Searching for Capital
Searching for Capital
Lesson Goals:
• Realize sources of outside capital
• Identify types of loans offered by commercial
lenders
• Learn how to prepare a loan package
• Learn how to establish and maintain a
relationship with a commercial lender
Searching for Capital
How much will you need?
Depends on:
• Type of business
• Kinds of products / services
provided
• Who suppliers will be
• Where you are located
• Amount of competition
• Customer Purchasing Power
• Costs
Searching for Capital
Where will the money come from?
• Personal Savings
• Family and Friends
• Banks, Savings and Loans, Credit Unions
• Commercial Finance Companies
• Venture Capitalists
• Government Programs
Searching for Capital
SBA Loans
• 7(a) Regular Business Loans
• 504 Loans (certified development company)
• Low Doc Loans
• SBIC
• Capital Access Loans (CAP)
• Others
Searching for Capital
Line of
Credit
Commercial
Short-Term
Business
Loans
Inventory
Accounts
Receivable
Searching for Capital
Other Types of Business Loans
• Medium-term Loans
• Long-term Loans
• Mortgages
• Real Estate Loans
• Equity Financing
Searching for Capital
What kind of collateral will you need?
• Personal Assets
• Savings Accounts
• Life Insurance Policies
• Stocks and Bonds
• Co-Signers
• Lease Assignments / Warehouse Receipts
• Mortgages
Searching for Capital
The 5 C’s of Credit
Character
Capacity
Collateral
Conditions
Capital
Searching for Capital
Preparing Your Loan Package
• Business Description
• Management Profiles
• Market Projections
• Purpose
• Amount
• Repayment Plans
• Financials
Searching for Capital
Establishing and Maintaining
Rapport
With Your Banker
• Establish a good credit
history
• Determine if your business is
too big or too small
• Invite your banker to your
business
Searching for Capital
Establishing and Maintaining Rapport
With Your Banker
• Keep your banker in the
information loop
• Work in advance
• Never surprise your banker
• Be honest with your banker