chamber training institute wells fargo session: financing your business – access to capital and...

Chamber Training InstituteWells Fargo Session: Financing Your Business – Access to Capital and Credit

Darrell Green, Director of Small Business Strategy - Southeast Region

Eli Marks, Eli Marks, Southeast Retail and Small Business Credit Director

Georgette “Gigi” Dixon, SVP/Director of Strategic Partnerships

© 2015 Wells Fargo Bank, N.A. All rights reserved.

May 13, 2015

1:00 p.m. – 4:00 p.m.

Wells Fargo Works for Small BusinessDarrell GreenDirector of Small Business Strategy

© 2015 Wells Fargo Bank, N.A. All rights reserved.

Wells Fargo Works is our commitment to small business. By delivering a wide range of products, resources and guidance, we help businesses everywhere to take the next step toward their goals.

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Visit the WellsFargoWorks.com websiteFind relevant and actionable information from business experts and fellow business owners on a variety of business topics.

More resources are at your fingertips – visit wellsfargoworks.com.

Optimized for mobile access

Topics:•How to start, run, and grow businesses•How to write a sound business plan•Effective cash flow strategies•How to build and access credit•Keep track of the competition•Manage day-to-day responsibilities

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Start your businessLearn how to build a solid foundation for business success.

Planning is key to a successful business – get off to a strong start.

2.5 millionNew business registrations each year**Bureau of Labor Statistics, 2011

Determining legal structure

Separating personal and business expenses

Creating a business plan

Finding funding

Finding customers

Hiring employees for the first time

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Start your businessLearn how to build a solid foundation for business success.


Determining legal structure

Separating personal and

business expenses

Creating a business plan

Finding funding

Finding customers

Hiring employees for the first time

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Startup guideYour guide to planning, launching, and establishing a business venture.

Startup guide: Build a strong foundation for your new business

•A strong start – Preparing for the journey

•Planning – From idea to reality

•Legal and administration – Getting the details right

•Finances – Fueling success

•Operations – Get up and running

•Marketing – Identify, attract, engage


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Run your businessGet tips for managing day-to-day business responsibilities.

Business owners wear many hats – find expert tips on the day-to-day.

Customer service

Financial statements

Managing cash flow

Technology

Managing employees

Employee benefit programs

Taxes

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Grow your businessDiscover how to move your business forward.

New locations, products, or customers – what does growth mean to you?

More employees

Expanding oversees or

into new markets

More locations

Challenges: Funding growth and growing without overreaching

New products and services

Building your customer base

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Discover more about credit Learn how to manage and apply for business credit by visiting the Business Credit Center section of the Wells Fargo Works website.

Don’t guess about credit – learn how to manage it.

Topics:•The basics of business credit, credit scores, and the credit lifecycle•How to use credit to manage cash flow•Building a strong credit application and learning what lenders look for in a business credit applicant•Government resources (SBA)•Tools (calculators)

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Managing credit for business success guideYour guide to building a strong credit profile and securing the financing you need. Topics:

•Take control of your credit profile

•What potential lenders really look for

•The business credit lifecycle

•Make sense of financing options

•Discover financing opportunities

Don’t guess about credit – learn how to manage it.

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Realize the power of a solid business planVisit the Business Plan Center to learn about what goes into a business plan, build your own business plan, and gain competitive insights.

A good business plan is the foundation for success – find out more.

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Discover business plan essentialsView videos, articles, slideshows, and other learning resources to help you brush up on all the various elements of a business plan.

Find out what to include in your business plan – start here.

Company Operations

Marketing Plan

Market Analysis

Financials

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Build your business planUse our Business Plan Tool to build a dynamic, professional business plan.

Executive Summary

Company Information

Marketing

Analysis

Financials

Make your business plan a reality – get started today.

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Revisit, update, and share your business planTreat your business plan as a living document that grows and changes with your business and financial goals.

Your business plan should change with you – keep it up-to-date.

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Use data to make sound business decisionsUse our Competitive Intelligence Tool to help you with benchmarking, mapping the competition, and finding where to advertise.

Use data to make informed decisions – explore your options.

Map the location of competitors, suppliers, and customersCompare your business to

others in your industry, locally and nationwide

Research the best places to advertise using advanced filters, such as household income and education level

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Compare your business to others in your areaThe Business Intelligence Tool can help you compare your business to others in your industry, both locally and nationwide.

See how other businesses are performing – stay competitive.

Revenue

Year Started

Salary

Employees

Cost Effectiveness

Revenue Per Capita

Local Turnover

Healthcare Cost

Workers’ Comp

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Find competitors, suppliers, and customersThe Business Intelligence Tool uses mapping functionality to show the location of your competitors, and businesses you buy from and sell to.

See where your competitors are located – find underserved markets.

Competitors

Businesses you sell to - customers

Businesses you buy from - suppliers

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Explore where to advertiseThe Business Intelligence Tool uses advanced filters to help inform where you may want to focus your advertising efforts.

Search distance

– By zip code Industry characteristics

– Annual revenue (business)

– Total annual revenue

– Total employees

– Revenue per capita Demographic characteristics

– Household income

– Household expenditure

– Median age

– Education level

– Prevalence of white collar workers

Know your customer base – focus your advertising efforts.

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Get content delivered to youFollow us on Twitter at @WellsFargoWorks to receive timely and relevant content specific to business.

Keep on top of the latest content – follow us at @wellsfargoworks.

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How can we help?Call and talk to one of our knowledgeable bankers 24 hours a day, 7 days a week:

1-800-869-3557

wellsfargo.com/biz

wellsfargoworks.com

Schedule an appointment:

wellsfargo.com/appointments

All credit decisions subject to approval. For SBA loan products, SBA eligibility is also required.

Deposit products offered by Wells Fargo Bank, N.A. Member FDIC.

© 2015 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801

http://www.wellsfargo.com/biz

https://wellsfargoworks.com/

https://appointments.wellsfargo.com/maa/appointment/

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Information and views provided through this presentation are general in nature for your consideration and are not legal, tax, or investment advice. Wells Fargo makes no warranties as to accuracy or completeness of information, does not endorse any non-Wells Fargo companies, products, or services described here, and takes no liability for your use of this information. Information and suggestions regarding business risk management and safeguards do not necessarily represent Wells Fargo's business practices or experience. Please contact your own legal, tax, or financial advisors regarding your specific business needs before taking any action based upon this information.

Wells Fargo & Company cannot provide tax advice. Please see your tax advisor to determine how this information may apply to your own situation.


Deposit products offered by Wells Fargo Bank, N.A. Member FDIC.


THANK YOU!Questions/Comments

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Managing Credit for B0usiness SuccessEli MarksSoutheast Retail and Small Business Credit Director

© 2014 Wells Fargo Bank, N.A. All rights reserved. For public use.

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Wells Fargo Works for Small BusinessSM

“Wells Fargo Works is our commitment to small

business. By delivering a wide range of products,

resources and guidance, we help businesses

everywhere to take the next step toward their goals.”

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Here’s what we’ll cover today:

Managing credit

Preparing to apply for financing

Choosing the most appropriate financing option

Discovering alternative financing opportunities

Finding free educational resources

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Managing credit

28All credit decisions subject to approval. For SBA loan products, SBA eligibility is also required.

Make the most of financing opportunitiesIf cash is the fuel that drives business, credit is the vital resource that helps fill the tank.

Don’t guess about credit – manage it.

How your business can rely on credit

• Provide working capital• Support business growth• Take advantage of opportunities

How your banker can be a valuable resource

• Conduct a business financial review• Assess business situation• Discuss future business goals


Take control of your credit profileA business credit profile is everything a lender sees about you and your business.

A lot depends on your credit profile – take control of it.

Create a sound financial footing

•Establish business checking and savings accounts

•A strong payment history strengthens your credit profile

•Review your personal credit profile yearly, and clear up any issues

Bank strategically

•Consolidate banking relationships

•A strong banking history can boost your creditworthiness

•Demonstrate a consistent flow of funds

Cultivate the relationship

•Visit your banker regularly

•Be clear about your situation and goals

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Know what goes into your credit reportsKeep in mind that lenders will look at both your personal and business credit reports.

Review your credit reports annually – clear up any issues.

Credit reports aggregate information collected by numerous credit reporting agencies.

A credit report will include:

•How long credit has been established

•What credit financing you’ve secured, and your payment history

•Recent credit applications

•Debt to income

•Public information, such as bankruptcies or tax liens

•Inquiries made for access to your record

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Know what goes into your credit scoresCredit scores use information from your credit records to generate a single number.

The key elements that go into a credit score are:

– How long your credit has been established

– Payment history

– Outstanding debt

There are two types of scores:

– Personal score: “FICO”

– Primary business score: “Paydex”

Credit scores are an important factor in getting credit – know yours.


Understand the Five C’s of CreditThe basic criteria that drives how most lenders make credit decisions.

Credit history• How you’ve handled obligations in the past shows

what lenders can expect in the future

Collateral• Alternative source of repayment in case of default,

such as real estate and cash

Capital• Business assets that can be easily turned into cash• Personal investment in the business

Conditions• Internal, such as purpose of the loan, and your own

experience and qualifications• External, such as industry/economic trends

Capacity• Ability to repay the loan• Profitability and cash flow

Each of the Five C’s is important – assess your business in each area.

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Preparing to apply for financing


Assess the state of your businessBefore you apply, review your current situation and be able to explain your future needs.

Make documentation easy – separate business and personal expenses.

Take stock of your goals and objectives

•What are my goals? Have they changed? Will they change soon?

Document your revenue

•Good financial tracking and separating business and personal expenses will make this easier

Know where your money goes

•Cash flow is a critical component of lending decisions – document your cash flow in detail

Schedule an appointment

•Be prepared for the meeting – ask what additional information you should have available for the appointment

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Consider how lenders make a decisionThe decision process will depend on many factors, such as the nature of the business, use of funds, and how much you’re requesting. Credit requests less than $100,000

– May have a fairly simple application process

– Underwriters may look at your credit profile and other basic information rather than requiring cash flow statements, a business plan, or other documentation

Credit requests for larger funding needs

– Typically require more detailed information

– Tax returns may be required to verify revenue streams and profits

Requirements may differ by size and type of credit – be prepared.


Enhance your cash flowBecause cash flow is so important, do everything you can do to improve this critical measure of your financial strength.

Cash flow is critical to obtain financing – enhance it with these tips.

Accelerate your inflows

Monitor your costs

Watch your outflows

Cover your taxes

Challenge everything

Process invoices quickly; offer more payment options

Track bills and inventory; know payroll obligations

Manage cash flow with credit; use volume discounts

Set aside a percentage each month to avoid penalties

Are you getting the best value from your vendors? Can you cut expenses?

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Choosing the most appropriate financing option


Make sense of financing termsUnderstanding your options begins with knowing the language.

Short-term, long-term, secured, unsecured – choose the best fit.

Short-term• Use to sustain cash flow and cover unexpected

opportunities

Long-term• Use to make major purchases that may take several

years to pay off

Secured• Backed by collateral, such as business or personal

assets

Unsecured• Requires no collateral; depends entirely on your

credit and strong cash flow

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Make sense of your financing optionsMany different types of financing are available. Credit cards and lines of credit are two types of revolving credit.

Credit card

• Great option to begin establishing business credit and managing monthly expenses

Cards and lines are ideal for managing cash flow– choose one, or both!

Line of credit

• Open, revolving account that lets you borrow just the funds you need, when you need them, up to the approved amount

• Pay off the amount owed at any time• Interest is paid only on outstanding balance

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Make sense of your financing optionsDifferent types of business loans are also available, with various sizes and terms.

Business term loan

• Lump sum of funds for a fixed term for a specific purpose• Fixed or variable interest rates• Terms from 2 – 30 years• May require a “balloon” payment or other conditions

Loans are ideal for major purchases – choose the appropriate loan for you.

Small Business Administration loan

• Range of financing options (lines, loans)• Loans are made by a traditional lender, with the SBA guaranteeing a portion of

the loan against default

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Match your business and credit stagesEvery business is unique, but many share common needs and characteristics when they’re at similar stages.

Stage Business Lifecycle Credit Lifecycle

Seed Earliest stage focused on planning

Critical credit planning stage as you develop a business plan and funding strategy


Startup Securing funding is critical as is having “skin in the game”

Sources of startup funding:•Personal and family assets• Business credit cards• Outside investors• Microlenders

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Growth Business growth and taking advantage of business opportunities as they arise

Possible funding sources:• Business line of credit•Equipment and vehicle financing• Business loan• SBA 7(a) loan


Maturity Mature businesses never stand still, they focus on staying ahead of the competition and improving performance

Strategic funding decisions:• Paying down debt•Purchasing commercial property or using available equity

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Expansion Expansion can mean funding new product lines, opening new locations, or acquisition

Possible funding sources:•Business real estate financing• Business term loans•SBA 7(a) and 504 loans•Equipment and vehicle financing


Transition Enhancing the value and stability of your business “endgame”

Optimize debt for the long term:• Paying down debt • Refinance equity

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Discovering alternative financing opportunities


Think creatively to find fundingOther business owners or organizations in your industry or community may be able to help you find alternative, nontraditional funding sources

Community organizations can be a great resource – reach out today.

Nonprofits

Microlenders

Individual Development

Accounts (IDAs)Grants

Community organizations

Crowdsourcing

Peer-to-Peer

Nonfinancial (free services)

Angel Investors

Universities

Government agenciesForgivable

Loans

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Finding free educational resources


Visit the Wells Fargo Works websiteLearn how to manage and apply for business credit by visiting the Business Credit Center section of the Wells Fargo Works website.

More resources are at your fingertips – visit wellsfargoworks.com.

Optimized for mobile access

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How can we help?Call and talk to one of our knowledgeable bankers 24 hours a day, 7 days a week:

1-800-869-3557

wellsfargo.com/biz

wellsfargoworks.com


Deposit products are offered by Wells Fargo Bank, N.A. Member FDIC.


http://www.wellsfargo.com/biz

https://wellsfargoworks.com/

49

DisclaimersInformation and views provided through this presentation are general in nature for your consideration and are not legal, tax, or investment advice. Wells Fargo makes no warranties as to accuracy or completeness of information, does not endorse any non-Wells Fargo companies, products, or services described here, and takes no liability for your use of this information. Information and suggestions regarding business risk management and safeguards do not necessarily represent Wells Fargo's business practices or experience. Please contact your own legal, tax, or financial advisors regarding your specific business needs before taking any action based upon this information.

Wells Fargo & Company cannot provide tax advice. Please see your tax advisor to determine how this information may apply to your own situation.


Deposit products are offered by Wells Fargo Bank, N.A. Member FDIC.


THANK YOU!Questions/Comments

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chamber training institute wells fargo session: financing your business – access to capital and...

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