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The Power of Credit
Confidential
2
Confidential
A Little About Me
Kenny Salas• Originally from L.A.• Co-Founder of Camino Financial,
credit platform helping small businesses access loans
• Worked five years on Wall Street investing and advising medium and large companies
• Served on the Board of Directors of Wise Foods and ANC Sports
• MBA, Harvard Business School • BA, UC Berkeley
3Business Financing = Porsche?
Confidential
Getting a loan is similar to buying a Porsche
It can get you where you need to go FASTER if driven responsibly
4Business Financing = Porsche?
Confidential
It can also get you into a deathly accident if driven recklessly
5The Power of Credit
Confidential
Credit can help your business reach new heights if managed responsibly
Fun Fact: Only 26 non-financial companies in the S&P 500 do not have debt
Some Reasons to finance your business:• Grow the top-line: acquire a competitor, equipment, new store, hire
more people, launch a new product
• Improve the bottom-line: buy supplies in bulk to get a discount or improve quality, invest in technology, remodel to attract new customers
• Address Short-Cash Needs: payroll, inventory and other working capital
Rule Of Thumb: Borrow Money To Make Money
Confidential
Types of Business Credit 6
Loan Category Installment Loan Line of Credit Cash Advance
What is this product? Installment loan paid over a specified period
Credit line based on short-term business assets (inventory, accounts receivable)
Cash advance in exchange for purchasing future receivables
How does it get paid back?
Installments payments of principal + interest
Owner pays back at his/her own discretion with interest charged on the outstanding balance
Loan is automatically paid back upon receipt of customer receivables less a transaction fee
What does a client use it for?
Business Investments Working Capital Working Capital
Product Types Unsecured LoansSecured Term LoansSBA Loans
Line of Credit Factoring Merchant cash advance
7
Confidential
How Does A Creditor Evaluate A Business?
• 3 Cs of Credit
– Character
– Capacity
– Collateral
• These 3 Cs help determine the Conditions for which a loan can be
made (i.e. loan terms such as tenor, interest rate, amortization)
8How Do I Access Business Credit?
Confidential
By telling a story to a debt investor that will understand your business
Telling Your Story• Financials (personal and business)• Credit history (personal and business)• Business plan
Institutional Business Creditors• Banks• Credit card companies• Specialty lenders (e.g. equipment, vehicle)• Online lenders
9Best Practices to Access Business Credit
Confidential
Prepare a solid story with hard facts
Protect and build your personal credit score
• Great resource: CreditKarma.com
Actively manage the cash flows of your business
• Great resource: banking mobile applications
Ensure all key business documentation is securely stored AND accessible
• Tax Returns
• Business Bank Statements
• Formation Documents
Maintain 2-3 open trade lines
Build a relationship with your bank or creditor
10Common Pitfalls
Confidential
A weak credit story makes it harder to finance your business
• Underreport on tax returns
• No open trade lines prior to applying for business financing
• Not maintaining a personal credit score above 650
• Low average cash balances and/or various overdrafts in bank account
• Same bank account for business and personal
• Not formed as a LLC or Corporation
• Key documentation not readily available
11Key Financing Terms
Confidential
The interest rate is important BUT it’s not the only loan term you should ask about
• Loan Size
• Interest Rate (calculate interest paid!!)
• Repayment schedule (i.e. amortization)
• Tenor
• Origination Fees
• Penalties
12How Should I Evaluate a Loan Offer?
Confidential
Again, it’s not only about the rate. Ask yourself more questions when evaluating the loan terms
• How much do I need to achieve my goals? BE SPECIFIC!
• How long is it going to take me to make money on the
investment?
• In the end, how much money am I going to make?
• Do the benefits overweigh the cost of the loan?
• How will the loan payment impact other cash needs of my
business?
13Camino Financial – Your Trusted Credit Advisor
Confidential
Camino Financial has partnered with LBA to provide FREE credit advisory to its members
All members inquiring about capital will work with a Camino Financial Associate to: • Evaluate their credit profile • Recommend the loan product that best meets your needs
For alternative loans we will:• Prepare and submit a loan application• Negotiate loan terms• Get you funded in less than 10 Days!!
Thank You
Together Moving Forward | Juntos Adelante
Schedule an appointment by calling us at (800) 852-0655 or visiting
caminofinancial.com