G E T T I N G T O Y E S 1 26 11 Final

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Slides for a presentation about applying to the NC Rural Center\'s Microenterprise Loan Program. Basics of what lenders look for.

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G E T T I N G T O Y E S 1 26 11 Final

  1. 1. Getting to Yes:Unlocking Funds For Your Small BusinessBusiness Development & Entrepreneurship Centerwww.pccbusiness.com1-26-2011 1
  2. 2. Let’s start by getting this out of the way! 2
  3. 3. Grants! Everybody wants one! Extremely rare for most industries. Those that exist don’t cover all costs. Don’t get scammed! 3
  4. 4. Getting To Yes So I can’t get a grant, where are the loans? Banks/Credit Unions Self-Help Credit Union • www.self-help.org Kerr Tar COG • www.kerrtarcog.org NC Microenterprise Loan Program Community Programs 4
  5. 5. Getting To Yes Can’t I get an SBA loan? Not from the SBA, they’re not a direct lender. Plan to work with a bank. Several programs are available. If you qualify. 7a 504 Microloans Additional costs are involved. 5
  6. 6. Getting to Yes Start with “Why” you want funding. Start up costs Expanding an existing business Short term capital needs Long term investment (purchase) 6
  7. 7. Getting To Yes To start/expand your businesses: 1. Develop the concept/idea 2. Write the business plan 3. Locate help/technical assistance (TA) 4. Research loan options 5. Check your credit 6. Prepare your application 7. Follow up 7
  8. 8. Getting To Yes A good business concept will: Be clear and consumer friendly Identify a niche consumer (market) Be specific about the consumers your business plans to serve Explain how your service is tailored to your consumers Explain why customers will buy from you 8
  9. 9. Getting To Yes Your written business plan is a “road map”: Keep it simple Keep the information consistent Keep it current 9
  10. 10. Getting To Yes A business plan written correctly: Contains the business financials Sells the business in a positive manner Illustrates why you will be successful. Showcases your knowledge as its owner or proposed owner 10
  11. 11. Getting to Yes You don’t have to do this alone. Get some help!  Business Development & Entrepreneurship Center • www.pccbusiness.com  Small Business and Technology Dev. Center • http://www.sbtdc.org/  North Carolina Institute of Minority Economic Development & Women’s Business Center • www.ncimed.com 11
  12. 12. Getting to Yes Preparing a loan request: Have a clear use of funds; know/understand exactly what money will be used for. Verify this information with written estimates and quotes, whenever possible. Information should be consistent from application to business plan. 12
  13. 13. Getting to Yes Preparing a loan request: Know loan requirements Inquire about loan terms upfront  Know the lenders “lending” focus and limitations 13
  14. 14. Getting to Yes What does the lender look at? Credit Cash flow Capacity Collateral Character 14
  15. 15. Getting To Yes Credit ( Do you pay people back?): Credit Score Credit Report History Public records Outstanding balances Amount and types of credit Ratios 15
  16. 16. Getting To Yes Know current credit history: Address blemishes before applying for funding Incorrect information Liens and judgments Collections and charge offs Late payments If needed contact: Consumer Credit Counseling 1-877-877-1995 16
  17. 17. Getting To Yes Credit reporting agencies: Equifax  Experian Trans Union Get a free copy of your credit reports at www.annualcreditreport.com Get a free credit score at www.creditkarma.com 17
  18. 18. Getting To Yes Cash Flow: Refers to moving money into and out of a business. Will there be enough cash flow to pay the loan? Should be included in the business plan Also demonstrated with profit/loss statements and balance sheets 18
  19. 19. Getting To Yes Capacity (Can you pay us back?): The ability to repay debt both present and future, as well as The ability to manage a business as its owner Secondary sources of repayment 19
  20. 20. Getting To Yes Capacity Counts: Refer to the business plan as evidence of capacity. Know your market! Demonstrate that you can compete. 20
  21. 21. Getting To Yes Capacity vs. Challenges: Don’t ignore challenges in your plan. Challenges impact your bottom line and if not addressed can destroy your business. Once you have acknowledged your challenges plan to overcome them. 21
  22. 22. Getting To Yes Collateral (What if you don’t pay us back?): Stuff they can take if you don’t pay. Almost always required as security for the loan Often viewed as a secondary source of repayment. Can be inventory, equipment, vehicles or real estate. Lender prefer collateral that can be easily liquidated. 22
  23. 23. Getting to Yes Collateral vs. Risk: Lenders want to minimize their risk To offset their risk, lenders look to collateral first and foremost Collateral guides the level of risk Character can also impact risk 23
  24. 24. Getting To Yes Lack of Collateral? Play up strengths, such as experience and training/certifications or strong competitive advantage Consider having a cosignor 24
  25. 25. Getting To Yes Character (Can we trust you?): Most subjective Does applicant show themselves to be trustworthy? What is the “financial reputation”? Are you honest and consistent in the business plan and application? Do you have the right attitude for your industry? 25
  26. 26. Getting To Yes Character is honesty It is also the best policy and the easiest to remember . Resist overstating facts, this can result in your application being declined. Do what you say you will do! 26
  27. 27. Getting To Yes Character is accuracy: Verify as much information as possible. Give sources if applicable If you don’t know something state that you don’t know. Do your homework. 27
  28. 28. Getting To Yes Character is being prepared to talk : Lenders ask questions Try to anticipate questions ahead of time Try to establish a relationship with the lender Do not “Beat up the Lender” 28
  29. 29. Getting To Yes Finally! Create a good track record for future funding needs. OR If you are declined understand why and ask for other references or assistance. 29
  30. 30. Getting To Yes Questions? 30

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