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Where’s The Money. Dave McLaren Iowa Small Business Development Centers 641-782-1483 mclaren@swcciowa.edu. Are You Bankable?. Putting together your financial package. Five C’s of Credit. Rate Yourself on each of these - PowerPoint PPT Presentation
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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
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