Burlington County Library System, UCEDC of New Jersey, Rowan College of Burlington County

1. Stage 3: Preparing to Grow
Lesson 4: Financing Your Business
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2. Review
• Concepts and questions from previous lesson(s)
• Elevator pitch
• Facilitator will share with students learning
objectives for the day:
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3. Learning Objectives
• Define targeted investors for your start up
• Understand the Investment process and needs of
investors
• Identify how due diligence happens and how to be
prepared
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4. • Feature set for MVP
• Validated learning
• Pivots
Problem worth solving? Built something people want? How accelerate growth?
Ideal time to
raise funding Concept Source: Blank Four Stages
to the Epiphany; Maurya, Running Lean
Image Source: Startitup

5. Considerations
• Do I have the resources around me to succeed?
• Who is a great investor for your company?
• Where do you find qualified investors?
• What are you going to use the money for?
• Where will that investment take you?
• How much money do you need?
• Are you ready?
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6. Start-Up Capital Sources
• Bootstrap
• Credit Cards & Savings
• Friends & Family
• Crowd-Funding (Kiva, KickStarter, IndieGoGo…)
• Angel Investors
• Venture Capital
• Investment Banks & Private Equity
• Banks & SBA Loans
• Fed/State/County/City Programs
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7. And another thing about Partnerships
• Potential source of capital
• Complexity
• Formal Partnership Agreement
• Intangibles
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8. What’s Best? (What’s Possible?)
• Loan vs. Gift
• Debt vs. Equity
• Timing (Pre-Sale, Finance Purchase Orders,
Factoring/Loans against Receivables)
• No Free Lunch – or Grants, either
• “Skin in the Game”
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9. Bootstrap, Savings, Credit Cards
• Most common financing method, along with
Friends/Family
• Caution: Promotional Rates
• Tiny bets & incremental funding*
• What you can afford to lose
• Borrowing from 401Ks
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10. Friends, Family, Angels
• Personal relationship – and network
• Invest in the person more than the business
(usually)
• Clarity about nature of investment
• Ownership, interest, repayments
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11. What (all) Funders Want
• Loan Amount & Use of Funds
• Legitimacy
• Business-Like (accuracy, responsiveness)
• Clarity (what and how)
• Meaning & Purpose
• Impact
• Alignment with THEIR goals
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12. Crowdfunding
• Kiva (USA)
– Loans $10K max/3 year repayment
• Kickstarter, Indiegogo, etc.
– Pre-Sale model
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13. Venture Capital
• Typically 2nd – stage funding
• VCs are looking for high growth, big profits
• May be a combination of equity & debt
• Strongly associated with specific types of
businesses – and not with others
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14. Traditional Lenders
• Tend not to lend to “start-up” businesses (less than
two years in business)
• Some banks don’t work with “small” loans at any
stage
• Collateral required
• Strict lending guidelines
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15. SBA: Small Business Administration
• Self-sustaining Federal program
• No direct loans to individual businesses
• Offer loan guarantees to lenders – not borrowers (loan
amounts up to $5M +)
• Micro-Loan Program (up to $50K) through Intermediaries
(several in NJ)
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16. What’s a Micro-Lender?
• Lend to those who cannot access traditional financing
– Smaller loan amounts
– Not enough time in business
– Poor credit or “thin” credit
– Additional services (training, technical assistance)
• Short-term borrowing
• Establish credit
Several in New Jersey: UCEDC, CBAC, RBAC,
Intersect Fund, Isles, Inc., ACCION, Finanta, etc.
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17. State, County, & Local
• Burlington County Economic Development – Small
Business Loan Program
– Contact: Mark Remsa, Director mremsa@bcbridges.org
• State of NJ – various programs
– www.nj.gov/njbusiness/financing/
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18. Three-Four-Five C’s
• Credit
• Character
• Collateral
• Capacity
• Conditions
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20. What (all) Lenders Want
Financials
• Projections & Cash Flow Cycle
• Breakeven Point
• Personal Financial Statement
• Tax History
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21. • Business Plan
• Tax Returns (Personal & Business)
• Financial Statements – historical and/or
projections
• Personal Financial Statements
• Other Supporting Documents

22. Business Plan
• Executive Summary
• Company Overview
• Industry Analysis
• Customers
• Competitive Analysis
• Marketing Plan
• Management
• Financial Statements &/or Projections
• Appendix
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23. Deal Killers
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(For any Federal-Funds program, including SBA)
Default on any government loan, including student loans
Recent bankruptcy
Failure to file tax returns
All owners not participating in loan
Not a US citizen or legal resident (“documented”)

24. Questions

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