Building a Bankable Business

Julio C. Canas
Building a
Bankable Business
@SCOREmiami / @jccanas

What Lenders Look For…
Character
Conditions
Collateral
Capacity
Capital
Cash Flow

What Lenders Also Look For…
Data is changing the way to get financing
Data Analytics
Behavior
Google
Digital ID
Social Media
Geography

First Steps
1. Check Your Credit
2. Ensure Your Records Are in Order
3. Prepare a Business Plan
4. Prepare a Financial Proposal
5. Organize Your Digital Life

FICO Score
• 3- Digit number ranging from 300-850
• Higher scores represent lower future risk of
default
• FICO scores use multiple scorecard designs to
segment population and increase predictability

Details Behind FICO Score
Nearly every major purchase is based on FICO:
• Home
• Automobile
• Revolving Credit
• Health Insurance
• Career Opportunities

Predictive Information
Considered:
• Accounts
• Inquiries
• Collections
• Public Records
Not Considered:
• Age
• Address
• Employment
• Income
• Gender

Components of Credit Score
35%
30%
15%
10%
10%
Payment History
Credit Utilization
Length of Credit
History
Credit Mix
Inquiries

Why is Credit Report Useful?
Consumer
Check accuracy of report
Identify fraud
Same as consumer, plus
Determine consumers’ credit
worthiness
Credit reporting agency
Compile and store consumer credit
information
Creditor
Marketing

Financial Records
• Orderly and accurate financial reports are
essential
• Accounting Software (e.g. Quickbooks)
• Hiring a Bookkeeper vs. DIY
• Understand your own financial statements

Not
OK
Financial Records

Financial Records
OK

Business Plan
Quantity vs Quality Well-organized

Business Model Canvas

BUSINESS PLAN
EXECUTIVE SUMMARY
THE TEAM
Management Profile
Why We Are a Winning Team
THE BUSINESS MODEL
Vision, Mission, and Values
How Our Business Model Works
Value Proposition
Target Markets
Marketing Plan
Key Resources and Activities
FINANCIAL ANALYSIS
Breakeven Analysis
Sales Scenarios and Projections
Capital Spending
Operating Costs
Funding Requirements
EXTERNAL ENVIRONMENT
The Economy
Market Analysis and Key Trends
Competitor Analysis
Competitive Advantages of Our Business Model
IMPLEMENTATION ROADMAP
Projects
Milestones
Roadmap
RISK ANALYSIS
Limiting Factors and Obstacles
Critical Success Factors
Specific Risks and Countermeasures
CONCLUSIONS
ANNEXES
financial spreadsheets
environmental analysis
implementation roadmap
SWOT and uncertainty analysis

Financial Proposal
• Personal financial statement
• Business financial statements
• Sources and uses of funds
• Cash forecast by month, for the first two years
of operations after receiving new funding

Personal Financial Statement
Assets
Liabilities
Net Worth
What
you
have
How
you
got it
Balance Sheet Income

Business Financial Statement
P&L and Cash Flow
Revenues
Expenses
Profit
Assets
Liabilities
Equity
What
you
have
How
you
got it
Balance Sheet

Sources and Uses of Funds
Fixed Assets:
• Land & Buildings
• Leasehold Improvements
• Equipment
• Furniture & Fixtures
• Vehicles
• Other Fixed Assets

Operating Capital:
• Pre-opening Salaries and Wages
• Prepaid Insurance
• Rent and Utility Deposits
• Supplies
• License & Permits
• Working Capital

Funding Available:
• Owner’s Equity
• Other Investors
• Additional Loans or Debt:
• Credit Card , Vehicle Loans, Commercial
Mortgage
• Other Bank Loans

Funds Needed
Fixed Assets
+
Operating Capital
-
Funding Available
=
Net Funds Needed

Cash Flow Forecast
Inflows:
• Beginning balance
• Cash sales
• Account receivables
Payments
Outflows:
• COGS/COS
• Salaries and wages
• Purchases
• Rent and utilities
• Marketing
• Other

Net Cash Flow
Cash Inflows
-
Cash Outflows
=
Net Cash Flow
Beg. Cash Balance
+
Net Cash Flow
=
End. Cash Balance

Organize Your Digital Life
• Avoid using 1st generation email addresses
• Use professional digital IDs & vanity url
• Think twice before posting on Social Media
• Develop your business digital presence
• Consistency across all digital spaces

Additional Considerations
• Conventional and SBA (partially government guaranteed)
• Line of credit or term loan
• Funds available for property purchase, construction, and
fitting out space, as well as for working capital
• Special consideration for professional firms
• Minimum loan amounts set by bank

• Bootstrapping
• Investor capital, including friends and
family
• Conventional financing from banks
• Lines of credit
• SBA 7a Loan program
• EXIM’s Working Capital Loan Guarantee
• 504 loans (fixed assets)
• Capital and Patriot Express Loans
• Community programs
• Peer to Peer lending
• Crowdfunding
Funding Options

Small Dollar Loans Celtic Bank
Small Loan Advantage Program
• Start-Ups OK
• Loans up to $150,000
• Working capital loans to businesses
• No: construction, location build out, business acquisition
• Franchise must be on SBA approved Franchise Registry
• Simplified application; faster processing
• 7 year amortization
• May be unsecured
• Variable interest rate
• No prepayment penalty

Miami Bayside Foundation
• Goal is to provide access to funds for local minority and women
entrepreneurs
• Business must be located in the City of Miami (as stated in its
occupational license)
• If start-up (under one year), owners must put up a 20% cash match
• Must demonstrate that the loan will aid in the creation of new jobs
• Purpose of loan can be for working capital, cash flow, inventory,
and/or equipment

Accion USA
• Provides micro-financing for small businesses
• Loans for start-ups up to $30,000
• Must have 6+ months in operation
• Credit score requirement lower than banks – interest rates
somewhat higher
• Free Webinars and online financial and business resources offered
• SCORE counselor can assist you with your application

Peer-to-Peer (P2P) Lending
• Uses the internet to match individual borrowers and lenders
• Lending site (e.g. Prosper.com or LendingClub.com) verifies
borrower’s credit history
• Interest rates reflect site’s own rating of borrower as well as
duration of loan.
Caveat Emptor – Buyer Beware
• Interest rates can be very high.
• P2P loans are considered personal debt, and will affect your credit
record in the future.

Crowdfunding
• Crowdfunding is:
– Individuals coming together to support, and directly fund,
projects by other entrepreneurs and businesses.
– There are several kinds of crowdfunding:
• Rewards – trading funds for various types of rewards.
• Donations
• Equity – trading funds for ownership in your company –
regulations being developed.
• Example of crowdfunding site – Kickstarter.com

Angel Investor
• Investment vs. financing vehicle
• You will have to give up a large slice of the business, at a
discounted price.
• Investors will set milestones. Funding will be provided as you
achieve milestones.
• Investors usually seek payback in five years.

Angel Investor
Florida:
• Emergent Growth Fund
• New World Angels
• Spring Board Capital
• Winter Park Angels
• Florida Growth Fund
• Tamiami Angel Fund
• Miami Innovation Fund
• The Funding Post - Distributed to 8,000 angel and venture
investors

Startup America
• Nation-wide networking site for small businesses.
• Offers advice and possible access to venture capital.
• Get-togethers in major cities for start-ups and investors.
• High tech companies with high growth potential preferred

https://miamidade.score.org/
Julio C. Canas
www.jccanas.com
Thank you!

Building a Bankable Business

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