The Quest for Cash: How to Obtain Financing for Your Business

1
The Quest for Cash How to Obtain Financing for
Your Business

• Mark RyczekVice President National City Bank

2
Where Is the Money? Who do you ask?

• Personal Savings
• Bank Loan / SBA Loan
• Angel Investors
• Private Investors
• Credit Cards, Home Equity Lines of Credit
• Personal access to capital (family, friends,
  relatives, grants, beg for it, other)

3
What is the need?

• Line of Credit - Commitment by a lender to
  provide up to a set amount of funds during a
  specific period of time. Funds are drawn against
  this commitment as they are needed and paid back
  as agreed.
• Term Loan - A loan which is repaid through
  regular periodic payments, over a specified
  period of time. Example Equipment, Buildings,
  typically a fixed asset

4
When do you need it? Yesterday?

• Is it for seasonal purchase and growth needs?
• Is it for next months payroll?
• When is the closing on the building purchase?
• How long can you hold off purchasing new
  equipment?
• Start planning ahead

5
How much do you borrow?

• Details about what you are doing and overall plan
  (AKA Business Plan)
• Description of need do you need a term loan,
  line of credit? Both?
• Marketing assumptions and what makes you unique
• Any special agreements such as Partnership
  Agreement, Purchase Contracts, Building Lease,
  etc.
• Personal Financial Information
• Personal Financial Statement
• Please note if you are purchasing a business you
  should gather their last 3 years of corporate tax
  returns.

6
What information do you present to the bank(er)?

• Business financial information
• Business Balance Sheet
• Business Income Statement
• Three Year Business Tax Returns
• Personal financial information
• Three Year Personal Tax Returns
• Personal Financial Statement
• Personal resume highlighting experience
• Any special agreements such as Partnership
  Agreement, Purchase Contracts, Building Lease,
  etc.

7
What to Look for in a bank(er)

• Record of working with new and expanding
  businesses
• Knowledge of Credit Enhancement Programs like SBA
• Willingness to meet in your office
• Desire to really know your business and discuss
• Money to Finance Growth and Acquisitions
• Tools to manage cash flow
• Services to reduce operating costs
• Investments to grow wealth or increase financial
  security
• Techniques to reduce risk
• Methods to manage personal finances

8
What does the SBA look for?

• What makes a good SBA Loan?
• Solid Business Cash Flow
• Good Business Trend
• Weaker Collateral
• What does the SBA look for?
• A good story
• Evidence that the owner understands the business
• Good management practices
• Borrowing need and reasonable projections

9
Key Business Ratios

• Liquidity Ratios
• Working Capital
• Days Inventory
• Days Receivable
• Operating Ratios
• Debt Service Coverage Ratio
• Return on Sales
• Return on Assets
• Leverage Ratios
• Debt to Worth Ratio

10
Thank you

• Questions and Answer