Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Financing Your Business This workshop will define and examine sources of business capital. Before approaching lenders, be prepared to answer their questions and concerns.

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Ohio Small Business Development Center Sponsored by: –Ohio Small Business Development Center –Kent State University Tuscarawas –Ohio Department of Development –Small Business Administration

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas How are small businesses financed? About 82.5 percent of small firms used some form of credit in Small firms use many different sources of capital, including their own savings, loans from family and friends, and business loans from financial institutions. Credit cards, credit lines, and vehicle loans are the most often type of credit. Commercial banks are the leading suppliers of credit, followed by owners and finance companies. Small Firms using Financial Services, 1998 (Percent reporting use of various types of credit)

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas How are small businesses financed? Credit TypeTotal Small Business Women- owned Minority & Hispanic Owned Any Credit82.5%78.2%76.9% Traditional Credit Types 55.0%46.1%49.0% Business Credit Cards34.1%28.8%28.6% Personal Credit Cards46.0%47.5%45.5%

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Steps in financing Develop A Business Plan Investigate Sources of Capital Prepare Loan Proposal Present Proposal

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Sources of financing Personal Equity Financing Borrowing from a Lender (debt financing)

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Personal Financing Savings Family & Friends Credit Cards Mortgage/2 nd Mortgage Home Equity Loan Life Insurance

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Equity Financing Partnership (General, Limited, Silent) Corporation Limited Liability Company Venture Capitalist

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Borrowing from a lender Financial Institutions (Lenders NOT Investors) Role of the SBA (Small Business Administration)

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas The loan proposal Loan amount & exact use of funds Description of the proposed business Information supporting the use of the funds. How the funds will be spent. Projected Income Statement Projected Cash Flow Statement Projected Balance Sheet

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas The loan proposal, cont. Other sources of funds being used in the business Personal Finance Statements of owners List of Credit references List of present and past business assoc. Personal background of applicant How and when loan is to be repaid

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas 4 C’s (Credit Factors) Capital Capacity Collateral Character

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Loan package requirements 1.Application form 2.Personal financial statement 3.Written business plan 4.Pricing strategy chart 5.Commitments from suppliers/customers 6.Three year cash projections with assumptions

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Loan package requirements, cont. 7.Historical Financials (if an existing business) 8.Past three years personal income taxes 9.Breakdown of loan uses 10.Written quotes on items to be purchased 11.List of collateral – with serial #, age, $$ 12.Insurance: quotes for start-up, proof of for existing business

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Loan package requirements, cont. 13.Lease or purchase agreement 14.Accountant or Attorney services & fees 15.Partnership agreement/corp. docs. 16.Licenses & permits 17.Resumes 18.References: Past employer, creditor, friend 19.Equity Injection

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Loan package requirements, cont. 20.Bank/Lender Commitment 21.Application fee: $25/$50/$100 (include with application submission) 22.Copy of vehicle titles or deeds (if pledging as collateral) 23.Other

Pat Comanitz, DirectorOhio Small Business Development Center Kent State University Tuscarawas Additional Assistance… Pat Comanitz, Director Ohio Small Business Development Center Kent State University Tuscarawas 330 University Drive NE New Philadelphia, Ohio Phone