FORMING AND FINANCING A SMALL BUSINESS Veterans - PowerPoint PPT Presentation

Loading...

PPT – FORMING AND FINANCING A SMALL BUSINESS Veterans PowerPoint presentation | free to download - id: 70dd85-ZWRmO



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

FORMING AND FINANCING A SMALL BUSINESS Veterans

Description:

Title: Context for Loan and Tax Programs Author: Msimmer Last modified by: Msimmer Created Date: 8/4/2010 3:57:16 PM Document presentation format – PowerPoint PPT presentation

Number of Views:52
Avg rating:3.0/5.0
Slides: 22
Provided by: Msi148
Learn more at: http://www.btyr.org
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: FORMING AND FINANCING A SMALL BUSINESS Veterans


1
FORMING AND FINANCING A SMALL BUSINESS
Veterans Entrepreneur Seminar
  • Small Business Assistance Office
  • November 3, 2010

2
Three Questions
  • Do you know what you want? .... Products and
    markets
  • Can you overcome barriers to entry?
  • Do you know how to make money? .... The limit of
    competition? (Price taker markets)

3
How will you structure your business?
  • ? Liability
  • ? Financing
  • ? Taxes

4
Sole Proprietorship
  • Assumed Name filing
  • Taxes on personal return
  • Liability issues
  • Financing and asset issues

5
Single Member LLC
  • Popular alternative to sole proprietorship
  • Insulation from liability
  • Election to be taxed as a Disregarded Entity or
    as a corporation
  • Formal filing with the Secretary of State
  • Debt financing still tied to owners credit.

6
Corporation
  • The corporation is a legal person
  • Formal filing with the Secretary of State Office
  • Insulation from liability for owner
  • C corporation pays taxes
  • S corporation a pass through entity
  • Corporation can be a debtor on loans

7
Money maters over the life of a business
  • Overcoming cost barriers to entry
  • Sustaining production and competition
  • Providing business flexibility
  • Providing for acquisition of assets and expansion
    of productive capacity

8
Debt Capital
  • Loans and other credit facilities
  • Deductable interest payments
  • Generally straight forward loan agreements
  • No dilution of ownership

9
Equity Capital
  • Sale of an ownership interest
  • Most often business stage, size, industry
    specific
  • Expensive offering
  • Often complicated agreements

10
What this means for you as a potential borrower
  • An even greater emphasis on a good business plan
  • A clear statement of the use of funds and the
    sources of repayment
  • A high personal credit score for the business
    owner
  • Owners cash equity
  • A personal guaranty and/or other secondary
    sources of payment.

11
Small Business Jobs Act of 2010P.L. 111-240
signed on 9/27/2010
  • Permanently raises 7(a) loan limits from 2
    million to 5 million total loan amount.
  • Extends guarantee amount and fee elimination
    through December 31, 2010. After January 1, 2011
    guarantee reverts to 75 percent of loans over
    150,000 and 85 percent of loans up to 150,000.
  • Increases maximum Express loan amount to 1
    million (from 350K) through 9/27/2011.

12
  • Permanently increases microloan limits from
    35,000 to 50,000
  • Establishes new intermediary-facilitated loan
    program for start-up, newly established, and
    growing small business concerns for working
    capital, real estate, or the acquisition of
    materials, supplies, or equipment. Maximum loan
    to be 200,000. Intermediaries to selected by
    SBA. (CDCs and other nonprofits).

13
Minnesota Reservist and Veteran Business Loan
Program
14
Business Start-Up Loans Interest-Free Loans
  • 400,000 revolving loan fund
  • Same pot of money as the Economic Injury Loans
  • Same terms
  • 5,000 - 20,000
  • 20K max by enabling statute
  • 5K min for admin efficiency
  • Do the math 20 loans _at_ 20K
  • Loan term 4 ½ years
  • No repayments the first 1 ½ years
  • Equal monthly payments over remaining 3 years
  • No interest

15
Business Start-Up Loans Eligible Veteran
  • Recently separated veteran
  • On active duty on or after September 11, 2001
  • Separated from service under honorable conditions
  • On active duty for at least 181 consecutive days
    or for the full period for which called to active
    duty (or after reason of disability incurred
    while on active duty)

16
Business Start-Up Loans Eligible Small Business
  • Must be majority owned and operated by a recently
    separated veteran
  • Small business as defined by Minn. Stat. 645.445
  • a for profit business entity which is not an
    affiliate or subsidiary of a business dominant in
    its field of operations, and
  • has either 20 or fewer full-time employees, or
  • had less than 1 million in annual gross revenue
    in the preceding fiscal year, or
  • if the business is a technical or professional
    service, has less than 2.5 million in annual
    gross revenue in the preceding fiscal year

17
Business Start- up Loans Application Review
Criteria
  • Main criteria
  • Is the business a small business?
  • Is the business owned and operated by an eligible
    veteran?
  • How likely is the applicant to repay the loan?
  • How likely will the loan help the applicant
    execute the submitted business plan to make it a
    successful business?

18
Loan Applications
  • Fill in forms available on the DEED website
  • 4 pages plus 9 exhibits
  • First 4 pages are geared toward loan program
    eligibility
  • 9 exhibits mirror SBA loan applications
  • Personal history
  • Personal financial statement
  • Business financial statements
  • Credit Reports and Scores
  • History of business/Background of owner
  • Details re any bankruptcies, lawsuits, etc.
  • Small Business Development Centers can assist
    with filling out loan applications
  • Applications will be reviewed in order received
  • When the loan fund is depleted, no further loans
    until repayments are received

19
Loan Making Procedure
  • Applicant completes and submits loan application
    (economic injury or start-up)
  • DEED and applicant execute a loan agreement
  • DEED and applicant execute a promissory note
  • Applicant/owner provides personal guaranty of
    repayment
  • At this time, not anticipating an applicant will
    need to provide other security for the loan

20
Minnesota Reservist and Veteran Business Loan
Program
  • Complete program information and applications are
    on the DEED website
  • Search Reservist and Veteran Business Loan
  • Any questions?
  • Contact person
  • Jeff Nelson
  • 651-259-7523
  • Jeff.M.Nelson_at_state.mn.us

21
  • Minnesota Small Business
  • Assistance Office
  • Minnesota Department of Employment Economic
    Development
  • 1st National Bank Bldg.
  • 332 Minnesota St., Suite E200
  • St. Paul, MN 55101
  • 651/ 259-7478
  • Deed.sbao_at_state.mn.us
About PowerShow.com