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Financing Your Business

Financing Your Business. Getting Started. Bootstrapping: Operating a business as frugally as possible and cutting all unnecessary expenses. Start-up Money. Equity Financing: Cash raised for a business in exchange for an ownership stake in the business Debt Financing:

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Financing Your Business

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  1. Financing Your Business

  2. Getting Started Bootstrapping: Operating a business as frugally as possible and cutting all unnecessary expenses.

  3. Start-up Money Equity Financing: Cash raised for a business in exchange for an ownership stake in the business Debt Financing: Financing with loans that must be paid back with interest

  4. Sources of Equity Capital/Financing • Personal Savings • Friends & Family • Private investors (Angels) • Partners • Venture Capitalists

  5. Sources of Debt Capital/Financing • Bank • Trade Credit • SBA Loan • Commercial Finance Companies • Minority Enterprise Dev. Programs

  6. What Bankers Expect FIVE C’s • Character • Capacity • Capital • Collateral • Conditions

  7. What Bankers Expect FIVE C’s • Character: • The borrower’s reputation for fair and ethical business • Business experience • Management team

  8. What Bankers Expect FIVE C’s • Capacity: • The ability for the business to pay the loan • Capital: • The net worth of a business

  9. What Bankers Expect FIVE C’s • Collateral: • Valuable assets a bank can claim if the loan is not paid back • Conditions: • Potential for growth • Amount of competition • Location • Form of ownership

  10. Start-Up Costs The costs a business incurs before a business opens. Determining Start-Up Costs • Suppliers • Vendors • Manufacturers • Distributors • Other businesses in your industry

  11. Start-Up Costs • Rent • Security deposit • Equipment • Furniture, Fixtures, Phones, Computers, Counters, etc. • Fees and Licenses • Permits, Licenses, Legal Fees • Promotion Expenses • Business, Cards, Brochures, Forms, • Contingency

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