Post on 27-Jun-2015
description
Why would your small business need funding?
A Loan is an Investment
Benefit > Cost
Maximum Amount You Should Borrow
Cash Flow
÷
1.5 Debt Payment >
• Purchase inventory (to take advantage of a discount) • Marketing with a known expectation of result
• Equipment that generates revenue
• Cover gap in time before you’re paid by clients • Expand to a new location
• Paying off another loan of equal or less interest rate
• Paying yourself a salary
• Decorative improvements
• Paying overdue bills • Buying something you don’t need at a discount
Good Uses Bad Uses
What is Considered a Good Investment?
Pros: Lowest Interest Rates Cons: Difficult to Secure Lengthy Applications Longer Waiting Times
Bank Loan FAQS 1. How do I know if I am a good candidate for a bank loan? 2. Where do I find a bank loan? 3. What is the application process like?
Bank Loans: The Lowest-Priced Option
14m unserved small
businesses
27m small
businesses
12m seek funding
5m need funding but don’t ask
3m got funding from
banks
Sources: SBA Small Business Lending in the United States 2012 July 2013
Federal Reserve Bank of New York Small Business Credit Survey May 2013
Small Businesses Aren’t Getting the Capital They
Need from Banks
Why Are Banks Loans So Hard To Get?
Government Restrictions because loans are made with 0ur money 1
Not Profitable to underwrite and service small loans 2
Pros: Fastest time to funding Shorter applications Diverse products Options for those with bad credit
Cons: Higher fees Difficult to “know where to go”
Alternative Lending is Booming
Different Types of Financial Products Available to Small Businesses
15 – 30%!
SBA Loans Lowest-priced alternative loan Longest term, monthly payments
Term Loans Shorter terms available Daily, weekly and monthly options
Invoice Financing Invoices serve as collateral Paid off when invoice is paid
MCAs Good for bad credit Paid off through daily credit card statements
Equipment Loans Equipment serves as collateral Monthly for determined life of asset
Lines of Credit Lower interest rates than credit cards Only pay interest on what you use
6 – 10%!
7 – 30%!
3% + % / week!
7 – 25%!
1.14 – 1.48!
Fees Loan Products Unique Value Proposition Repayment?
• If you have a friend or peer who has received a non-bank loan, ask them about their experience
• Marketplaces like Fundera make the shopping experience
easy • With one application, you can see all of your available loan
options and apply to your favorite lenders
Where Do I Find Alternative Loans?
Questions? Meredith Wood: meredith@fundera.com
@Fundera @Mere_Wood www.fundera.com