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Financing Social Enterprises

Financing Social Enterprises. 1. A Focus on Low-Income Communities & Special Needs Populations Throughout the Midwest. Building better futures for families, children, students, patients, and individuals with disabilities. Capital Solutions Program Accessible capital for nonprofits

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Financing Social Enterprises

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  1. FinancingSocial Enterprises 1

  2. A Focus on Low-Income Communities & Special Needs Populations Throughout the Midwest

  3. Building better futures for families, children, students, patients, and individuals with disabilities • Capital Solutions Program • Accessible capital for nonprofits • Tailored solutions for community facilities • 5-year to 15-year loans • Financing from $10,000 to $1.5MM • Real Estate Services • Affordable facilities planning and project management • Effective community development • Research • Community investment analysis • Nonprofit financial health studies • Public Policy • Community Strategies

  4. What is driving the creation of social enterprises? 4 factors:

  5. Factors to consider when contemplating a social enterprise Does the proposed social enterprise provide employment or training opportunities for your clients? Can it provide quality goods or services at a competitive price? Will it be profitable for the nonprofit?

  6. Laying Groundwork: Assessing Readiness

  7. Sample Space Plan

  8. Laying Groundwork: Location Considerations

  9. Laying Groundwork: Location Considerations

  10. Project Development Budget Technical Assistance Worksheet #8: Creating a Project Development Budget

  11. SampleDevelopment Budget Total $1,984,360

  12. Developing A Program Expansion Budget Technical Assistance Worksheet #2: Projecting New Operations and Monthly Cash Flow

  13. LayingGroundwork:Sample Program Expansion Budget

  14. LayingGroundwork:EvaluatingFeasibility What is the surplus? Revenues - Expenses = $95,337 What debt can that support annually (with a debt coverage ratio of 1.2)? $95,337 / 1.2 = $79,448 annually What is the monthly payment? $79,448 / 12 = $6,621 monthly

  15. LayingGroundwork:Lease vs. Buy LEASE BUY Technical Assistance Worksheet #6: Making A Facility Decision

  16. Financing: Potential Sources of Funds

  17. Project financing can be as simple as securing a single loan or grant … Financing: Sourcing

  18. … or more complicated involving many layers of financing. Financing: Sourcing Coordinating the timing of financing sources and construction timelines is critical to project success.

  19. Important Five Factors: Organizational Capacity

  20. Important Five Factors: Financial Capacity

  21. Readiness Indicators: • Liquidity/Cash • Working Capital • Net Assets • Debt Coverage • Days Receivable • Days Payable

  22. Important Five Factors: Capital

  23. Important Five Factors: Collateral “Second Way Out”

  24. Important Five Factors: Conditions for opening a social enterprise

  25. Assess your strengths and weaknesses from a lender’s perspective using the five factors Determine what steps can be taken to strengthen your organization’s application Work with your board and leadership team to establish benchmarks to achieve access to capital Seek specific input and guidance from your bank or real estate expert to acquire potential resources or external expertise Whatif I am not ready?

  26. Questions?

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