Just keep going. Everybody gets better if they keep at it. Ted Williams

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Just keep going. Everybody gets better if they
keep at it.--- Ted Williams
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SOURCES OF FUNDS, or How to borrow money for your
business when you have no assets and a rather
large student debt to repay
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TWO SOURCES Equity you give up ownership and
control in return for funds Give someone a share
in your business venture capitalist (probably
not) or someone known to you (more likely)
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Debt Financing from lenders, either private
parties or commercial lenders or vendor
financing Types of loans Mortgage Lines of
credit Term loan Vendor financing
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First, establish funds needed Prepare financial
statements be specific about what you will need
For startup For working
capital Prepare personal financial statement and
personal budget
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Key Match financing type to length of
need Short-term loans for short-term
purposes Longer-term loans for long-term purposes
and long-lasting assets
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• What are lenders looking for?
• Banks want to know only two things
• How much do you need?
• How will you pay it back?

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Lenders evaluating potential borrowers on several
characteristics Character do you pay your
bills? Are you a good citizen? What is your
credit rating? Capacity will your business
generate enough to pay back this loan?
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Collateral How much are you able to contribute
to this new business? Lenders want you to have a
major stake in the business, so you wont walk
away from it Capital what assets does/will the
business have? Are they worth what youre asking
for them?
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BEFORE YOUR VISIT THE FIRST BANK, Check your
credit rating Prepare a detailed Personal
Financial Statement
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SBA Small Business Administration US government
agency that provides information to small
business owners also provides guarantees to
lenders
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SBA serves as your co-signer guarantees up to
80 /85 of your loan amount SBA requires
additional paperwork, additional fees Some banks
are SBA Preferred Lenders and are willing to
work with SBA financing
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SBA does NOT require that you have been turned
down by 3 banks SBA loan types LowDoc loans
easy application forms Can Pre-Qualify for
loans Womens loan program?
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Finding a Banker First, understand that every
bank is different from every other They
have Different policies Different
specialties Different experience with small
businesses (chiropractors!)
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Make a List, and include LOCAL Banks more
willing to work with local businesses SBA
preferred lenders (see SBA web site or mine for
list) Banks with more experience in commercial
lending
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Dont go one at a time to banks Work with several
at one time You dont have time to work with one
bank and then another and then another!
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Make an initial phone call and ask some
questions Do they work with SBA? Do they have a
commercial lending department? Have they worked
with chiropractors? Other health care providers?
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If you like the answers you receive, Drop off a
copy of your business plan and make an
appointment with the commercial lending
officer Or, Make an appointment and bring the
business plan to the appointment
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Be prepared to answer questions about your
numbers Be sure you know what you are talking
about Be sure your numbers match your narrative
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Be prepared to provide additional
information More years of cash flow and income
statements
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Some banks may want Additional collateral from
you, in the form of cash or pledged assets A
co-signer who has assets which can be
pledged Life insurance on you (buy a term policy
for the loan term)
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Suggested loan structure A term loan (8 years?)
for your startup assets A line of credit for your
working capital requirements Finance your
equipment with a vendor
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When a bank says no Dont be defensive dont
take it personally Get details on why you were
refused (they must provide by law) Use the
information to plan for the next bank on your
list
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If the bank still feels you are asking for too
much money Consider alternative sources (credit
cards? Finance companies?) Take some things out
of your request Start more slowly with fewer
assets BE FLEXIBLE!!!
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If you are considering a practice purchase,
youll have several pieces to consider A
mortgage on building/land Purchase of assets
(accounts receivable?) Purchase of practice
patient files
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If you are considering an Independent Contractor
situation you may still need some funding
for Marketing Supplies, expenses Personal living
expenses
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• Questions your banker will ask
• Can the business repay the loan (through positive
  cash flow)
• Can you personally repay if the business fails
  (collateral, personal guarantees)
• Does the business collect its bills?
• Does the business pay its bills?

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• Are the owners committed to the business?
• Does the business match its sources and uses of
  funds?
• Are sales growing?
• Does the business control expenses?
• Are profits increasing as a percentage of sales?

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• Is there any discretionary cash flow (to Draw)
• Whats the future of the industry?
• Who is your competition and what are their
  strengths and weaknesses?

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• Self-assessment checklist to improve your
  ability to obtain financing for your business
• Do you have a good personal credit history?
• Do you have enough of your own money in the
  business?
• Do you have collateral to secure a business loan?

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• Can the business pay its bills?
• Are you willing to personally guarantee a loan?
• Does your business have qualified managers and
  advisors?
• Do you have experience in running your own
  business?

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SBA STOP! If you cannot answer yes to all the
questions above, then you may have difficulties
obtaining financing at this time. We suggest
that you evaluate the needs of your business and
take advantage of local business assistance
centers.
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Being defeated is often only a temporary
condition. Giving up is what makes it permanent.
(Marilyn Vos Savant)
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Never, never, never, never give up.--- Winston
Churchill