1. FINANCING YOUR BUSINESS
Welcome – Introduce trainers
FINANCING YOUR BUSINESS

2. BUSINESS DEVELOPMENT Where are you in the Business Life Cycle?
PROGRAM OVERVIEW
Loans
IDA:
Matched Savings S E S E
Qualify
Up to $20,000, New Business
Up to $50,000, Exist Business
$500-$1,000, Credit Builder
Next Level:
Foundations II
For qualified businesses
IDA: $500 saved, $4,000 matched E
Start Smart:
Foundations I I S
Seminars S I S E
IDEA:
Have an idea, not sure what to do with it
START UP:
Beginning or in operation
less than one year
EXISTING:
Generating revenue for at least 12 months I S E
Where are you in the Business Life Cycle?

3. ACCESS TO CAPITAL: WHERE ARE YOU NOW?
What is your business and what do you need to finance?
How much do you need?

4. ACCESS TO CAPITAL: LANDSCAPE OF FINANCING
Where do Entrepreneurs get their money?
Kauffman Foundation Study
Personal Savings
→ More than ½ of young companies get ALL of their $ from savings, and follow it up with positive business cash flow
Credit Cards
Friends and Family
Banks
Venture Capital
Others – peer to peer lending, crowdfunding, angel investors

5. WHAT KIND OF FINANCING IS RIGHT FOR YOU?
Equity
Debt
IDAs
Finance long term assets?
NOT with short term credit.
Loans
Non-bank CDFI
Crowdfunding
Local investors
Commercial Banks
Credit Union
SBA - government
Revolving Credit
Credit Card
Operating Line
Owner Savings
Friends & Family
Business Partners
BUSINESS CAPITAL

6. PERSONAL SAVINGS – MEET TOM
#1 source of founder investment – first place most go to
Have you been saving funds for this business?
Are you personally invested into your business and its success?
Get scrappy!

7. FRIENDS AND FAMILY Friends & Family #3 source of investment
Must consider current relationships, potential strains
Can be a great source of patient capital – flexible terms.
Rental support, cosigning, collateral, general living expenses
You never know unless you ask! Be prepared with pitch

8. ACCESS TO CAPITAL: WHERE ARE YOU NOW?
How much can you readily access?
How much are you willing to contribute?

9. INDIVIDUAL DEVELOPMENT ACCOUNTS (IDA’S)

10. INDIVIDUAL DEVELOPMENT ACCOUNTS
IDAs
Matched savings business grants
Longer time commitment – start up funding or future money for growth and reinvestment
Pairs valuable training and incentivizes saving money to get capital for hard asset and equipment purchases
Low risk, high reward
Individual Development Account = Matched savings business grant program. MCNW has a 3:1 match. Save $1,000 get matched with $3,000. Etc
There are a couple of key items to consider to determine if your business might be a good fit for crowdfunding, ‘social capital’, communication channels, long –term benefits, ability & resources to run a campaign.
- It can be a good option to consider if:
- You will derive marketing benefits from running a campaign? New customers & customer loyalty
- You have a successful business but are having trouble accessing capital
- Can mitigate risks
No Free Money! Typically lots of effort and risk are involved with crowdfunding just like other financing sources.
Do your research, many platforms out there so make sure you’ve done your homework to find an appropriate fit.

11. INDIVIDUAL DEVELOPMENT ACCOUNTS
IDAs
8:1 Matched-Savings Business Grant
Income and net worth restrictions
Must be a Walla Walla County resident
Need a source of earned income
Enrolling now!
Individual Development Account = Matched savings business grant program. MCNW has a 3:1 match. Save $1,000 get matched with $3,000. Etc
There are a couple of key items to consider to determine if your business might be a good fit for crowdfunding, ‘social capital’, communication channels, long –term benefits, ability & resources to run a campaign.
- It can be a good option to consider if:
- You will derive marketing benefits from running a campaign? New customers & customer loyalty
- You have a successful business but are having trouble accessing capital
- Can mitigate risks
No Free Money! Typically lots of effort and risk are involved with crowdfunding just like other financing sources.
Do your research, many platforms out there so make sure you’ve done your homework to find an appropriate fit.

12. ACCESS TO CAPITAL: WHERE ARE YOU NOW?
Who here is in the IDA program?
What will you use the funds on?

13. Idea Stage or Nonprofit
WHAT IS CROWDFUNDING?
Funding a project by raising small amounts of money from a lot of people
Donation Based
Funders donate money, typically for non-profit causes
Reward Based
Funders provide money for rewards based on how much they give
Loan Based
Funders provide money as a loan that will be repaid by the business
Equity Based
Funders provide money in exchange ownership of the company
Idea Stage or Nonprofit
Idea Stage/ New
More 1 Year Operation
Mature Business
-You’ve probably hear a lot about crowdfunding so we are going to take the next 10mins to give you a brief overview and some things to think about regarding if it could be a useful option for your business
- First: Here is an introduction to the wide variety of different types of crowdfunding that are out there , all the way from:
Donation based where folks are giving away their money
Reward based, (Kickstarter & indigogo are examples where companies essentially ‘pre-sell’ products or services, can get upfront money, but businesses will most likely have to ship a product or fulfil a service as part of the reward later
Loan Based – companies run campaigns, get a loan amount, more flexible capital, & repaid over time, typically w/some interest or fees NOTE: All the considerations in this presentation, should also be kept in mind if exploring loan-based crowdfunding
Equity – Few sites where you can crowd-source equity ownership, but that is for more established businesses and we won’t cover here
Important distinction to think about is ‘debt’ vs non-debt based, however even in the non-debt based version, you may have still have to fulfill an obligation in the form of a product of service
Non-Debt Based
Kickstarter
Go Fund Me
Indiegogo
Crowd Supply
Debt Based
Kiva Zip
Funding Circle
Lending Club

14. CROWDFUNDING – CASE STUDY
There are a couple of key items to consider to determine if your business might be a good fit for crowdfunding, ‘social capital’, communication channels, long –term benefits, ability & resources to run a campaign.
- It can be a good option to consider if:
- You will derive marketing benefits from running a campaign? New customers & customer loyalty
- You have a successful business but are having trouble accessing capital
- Can mitigate risks
No Free Money! Typically lots of effort and risk are involved with crowdfunding just like other financing sources.
Do your research, many platforms out there so make sure you’ve done your homework to find an appropriate fit.
Case Study
Abram Goldman-Armstrong – Cider Riot!
Strength of Network
Strong Video and Content
Builds credibility

15. IS CROWDFUNDING RIGHT FOR ME?
Do we have ‘social capital’ & communication channels?
Do we have internal resources to conduct outreach?
Structured to have long term benefits?
Consider
Platform Research
Are there local representatives to provide assistance?
Have businesses similar to me succeeded?
What is the relationship between supporters and the business? Profit vs. Community?
Fees/Risks?
There are a couple of key items to consider to determine if your business might be a good fit for crowdfunding, ‘social capital’, communication channels, long –term benefits, ability & resources to run a campaign.
- It can be a good option to consider if:
- You will derive marketing benefits from running a campaign? New customers & customer loyalty
- You have a successful business but are having trouble accessing capital
- Can mitigate risks
No Free Money! Typically lots of effort and risk are involved with crowdfunding just like other financing sources.
Do your research, many platforms out there so make sure you’ve done your homework to find an appropriate fit.

16. IS CROWDFUNDING RIGHT FOR YOU?
Indiegogo Presentation Notes
Find your champions, the ones who will support and promote
30% rule – have 30% raised before launch
Create a feeling of membership - not a customer but part of your story
Have a brand…Paint a Picture… Have a STORY
Prepare - video, content, build list
Define your target market

17. ACCESS TO CAPITAL: WHERE ARE YOU NOW?
Who here has a good business fit for crowdfunding?
Does anyone have experience with crowdfunding?

18. IS A LOAN RIGHT FOR YOU? Loans
Banks are the #4 source of capital for businesses
The problem – banks don’t fund young companies, and when you need it, you can’t get it
“You can get all the money you want as long as you don’t need it.”
Are you ready to take on debt financing? Is debt an appropriate tool for you?

19. GETTING TO YES MCNW Loans
Experience and credibility are very important
Mostly weighted to last 12 months of credit history – no adverse history or outstanding judgments/liens/collections
Adequate income and/or revenue through business, and demonstrated commitment to business via investment
Targeted to business growth – quality use of funds

20. HOW DO I BECOME “LOAN READY?”
Business Analysis & Cash Flow Projections
Are your projections realistic and cover your expenses?
Do you have relevant experience & managerial capacity?
Credit
Do you have a history of timely, reliable repayment?
Sign up for credit counseling, make on-time payments, pay off outstanding collections/lien/judgments
Household Finances
Personal income and debt can be covered, strong personal financial position
Decrease your debt burden – increase your buffer
A strong secondary source of income and/or co-signer is always a great help in the underwriting process
Investment to Loan- “Skin in the Game”
Demonstrate commitment to this business through savings, IDA, family gift, crowdfunding
Collateral
Quality of collateral (accessible, liquid, etc)
Build assets and have collateral you are willing to pledge as security (real estate, personal vehicles, equipment, etc.)
Use of Funds: Project Budget
Global cash flow
When is the right time to ask for a loan, what amount?

21. Develop Your 5 C’s 5 C’S OF LENDING Character: Cashflow: Capital:
Credit
Borrower’s reputation
How have you managed credit in the past?
Credit Counseling
Repairing credit
Debt Management
Household & Business
How to make a plan to prioritize paying back debt.
Cashflow:
Capacity
Borrower’s ability to repay a loan comparing income against recurring debt.
How will you
repay the loan?
Business Revenue
Secondary Income
Savings
Small Business Classes
Increase business revenues by building better practices.
Capital:
Commitment
Borrower investment in the business.
Do you have “skin in the game”?
Project Budget
Build a budget for your project.
How much money will you contribute to your business and how much do you expect a lender to cover?
Collateral
Borrower assets used to secure the loan.
What assets can you pledge to secure the loan?
Vehicle Titles
Deed of Trust on Home
Small Business IDA
IDA’s help individuals with limited financial resources build assets that can be used as collateral.
Conditions
Current market conditions and how the borrower’s company fits into it.
Why will your business be successful in the current market?
Market Research Tools
Industry Research
Book a Librarian
One on one assistance
Are character and credit history one in the same?
Character
Capacity
Capital
Collateral
Conditions
Borrower Characteristics:
Lenders weigh these five characteristics to determine the credit worthiness of a potential borrower.
Small business technical assistance providers support you in developing capacity across the 5 C’s.

22. ACCESS TO CAPITAL: WHERE ARE YOU NOW?
Who here has applied for a loan?
What was your experience?

23. Rural Walla Walla and Columbia County
REGIONAL RESOURCES
Non Profit Lenders
Low
High
Coverage
IDA’s
Revolving Products
Business training
Benton-Franklin Council of Governments bfcog.us
$5,000
$150,000
Rural Walla Walla and Columbia County No
Craft3 craft3.org
$25,000
$1,000,000
OR & WA
Greater Eastern Oregon Development Corporation
geodc.net
$1,000
$250,000
Umatilla County
Mercy Corps Northwest
mercycorpsnw.org
$500
$50,000
Yes
Loan Range
Are character and credit history one in the same?
Character
Capacity
Capital
Collateral
Conditions
Crowdfunding
Kick-starter
0% Interest
5-10% Fees
Premiums
Indiegogo
Kiva Zip
0% Fees
Loan-full repayment

24. SMALL BUSINESS FINANCING - THE REALITY