GUIDE TO ACQUIRING
STARTUP FINANCING
CONTENTS
BEFORE YOU BEGIN
FORECASTING
TYPES OF WORKING CAPITAL FINANCING
CAPITAL FOR FIXED ASSETS
POTENTIAL FUNDING SOURCES
FINANCING PACKAGES
HOW A CPA CAN HELP
2
BEFORE YOU BEGIN
YOU WILL NEED:
A written business plan
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Objective
Management team
Market
Products and services
Competitive advantage
Financial forecast
3
FORECAST REVENUE, EXPENSES AND OPERATING
CAPITAL REQUIREMENTS
CALCULATE:
– Monthly projected sales revenue (minimum of 36 months)
• Break down by cash sales and credit sales (accounts receivable)
• Include assumptions
SUBTRACT:
– Monthly expenses
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Product costs
Salaries
Rent
Utilities
Insurance
Software subscriptions
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Travel
Interest on loans (assume market
rates)
Credit card processing fees
Any other significant expenses (except
depreciation)
– Other monthly cash outflows
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Non-financed fixed asset purchases
Product purchases that remain in
inventory
RESULT:
Operating capital required
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Principal payments on loans.
4
EVALUATE TYPES OF WORKING CAPITAL FINANCING
LINES OF CREDIT
– Short-term
– 12 months operating history
– Monthly interest payments
– “Callable”
– Secured
– Personal guarantee
– Covenants
TRADE CREDIT
– Typically 30 days
– Relationship/performance based
– No interest
5
DETERMINE CAPITAL NEEDED FOR FIXED ASSETS
FACILITY
EQUIPMENT
TECHNOLOGY
FURNITURE AND FIXTURES
VEHICLES
6
LIST YOUR PERSONAL ASSETS AND LIABILITIES
PERSONAL FINANCIAL STATEMENT
DEMONSTRATE FINANCIAL
COMMITMENT BY:
– Investing cash in the business
– Signing a personal loan guarantee
– Pledging personal assets as collateral
CREDIT REPORT
7
IDENTIFY POTENTIAL FUNDING SOURCES
BANK LOANS
SBA LOANS
LEASES
CREDIT UNIONS
VENTURE CAPITAL
GRANTS AND COMMUNITY
DEVELOPMENT LOANS
CROWDFUNDING
8
PUT TOGETHER A FINANCING PACKAGE
EXAMPLE FOR A CRAFT BREWERY
SOURCE
AMOUNT
Owner’s personal savings/investments
$50,000
Angel investor
25,000
Job creation grant from regional economic development authority
50,000
Grant from downtown development corporation to renovate
historic building (made to building owner who will leases to you)
50,000
Capital equipment loan from community bank
200,000
Total
$475,000
9
A CPA CAN HELP YOU
FINANCIAL FORECASTS
PERSONAL FINANCIAL STATEMENT
FUNDING SOURCES
FINANCING PACKAGE
BOOKKEEPING, FINANCIAL
STATEMENTS AND STRATEGY
10
Questions?
THANK YOU
© 2015 American Institute of CPAs. All rights reserved.