This document discusses various sources of capital and funding options for small businesses. It defines capital and outlines two main ways to acquire it: earning it or borrowing it. The document then summarizes various funding options for starting a business, funding growth and expansion, and borrowing versus self-funding. It also discusses other ways to speed up access to capital and provides an overview of lines of credit, business credit cards, term loans, and real estate-secured loans, including their key characteristics, pros, and cons. The presenter emphasizes that small businesses may use credit to support operations but that self-funding is usually best and stresses the importance of establishing relationships with good resource partners.

1. Presented by: Katina Phillips, VP Business
Banker
Access to Capital

2. Copyright 2019 EVERFI,
Inc.
Worksho
p Goal
s
1) Define Capital
2) Funding a Start Up
3) Funding Growth and
Expansion
4) Borrowing vs Organic
Cash Flow
5) Other Ways to Speed Up
Access
6) Understanding Credit
Products
T
oday, you
will
learn the following...

3. What Is Capital?
Simply put, capital is the life blood
of any business. It’s like the fuel
an engine requires to move.
In most cases, there are 2 ways
to acquire capital.
1. Earn it
2. Borrow it
wealth in the form of money or other assets owned
by a person or organization or available or
contributed for a particular purpose such as starting a
company or investing

4. Funding A Start Up
• Personal Savings.
• Private Investor/Crowd Funding.
• Personal Loan.
• Conventional Lending or SBA
Guaranteed Loan.

5. Funding Growth & Expansion
• Adding Products or Services.
• Purchasing Equipment & Other
Assets.
• Short Term Working Capital.
• Loans vs Lines of Credit.

6. Borrowing vs Self Funded
Short-Term Needs
(such as paying bills or
covering travel expenses)
• Lines of credit (secured
and unsecured)
• Business credit cards
• Self Fund when possible
Long-Term Needs
(such as buying a vehicle,
real estate, or equipment)
• Unsecured term loans
• Non-real estate-secured
term loans
• Real estate-secured
term loans
• Self Funding is
more difficult

7. Other Ways to Speed Up Access
Payment Processing and Automated Invoicing
• Accepting Debit/Credit Cards
• Payment Apps (Zelle, Applepay, Venmo etc.)
• Invoicing Software
Alternative Solutions
• Merchant Advance
• Invoice Advance (factoring)
• Offering Discounts for Early Pay
• Taking Advantage of Delayed Payment Options

8. Understanding Credit Products

9. Lines of Credit
WhatAre Their Characteristics?
• Provide short-term finances
• Allow borrowing up to a certain dollar amount
• May be revolving: as principal is repaid, it
becomes available again
• Can be repaid with interest in installments over
time
• Have interest rates that may fluctuate with time
Why UseThem?
• Fund ongoing operations
• Have working capital and easy access to cash
• Have cash flow, especially during seasonal
fluctuations
• Acquire inventory
• Meet short-term goals
• Take advantage of trade discounts

10. Pros and Cons: Lines of
Credit
Pros
• Are more flexible based on cash
flow needs—especially during
seasonal fluctuations—or
unexpected situations.
• Have a lower interest rate and
closing costs than term loans.
• Can be repaid incrementally.
Con
s
• Can be riskier: depending on the
type of business you have, you may
be personally liable if your business
fails.
• May have adjustable interest rates
based on the index on which they
depend.
• May have annual fees and require
you to provide financial documents
every year.
• May have to be fully repaid at
some point during a 12-month
period. Matched the wording in the
FG.

11. Business Credit
Cards
WhatAre Their Characteristics?
• Are issued to businesses rather than
individuals
• Are used to make purchases related to the
business
• Usually have higher credit limits than
personal credit cards
Why UseThem?
• Have purchasing power wherever you go
• Allow for authorized users
• Provide access to cash
• Establish your business’s creditworthiness

12. Pros and Cons: Business Credit
Cards
Pros
• Can add other authorized
users and track their
expenses.
• Can assign credit limits for
authorized users.
• Keeps your personal expenses
separate from your business
expenses.
• May have a robust rewards system.
Con
s
• Because authorized users are not
responsible for paying the bills, they
may misuse the card.
• Mishandling a business credit
card account may negatively
affect your personal credit
report .
• If you have a large balance,
compound interest can add up
quickly.

13. Term Loans
WhatAre Their Characteristics?
• Provide a fixed amount
• Are for a specific purpose
• Are repaid over a fixed period, up to 30 years
• Are usually secured with collateral
• Offer repayment in installments
Why UseThem?
• Purchase vehicles or equipment
• Purchase capital assets or anything that has long-term value and
durability, apart from real estate and software products
• Close on acquisitions
• Fund construction projects

14. Pros and Cons:Term
Loans
Pro
s
• Help finance major expenses and
keep cash available for working
capital.
• Are repaid with fixed monthly
payments, which allows for easy
budgeting and financial
management.
• Are used to purchase
equipment, vehicles, or other
long-lived assets.
• Are used to fund growth for
well-established, profitable
businesses that require permanent
working capital.
• Provide one lump sum at the time
of funding.
Con
s
• May have higher closing costs and
interest rates than lines of credit,
depending on whether a loan
product is secured or unsecured.
• Require borrower to reapply
for additional funds.

15. Real Estate-Secured
Loans
WhatAre Their Characteristics?
• Are for purchasing property that will
generate its own income
• May be for a high loan amount
• Have higher interest rates than personal real estate loans
• May have repayment terms of 5 to 20 years
Why UseThem?
• Non-owner-occupied real estate loan: Acquire or purchase
commercial property that will generate its own income
• Owner-occupied real estate loan: Purchase property or improve
on land that will be used to conduct business operations

16. Pros and Cons: Real Estate-Secured
Loans
Pros
• Flexible terms up to as long as 20
years, with an option to repay in
installments
• Opportunity to finance real estate,
such as owner-occupied properties
• Opportunity to finance
leasehold improvements
Con
s
• Down payments may be higher
• Additional fees may raise the total
cost of the loan
• May have prepayment fees,
severe penalties, or even
lockdowns on early repayments
• Interest rates may be higher than
those for personal real estate loans
because the risk to the lender is
higher

17. Copyright 2019 EVERFI,
Inc.
Summar
y
Remember..
1) Small businesses may
use credit to support
operations, purchase
equipment, or expand
services. However,
self funding is usually
best.
2) Establish a relationship
with good resource
partners.

18. “Making the decision to sign your own
paycheck is huge! You’ve got this!”
-Katina Phillips
904-505-6970