Economic Development Finance, TN Basic Economic Development Course 2013

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Maureen Collins‐Williams
University of Northern Iowa

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  • 577,000 of a $15k ask
  • Economic Development Finance, TN Basic Economic Development Course 2013

    1. 1. Economic Development FinanceMaureen Collins-WilliamsDirector, Entrepreneurship OutreachUniversity of Northern IowaMaureen.Collins-Williams@uni.edu#McWillie
    2. 2. Economic Development Finance1 The Role of Finance in ED2 Private and Public Sector3 Kinds of Business Financing4 Startup and Growth Finance5 Finance Programs
    3. 3. Finance and the EDOCore CompetencyMultiple PartnersMultiple RoundsKaty-Bees $15,000
    4. 4. Knowledge Base Needed by an EDo Finance Program Managemento Public Policy Behind the Programso Municipal FinanceClassic Kitchenand Bath$450.000
    5. 5. DebtEquityPrivate Sector LendingUrban Chickens…Omlet Chicken Coops$85,000
    6. 6. Commercial BanksCommunity Development FinanceInstitutions (CDFIs)Microfinance OrganizationsNon-Bank LendersTransactional LendersPrivate Sector Lending-Debt Financing
    7. 7. Dilutive Investmento Entrepreneur Loses Portion of Ownershipo Does Not Require Repaymento Business Capital is Used to Leverage DebtSourceso Friends and Familyo Angel Investors (Formal, Informal)o Venture Capital OrganizationsPrivate Sector Lending-Equity Financing
    8. 8. The Role of the Public Sectoro Fill Gapso Public Good Exceeds Risko DovetailsImproves AccessPublic Sector FinancingDisaster Recovery TechnicalAssistance Parkersburg, IAEF5 Tornado 2008
    9. 9. Lowers the Cost of BorrowingReduces the RiskAddresses Special NeedsProvides PackagingDirect Lending/ InvestmentTechnical AssistancePublic Sector FinancingNH Transfer and Storage$250,000
    10. 10. Factors Which Influence Finance OptionsStageIndustryEconomic Conditions
    11. 11. Two Kinds of Needo Working Capitalo Fixed AssetsUse of FundsMainStreet Waterloo
    12. 12. Seasonal IndustriesContractorsBusiness w/RapidGrowthNew to ExportingReplacement/RepairTypical NeedsNew Hampton MetalFab$650,000
    13. 13. Factorso Debt:Equityo Collateralo Amount of FundingNeededo TermChoosing the Financial ToolEntreFest 2013
    14. 14. EDO Direct LendingRevolving Loan FundsMicroloan FundsState Finance ProgramsFederal FinanceProgramsCrowdfunding!Tools and ProgramsSoybasics Candles$1.2 Million
    15. 15. EDO Direct LendingRevolving Loan FundsTools and ProgramsPeach Tree Tea Room$38,000
    16. 16. Microloan FundsState FinanceProgramsFederal FinanceProgramsTools and ProgramsBuchanan County EDC
    17. 17. Microenterprise Programsself-sufficiencyo increase economic self-sufficiencyo 500 to $5,000 loans (peer lending)self-employmento encourage start-up & expansiono $5,000-$15,000 loanssmall-scale enterpriseo existing businesses poised for expansiono $15,000 to $25,000 loansMaggieVandewalle,Nashville, TN
    18. 18. Direct Microlendingadvantageso Control of Fundso Group solidarityo Borrowers Accountabledisadvantageso Timeo Identifying LRCPlease See Your SBEManual For ElementsOf EffectiveMicro-loan FundLendingPages 162-166
    19. 19. Cost EffectivenessDelivering Microcredit is Costlyo extensive technical assistance & trainingSelf Sufficiency Ratioo internally generated fundso total program costsIncome Sourceso application fees and closing costso interest earned from lending or uncommitted fundso fees for technical assistance & trainingThe OneHat Band
    20. 20. Federal Programs SBA7(a)504Microloan ProgramDisaster AssistanceSmall Business Investment Company(SBIC)MoGo Organics
    21. 21. CrowdfundingSmall Investments Made by ManyTokens of AppreciationOnlineJOBS Acto Waiting on RulesSeed Money, Kickstarter
    22. 22. PlatformsKickstarterIndiegogoRocketHubGoFundMeRazooCrowdrisePledge MusicSellabandAppbackrCrowdfunderCrowdLeverFundaroleiCrowdPetridishUluleEarlysharesStartsomegoodSportfunder33needsChipInBuzzbnkInventionBuy.comCrowdtiltGo4FundingCumploDancefunderCrowdBnkFundAGeek
    23. 23. Inventory $ 30,000Furniture and Fixtures $ 15,000Equipment $ 5,000Supplies $ 5,000Accounting and Legal $ 1,000Signage $ 2,000Pre-Opening Training Costs $Insurance $ 500Deposits on real estate $ 1,000Deposits on utilities $ 500Remodeling $ 20,000Operating Capital $ 20,000Total Financial Need $100,000Bartlett’s Boutique
    24. 24. $100,000 total need$ 15,000 owner equity$ 85,000 outside investment neededHer package should look something like this:$100,000 total need$ 18,000 more owner equity$ 15,000 owner equity$ 67,000 outside investment neededBartlett’s Boutique
    25. 25. Cost Collateral ValueInventory $ 30,000 $15,000 (50%)Furniture and Fixtures $ 15,000 $ 7,500 (50%)Equipment $ 5,000 $ 2,500 (50%)Supplies $ 5,000 $ 0Accounting and Legal $ 1,000 $ 0Signage $ 2,000 $ 0Pre-Opening Training Costs $ $ 0Insurance $ 500 $ 0Deposits on real estate $ 1,000 $ 0Deposits on utilities $ 500 $ 0Remodeling $ 20,000 $ 0Operating Capital $ 20,000 $ 0Total Financial Need $100,000 $25,000Bartlett’s Boutique
    26. 26. Economic Development FinanceMaureen Collins-WilliamsDirector, Entrepreneurship OutreachUniversity of Northern IowaMaureen.Collins-Williams@uni.edu#McWillie

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