1. Financing Your Business Keys to Understanding Your Banker

2. Everyone needs a banker….

3. You might not be understanding your banker if…

4. Supporting Information  Balance Sheet  Income Statement  Cash Flow Statement  Tax Return  Legal Documents  Business Plan

5. Cash vs Accrual Accounting “Cash may be king but cash basis accounting can too often be its assassin.” - Dr. Donald J Jonovic

6. 6 C’s of Credit  Character  Capacity  Capital  Cranium  Collateral  Conditions

7. Character (credit history)  Credit report  Public records  Credit reputation

8. Capacity  Repayment ability Banker Talk… Fixed Charge Coverage Debt Service Coverage Interest Coverage Funded Debt/EBITDA EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

9. Capital  Liquidity  Equity Banker Talk… Current Ratio Funded Debt to Capital Owner Equity

10. Cranium (aka Common Sense…) Does the story match the book?

11. Collateral  Real property  Chattel  Assignment of contract  Guarantors  Unsecured Banker Talk… Loan To Value Loan To Recovery Value Lien Position

12. Conditions  Factors with potential to influence repayment ability Banker Talk… Financial Covenants Affirmative Covenants Negative Covenants Reporting Covenants