Slides for a presentation about applying to the NC Rural Center\'s Microenterprise Loan Program. Basics of what lenders look for.

1. Getting to Yes:
Unlocking Funds For Your Small Business
Business Development & Entrepreneurship Center
www.pccbusiness.com
1-26-2011
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2. Let’s start by getting this out of the way!
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3. Grants!
Everybody wants one!
Extremely rare for most industries.
Those that exist don’t cover all costs.
Don’t get scammed!
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4. Getting To Yes
So I can’t get a grant, where are the loans?
Banks/Credit Unions
Self-Help Credit Union
• www.self-help.org
Kerr Tar COG
• www.kerrtarcog.org
NC Microenterprise Loan Program
Community Programs
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5. Getting To Yes
Can’t I get an SBA loan?
Not from the SBA, they’re not a direct lender.
Plan to work with a bank.
Several programs are available. If you qualify.
7a
504
Microloans
Additional costs are involved.
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6. Getting to Yes
Start with “Why” you want funding.
Start up costs
Expanding an existing business
Short term capital needs
Long term investment (purchase)
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7. Getting To Yes
To start/expand your businesses:
1. Develop the concept/idea
2. Write the business plan
3. Locate help/technical assistance (TA)
4. Research loan options
5. Check your credit
6. Prepare your application
7. Follow up
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8. Getting To Yes
A good business concept will:
Be clear and consumer friendly
Identify a niche consumer (market)
Be specific about the consumers your business
plans to serve
Explain how your service is tailored to your
consumers
Explain why customers will buy from you
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9. Getting To Yes
Your written business plan is a “road map”:
Keep it simple
Keep the information consistent
Keep it current
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10. Getting To Yes
A business plan written correctly:
Contains the business financials
Sells the business in a positive manner
Illustrates why you will be successful.
Showcases your knowledge as its owner or
proposed owner
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11. Getting to Yes
You don’t have to do this alone. Get some help!
 Business Development & Entrepreneurship Center
• www.pccbusiness.com
 Small Business and Technology Dev. Center
• http://www.sbtdc.org/
 North Carolina Institute of Minority Economic
Development & Women’s Business Center
• www.ncimed.com
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12. Getting to Yes
Preparing a loan request:
Have a clear use of funds; know/understand
exactly what money will be used for.
Verify this information with written estimates
and quotes, whenever possible.
Information should be consistent from
application to business plan.
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13. Getting to Yes
Preparing a loan request:
Know loan requirements
Inquire about loan terms upfront
 Know the lenders “lending” focus and
limitations
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14. Getting to Yes
What does the lender look at?
Credit
Cash flow
Capacity
Collateral
Character
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15. Getting To Yes
Credit ( Do you pay people back?):
Credit Score
Credit Report
History
Public records
Outstanding balances
Amount and types of credit
Ratios
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16. Getting To Yes
Know current credit history:
Address blemishes before applying for funding
Incorrect information
Liens and judgments
Collections and charge offs
Late payments
If needed contact:
Consumer Credit Counseling
1-877-877-1995
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17. Getting To Yes
Credit reporting agencies:
Equifax
 Experian
Trans Union
Get a free copy of your credit reports at
www.annualcreditreport.com
Get a free credit score at www.creditkarma.com
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18. Getting To Yes
Cash Flow:
Refers to moving money into and out of a
business.
Will there be enough cash flow to pay the loan?
Should be included in the business plan
Also demonstrated with profit/loss statements
and balance sheets
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19. Getting To Yes
Capacity (Can you pay us back?):
The ability to repay debt both present and
future, as well as
The ability to manage a business as its owner
Secondary sources of repayment
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20. Getting To Yes
Capacity Counts:
Refer to the business plan as evidence of
capacity.
Know your market!
Demonstrate that you can compete.
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21. Getting To Yes
Capacity vs. Challenges:
Don’t ignore challenges in your plan.
Challenges impact your bottom line and if not
addressed can destroy your business.
Once you have acknowledged your challenges
plan to overcome them.
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22. Getting To Yes
Collateral (What if you don’t pay us back?):
Stuff they can take if you don’t pay.
Almost always required as security for the loan
Often viewed as a secondary source of
repayment.
Can be inventory, equipment, vehicles or real
estate.
Lender prefer collateral that can be easily
liquidated.
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23. Getting to Yes
Collateral vs. Risk:
Lenders want to minimize their risk
To offset their risk, lenders look to collateral
first and foremost
Collateral guides the level of risk
Character can also impact risk
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24. Getting To Yes
Lack of Collateral?
Play up strengths, such as experience and
training/certifications or strong competitive
advantage
Consider having a cosignor
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25. Getting To Yes
Character (Can we trust you?):
Most subjective
Does applicant show themselves to be
trustworthy?
What is the “financial reputation”?
Are you honest and consistent in the business
plan and application?
Do you have the right attitude for your
industry?
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26. Getting To Yes
Character is honesty
It is also the best policy and the easiest
to remember .
Resist overstating facts, this can result in your
application being declined.
Do what you say you will do!
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27. Getting To Yes
Character is accuracy:
Verify as much information as possible.
Give sources if applicable
If you don’t know something state that you
don’t know.
Do your homework.
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28. Getting To Yes
Character is being prepared to talk :
Lenders ask questions
Try to anticipate questions ahead of time
Try to establish a relationship with the lender
Do not “Beat up the Lender”
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29. Getting To Yes
Finally!
Create a good track record for future funding
needs.
OR
If you are declined understand why and ask for
other references or assistance.
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30. Getting To Yes
Questions?
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