
• Angel Funds
• People with money to invest

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Equity Financing

• Advantages
• You dont have to worry about repayment in the
  traditional way
  
• With the help of investors, your business becomes
  more credible

• Disadvantages
• You loose complete control and autonomy
• Too much may indicate a lack of belief in your
  business
  
• Expensive process

6
Equity Financing

• Where to find investors
• Business people that knows and understand your
  business
  
• People in a similar business who can see the
  potential in your business
  
• Talk to your banker
• Ace-net
• http//ace-net.sr.unh.edu.

7
Debt Financing

• Traditional source
• Short-Term Loan
• Less than a year
• Long-Term Loan
• Over 3 years
• Equipment Lease
• Bank or equipment company

8
Debt Financing

• Credit Line
• Using your assets
• Accounts Receivables
• Factoring companies
• Financing Companies

9
Debt Financing

• Advantages
• You retain maximum control of your business
• Your interest on debt financing is tax
  deductible
  

• Disadvantages
• Too much debt can cause problems if you begin to
  rely on it and cant pay it back
  
• Too much debt will cause you to be considered
  high risk

10
Debt Financing

• What do lenders look for
• Character/ Credit History
• Capacity/ Cash Flow
• Capital Equity
• Collateral
• Conditions
• Management Expertise

11
Other Financing Sources

• KanPai
• Capital Generated Internally
• Family and Friends
• Bootstrapping
• Micro-loan / revolving program
• Corporate sponsoring
• Other federal/ state/ local government agencies

12
Other Financing Sources

• SBA Programs
• 7A
• 504
• CAP lines
• Low Doc

13
Other Financing Sources

• Community Express
• 7(m) Micro-loan
• International Trade Loan
• Export Working Capital Program

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Questions?

• Eduardo López
• University of Georgia
• SBDC
• Office of Minority
• Business Development
• (706) 542 - 1121
• elopez_at_sbdc.uga.edu