Dave McLarenIowa Small Business Development

Centers641-782-1483

mclaren@swcciowa.edu

Are You Bankable?

Rate Yourself on each of these1. Capacity - The ability of your business to

generate sufficient cash to service the debt is the most critical factor

2. Capital - The money you personally have invested in the business and how much you have at risk should the business fail

3. Collateral - Anything of value that can be used as security for repayment of the debt

4. Conditions - Intended purpose of the loan such as working capital, equipment, etc. Local economic conditions that could impact your business

5. Character - Your financial status and personal credit history, including your previous loan payment record

Personal history

Taxes Child support Felonies

Personal financial statement

What you own What you owe Personal net worth/equity

Personal credit history

Credit Score Bankruptcy

Last three years of personal tax returns

Gross Income Sources of income Income after taxes

Last three years of business tax returns

Past trends Basis for projecting ability to service existing and new debt

Business financial statements within 90 days current

Income Statement (P&L) and Balance Sheet Used to project end of current year Used to project ability to service existing and new debt

Collateral and personal guarantee

Financial Projections

Source and Use of Funds What is the total amount of money needed from all

sources? What will the money be used for – Use Of Funds? Where will the money come from – Source of Funds?

Three years projected financial statements Income Statement (P&L) Balance Sheet Monthly Cash Flows for the first 12 months

Local Bank/Lender Federal State Regional/Local Revolving Loan

Funds (RLF) Your Equity/Cash Grants

Your local bank or credit union should be your first stop

They are your gateway to finding the money

They know you They know the market They understand local business conditions You need the services they provide

Small Business Administration (SBA) - www.sba.gov and USDA RD www.rurdev.usda.gov/ia/, Loan Guarantee Programs

Bank/Lender applies to SBA/USDA for a guarantee on the loan

Bank/Lender makes the loan, determines interest rate and term

Iowa Department of Economic Development

Targeted Small Business Program (TSB) - https://dia.iowa.gov/tsb/, low interest loan program for women, minority or those with a qualifying disability

Iowa Self Employment (ISE) – Iowa Vocational Rehabilitation - www.ivrs.iowa.gov/clients/selfemploymentoptions.html, provides financial support for self-employment of individuals with qualifying disabilities

Iowa Micro-Loan Program - www.iowamicroloan.org/

$5,000 - $35,000 maximum High interest rate 6 Year term May not be used for the purchase of real estate or as a line of

credit.

Revolving Loan Funds – provide “Gap” financing http://www.rurdev.usda.gov/SupportDocuments/IA_rlf.pdf

Low Interest rate Up to 10 year term Many require a participating bank

Agency/Organization Program Contact # Counties Served

Lorimor Community Development Corporation

RBEG 641-763-2007 City of Lorimor

Southern Iowa COG RBEG 641-782-8491 Adair, Madison, Adams, Union, Clarke, Taylor, Ringgold and Decatur

Southern Iowa RC&D RBEG 641-782-7058 Adair, Adams, Union, Clarke, Taylor, Ringgold and Decatur

Farmers Electric Coop REDG 641-743-6146 Adair, Cass, Madison, Union, Audubon and Guthrie

Clarke Electric Cooperative REDG 641-342-2173 Warren, Madison, Union, Clarke, Lucas, Ringgold, Decatur and Wayne

Grow Iowa Foundation IRP/RBEG 641-343-7977 Adair, Adams, Cass, Clarke, Decatur, Fremont, Guthrie, Mills, Montgomery, Page, Pottawattamie, Ringgold, Shelby, Taylor and Union.

Southwest Iowa Rural Electric REDG 641-322-3165 Page, Fremont, Mills, Adair, Adams, Cass, Montgomery, Taylor, Union, Ringgold and Decatur

Clarke Electric Cooperative REDG 641-342-2173 Warren, Madison, Union, Clarke, Lucas, Ringgold, Decatur and Wayne

Central Iowa Power Cooperative (CIPCO)

REDG/ IRP/ RBEG

319-366-8011 Union and Most Surrounding Counties

Some “Skin” in the GameIf you are not willing or able to put any of

your money at risk, Don’t ask someone else for their money.

How much “down”? Depends on many issues including

Collateral Personal finances Type of business Risk

There are NO GRANTS for most for profit businesses and individuals

Don’t trust what you hear or readNever pay someone in advance for the

promise of a grantsVirtually all Federal Economic

Development, Rural Development, or Small Business Development Grants are given to Non Profits that use the money to support small businesses, i.e. Revolving Loan Funds