Building a Bankable Business

Julio C. Canas

Building a Bankable Business

@SCOREmiami / @jccanas

What Lenders Look For…


Character

Conditions

Collateral

Capacity

Capital

Cash Flow

What Lenders Also Look For…


Data is changing the way to get financing

Data Analytics

Behavior

Google

Digital ID

Social Media Geography


First Steps1. Check Your Credit2. Ensure Your Records Are in Order3. Prepare a Business Plan4. Prepare a Financial Proposal5. Organize Your Digital Life


FICO Score• 3- Digit number ranging from 300-850

• Higher scores represent lower future risk of default

• FICO scores use multiple scorecard designs to segment population and increase predictability


Details Behind FICO ScoreNearly every major purchase is based on FICO:

• Home• Automobile• Revolving Credit

• Health Insurance• Career

Opportunities


Predictive InformationConsidered:• Accounts• Inquiries• Collections• Public Records

Not Considered:• Age• Address• Employment• Income• Gender


Components of Credit Score

35%

30%

15%

10%

10%

Payment HistoryCredit UtilizationLength of Credit HistoryCredit MixInquiries


Why is Credit Report Useful?Consumer Check accuracy of report

Identify fraud

Same as consumer, plusDetermine consumers’ credit worthiness

Credit reporting agencyCompile and store consumer credit information

Creditor

Marketing


Financial Records

• Orderly and accurate financial reports are essential

• Accounting Software (e.g. Quickbooks)• Hiring a Bookkeeper vs. DIY• Understand your own financial

statements


NotOK

Financial Records


Financial Records

OK


Business Plan

Quantity vs Quality Well-organized


Business Model Canvas

www.businessmodelgeneration.com

BUSINESS PLAN

EXECUTIVE SUMMARY THE TEAMManagement ProfileWhy We Are a Winning Team THE BUSINESS MODEL Vision, Mission, and Values How Our Business Model Works Value Proposition Target Markets Marketing Plan Key Resources and Activities FINANCIAL ANALYSIS Breakeven Analysis Sales Scenarios and Projections Capital Spending Operating Costs Funding Requirements EXTERNAL ENVIRONMENT The Economy Market Analysis and Key Trends Competitor Analysis Competitive Advantages of Our Business Model IMPLEMENTATION ROADMAP Projects Milestones Roadmap RISK ANALYSIS Limiting Factors and Obstacles Critical Success Factors Specific Risks and Countermeasures CONCLUSIONS ANNEXES

financial spreadsheets

environmental analysis

implementation roadmap

SWOT and uncertainty analysis

www.businessmodelgeneration.com

Financial Proposal


• Personal financial statement

• Business financial statements

• Sources and uses of funds

• Cash forecast by month, for the first two years of operations after receiving new funding

Personal Financial Statement


Assets

Liabilities

Net Worth

What you have

How you

got it

Balance Sheet

Income

Business Financial Statement


P&L and Cash Flow

Revenues

Expenses

ProfitAssets

Liabilities

Equity

What you have

How you

got it

Balance Sheet


Sources and Uses of Funds Fixed Assets:• Land & Buildings• Leasehold Improvements• Equipment• Furniture & Fixtures• Vehicles• Other Fixed Assets


Sources and Uses of Funds Operating Capital:• Pre-opening Salaries and Wages• Prepaid Insurance• Rent and Utility Deposits• Supplies• License & Permits• Working Capital

Sources and Uses of Funds


Funding Available:• Owner’s Equity• Other Investors• Additional Loans or Debt:• Credit Card , Vehicle Loans, Commercial

Mortgage• Other Bank Loans


Funds NeededFixed Assets

+Operating Capital

-Funding Available

=Net Funds Needed


Cash Flow ForecastInflows:• Beginning balance• Cash sales• Account

receivables Payments

Outflows:• COGS/COS• Salaries and wages• Purchases• Rent and utilities• Marketing• Other


Net Cash FlowCash Inflows

-Cash Outflows

=Net Cash Flow

Beg. Cash Balance+

Net Cash Flow=

End. Cash Balance


Organize Your Digital Life• Avoid using 1st generation email addresses

• Use professional digital IDs & vanity url

• Think twice before posting on Social Media

• Develop your business digital presence

• Consistency across all digital spaces


Additional Considerations• Conventional and SBA (partially government

guaranteed)

• Line of credit or term loan

• Funds available for property purchase, construction, and fitting out space, as well as for working capital

• Special consideration for professional firms

• Minimum loan amounts set by bank

• Bootstrapping• Investor capital, including friends and

family • Conventional financing from banks• Lines of credit• SBA 7a Loan program• EXIM’s Working Capital Loan

Guarantee• 504 loans (fixed assets)• Capital and Patriot Express Loans• Community programs • Peer to Peer lending• Crowdfunding@SCOREmiami / @jccanas

Funding Options


Small Dollar Loans Celtic Bank Small Loan Advantage Program• Start-Ups OK• Loans up to $150,000• Working capital loans to businesses• No: construction, location build out, business acquisition • Franchise must be on SBA approved Franchise Registry• Simplified application; faster processing• 7 year amortization• May be unsecured • Variable interest rate• No prepayment penalty


Miami Bayside Foundation• Goal is to provide access to funds for local minority and

women entrepreneurs • Business must be located in the City of Miami (as stated in

its occupational license)• If start-up (under one year), owners must put up a 20%

cash match• Must demonstrate that the loan will aid in the creation of

new jobs• Purpose of loan can be for working capital, cash flow,

inventory, and/or equipment


Accion USA• Provides micro-financing for small businesses• Loans for start-ups up to $30,000• Must have 6+ months in operation• Credit score requirement lower than banks – interest rates

somewhat higher• Free Webinars and online financial and business resources

offered• SCORE counselor can assist you with your application


Peer-to-Peer (P2P) Lending• Uses the internet to match individual borrowers and

lenders• Lending site (e.g. Prosper.com or LendingClub.com)

verifies borrower’s credit history• Interest rates reflect site’s own rating of borrower as well

as duration of loan.

Caveat Emptor – Buyer Beware• Interest rates can be very high.• P2P loans are considered personal debt, and will affect

your credit record in the future.


Crowdfunding• Crowdfunding is:– Individuals coming together to support, and directly

fund, projects by other entrepreneurs and businesses.

– There are several kinds of crowdfunding:• Rewards – trading funds for various types of

rewards.• Donations• Equity – trading funds for ownership in your

company – regulations being developed.• Example of crowdfunding site – Kickstarter.com


Angel Investor• Investment vs. financing vehicle

• You will have to give up a large slice of the business, at a discounted price.

• Investors will set milestones. Funding will be provided as you achieve milestones.

• Investors usually seek payback in five years.


Angel InvestorFlorida: • Emergent Growth Fund• New World Angels• Spring Board Capital• Winter Park Angels• Florida Growth Fund• Tamiami Angel Fund• Miami Innovation Fund• The Funding Post - Distributed to 8,000 angel and venture

investors


Startup America• Nation-wide networking site for small businesses.

• Offers advice and possible access to venture capital.

• Get-togethers in major cities for start-ups and investors.

• High tech companies with high growth potential preferred

https://miamidade.score.org/

Julio C. Canas

www.jccanas.com

Thank you!

Building a Bankable Business

Small Business & Entrepreneurship

Transcript of Building a Bankable Business