Financing Demystified for Entrepreneurs & Investors

Bank & Non-BankDebt Financing

Two Biggest Challenges for SMB’s**:

Cash FlowCost of running the business

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*Resource “How the Economic Machine Works” by Ray Dalio: http://bit.ly/howeconomyworks**According to 2015 Federal Reserve Study

Small Business 10128,000,000 SMB’S in U.S.

Purpose of Leverage/Financing*

Failure Rate

Business Stages

From Les McKeown, Predictable Success

Financing Options

Financing Options

Two Choices

EquityDebt

Debt Financing

Borrowing money from a lender and agreeing to pay back that money at agreed-upon terms.

Loans * Lines of CreditCash advances * Factoring

Debt Financing:

Fun Fact: Acc. to SBA small businesses spend an average of 26 hours searching for and applying for credit (and are not always successful)

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Character (aka credit)

Capacity

Capital

Collateral

The 4 C’s of Lending

• Trade/Vendor Financing Unknown %• Credit Cards 60-80%• Personal Savings 21%

Loans & Lines of Credit

The three Most Commonly used forms of financing are…

Fun Fact: 63% of SMB’s hold some amount of debt*Acc to Federal Reserve Study

• Equipment Financing• Factoring/PO Financing*• MCA/ACH Financing*

Loans & Lines of CreditOther Common forms of Small Business Debt Financing…

Fun Fact: 70% of SMB’s want financing under $250,000*Technically not debt solutions

• ROBs – Rollover as Business Startup

• SBA Loans

Loans & Lines of CreditTwo more worth mentioning…

Fun Fact: 73% of companies over $10MM got fully funded but only 37% of companies under $100k got fully funded

SBA Example52,044 7(a) Loans$19.19 Billion$368,726 Ave Approval63,000 7(a) Loans$23.6 Billion$374,603 Ave Approval

Source: SBA.gov release number 14-66 & 15-03

FY 2014:

FY 2015:

Live Oak Bank or Berkshire Bank?

Business Stages

From Les McKeown, Predictable Success

Conclusion

Your Stage?

Debt or Equity?

The 4 C’s –what to do NOW?

Go For It!