Small business funding options

Transcription

1 Small business funding options 60 minutes of straight talk! Donna J. Davis Former Regional Administrator U.S. Small Business Administration 11/16/17 WiFi: QBConnect Password not required

2 About today s speaker Donna J. Davis Served as Regional Administrator of the Small Business Administration (SBA) for Region IX (AZ, CA, HI, NV, and Guam) from 2013 to early Serial entrepreneur, founder of a global event management corporation, international speakers bureau. Successful small business owner, currently President & CEO of DIR Group, a leading business & advocacy consulting firm. 2

3 Agenda The language key terms Options for funding Funding considerations Getting approved common challenges Building business credit 3

4 Key terms 4

5 Fees Origination fees Prepayment Fees 5

6 Interest and APR are not the same The interest rate is the cost of borrowing the principal loan amount (it can be variable or fixed). The APR (annual percentage rate) is a broader measure of the cost of borrowing because it reflects the interest rate, fees, term length, and repayment frequency. 6

7 Funding options Personal funds Equity / Investment backing Borrowing from lenders 7

8 Personal funds Family & friends Crowdfunding Personal savings Personal assets PROS Don t give up ownership Usually very low or no interest You choose source that works for you CONS Still on your own not getting an advisor Risking your personal finances (or those of your friends/family) Doesn t build business credit 8

9 Equity / Investment backing PROS Provides business expertise, resources and guidance. Looks at your idea s potential rather than risk Investors brings their network/connections CONS Giving up ownership; could be over 50% Backers may think short term rather than long term Investment partners may not agree with your vision. 9

10 Borrowing from lenders Banks & Credit Union Government backed loans Online lenders Merchant financing QuickBooks Capital 10

11 Borrowing Banks & Credit Unions PROS Don t give up ownership Payments follow a set schedule Builds your business credit history You control how you spend the funds. CONS Payback may be a drain Lots of paperwork, time to funding If you re new or small, you may be considered high-risk (high rates). 11

12 Borrowing - Government backed loans PROS Don t give up ownership Usually better rates and terms Lenders like the government guarantee Builds guarantee your business credit history CONS Lots of paperwork, time to funding Will most likely need an advisor Spending restrictions 12

13 Borrowing - Online lenders PROS High approval rate Less paperwork May lend to smaller/newer businesses CONS Higher rates Non-standard lending terms. Read the fine print! Less established institutions 13

14 Borrowing - Merchant financing PROS Loan amount based on payment processing volume and frequency Fast decision Business credit history may not be important. CONS Must have credit card processing volume Automatic repayment, takes a percentage of your daily card sales APR may be unclear, difficult to compare options. 14

15 Borrowing - QuickBooks Capital 15

16 Borrowing - QuickBooks Capital PROS Looks at your business whole story Apply from directly within QuickBooks Lends to smaller/newer businesses CONS Need to have bank account connected to QuickBooks May not lend in your country/state or to your legal entity type of business YET Smaller loan amounts and shorter terms 16

17 Funding considerations How much do you need? What are you using the funds for? What are the terms; what can you afford to payback? What is your business and personal credit scores and history? Are you willing to give up some ownership? Documentation requirements and preparation. 17

18 Getting approved - Common challenges Poor credit history Cash flow challenges Young business Risky industry Lack of collateral Documentation issues 18

19 Building business credit 6 steps Separate personal and business Get listed Obtain business credit Use your credit, but not too much Payment history Monitor business credit 19

20 1. Separate personal and business Tax ID - Business Legal Entity Type - EIN vs. SSN Bank account Credit cards Business license Website 20

21 2. Get listed Dun & Bradstreet (D&B) - Get a D-U-N-S number Experian Small Business Equifax Small Business 21

22 3. Obtain business credit Business credit card(s) Line of credit from your bank/credit union Establish trade lines of credit with your suppliers - Office supplies distributor - Accountant - Legal - Bottle water vendor - Etc. Work with and ask your supplier to report your payments to a business credit bureau! 22

23 4. Use your credit but not too much How much available credit do you need? Keep credit utilization at less than 25% Don t overextend, watch your cash flow 23

24 5. Payment history Make payments on time or early Don t just pay the minimum amount due Don t max out your credit cards 24

25 6. Monitor business credit Review both business and personal credit reports Take steps to improve credit rating if it is declining Keep your business public records clean - If errors get them fixed right away 25

26 Summary Get organized and prepared Thoroughly research and vet your options Get expert assistance and help Dream big, be bold and prosper! 26

27 Join us Business owners share how they got funding to grow Room: 230 A TODAY at 2:50pm QuickBooks Capital leader Rania Succar is hosting a panel discussion, "Business owners share how they got funding to grow where you'll hear how 4 business owners funded their businesses, and what they learned along the way. Come by the Small Business booth to learn more. Visit us

28 Access the presentations & continue the conversation The QuickBooks Connect 2017 Conference App The QuickBooks Community qbcommunity.com Sign in with your QuickBooks login

29 Questions?

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