Financing Your Business

Getting StartedBootstrapping: Operating a business

as frugally as possible and cutting all unnecessary expenses.

Start-up MoneyEquity Financing:

Cash raised for a business in exchange for an ownership stake in the business

Debt Financing:Financing with loans that must be paid back with interest

Sources of Equity Capital/Financing

Personal SavingsFriends & FamilyPrivate investors (Angels)PartnersVenture Capitalists

Sources of Debt Capital/Financing

BankTrade CreditSBA LoanCommercial Finance CompaniesMinority Enterprise Dev. Programs

What Bankers ExpectFIVE C’s

1. Character2. Capacity3. Capital4. Collateral

5. Conditions

What Bankers ExpectFIVE C’s

1. Character:A. The borrower’s reputation for fair

and ethical business B. Business experienceC. Management team

What Bankers ExpectFIVE C’s

2. Capacity:A. The ability for the business to pay

the loan

3. Capital:A. The net worth of a business

What Bankers ExpectFIVE C’s

4. Collateral:A. Valuable assets a bank can claim if the

loan is not paid back

5. Conditions:A. Potential for growthB. Amount of competitionC. LocationD. Form of ownership

Start-Up CostsThe costs a business incurs before a business opens.

Determining Start-Up Costs

Suppliers Vendors Manufacturers Distributors Other businesses in your industry

Start-Up CostsRent

Security depositEquipment

Furniture, Fixtures, Phones, Computers, Counters, etc.Fees and Licenses

Permits, Licenses, Legal Fees

Promotion Expenses Business, Cards, Brochures, Forms,

Contingency