GUIDE TO ACQUIRING STARTUP FINANCING

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CONTENTS

BEFORE YOU BEGIN

FORECASTING

TYPES OF WORKING CAPITAL FINANCING

CAPITAL FOR FIXED ASSETS

POTENTIAL FUNDING SOURCES

FINANCING PACKAGES

HOW A CPA CAN HELP

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BEFORE YOU BEGIN

YOU WILL NEED:

A written business plan• Objective• Management team• Market• Products and services• Competitive advantage• Financial forecast

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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

• Product costs• Salaries• Rent• Utilities• Insurance• Software subscriptions

• Travel• Interest on loans (assume market rates)• Credit card processing fees• Any other significant expenses (except

depreciation)

• Non-financed fixed asset purchases

• Product purchases that remain in inventory

• Principal payments on loans.

– Other monthly cash outflows

RESULT:Operating capital required

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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

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DETERMINE CAPITAL NEEDED FOR FIXED ASSETS

FACILITY

EQUIPMENT

TECHNOLOGY

FURNITURE AND FIXTURES

VEHICLES

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LIST YOUR PERSONAL ASSETS AND LIABILITIES

PERSONAL FINANCIAL STATEMENT

DEMONSTRATE FINANCIALCOMMITMENT BY:– Investing cash in the business– Signing a personal loan guarantee– Pledging personal assets as collateral

CREDIT REPORT

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IDENTIFY POTENTIAL FUNDING SOURCES

BANK LOANS

SBA LOANS

LEASES

CREDIT UNIONS

VENTURE CAPITALGRANTS AND COMMUNITYDEVELOPMENT LOANSCROWDFUNDING

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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

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A CPA CAN HELP YOU

FINANCIAL FORECASTS

PERSONAL FINANCIAL STATEMENT

FUNDING SOURCES

FINANCING PACKAGE

BOOKKEEPING, FINANCIALSTATEMENTS AND STRATEGY

Questions?

© 2015 American Institute of CPAs. All rights reserved.

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