women & money starting and growing a business new hampshire district office (603) 225-1400
TRANSCRIPT
Women & MoneyWomen & MoneyStarting and Growing a BusinessStarting and Growing a Business
New Hampshire District Office(603) 225-1400
Trivia: Small Business is “Hot” right now
• “Small Business” mentioned in the congressional record over 10,000 times in the past two years.
• That’s less than “taxes” but more than “debt limit”• “Small business owner” represents someone willing to
take a risk. She represents hard work and perseverance.
• More proof: over 25% of people running for state office call themselves business people or small business owners
• The only group that Americans trust more is the military
Women & Money• Globally: Women’s self employment up 33% over
last 25 years• Nationally: Women Owned Businesses increased
from 10% to 30% over 25 years• New Hampshire: WOB 27%• Washington DC & Maryland are #1 & 2 • WOBs tend to be smaller, start with less capital,
are less likely to get started with loans or venture capital.
Why This Presentation?• Almost everyone considers owning a small
business at some point in her life.
• 90% of all businesses today are considered to be “small business”.
• You are likely to find yourself working for a small business someday.
• You may find yourself in a position where you must consider purchasing the business you work for.
The SBA Advantage
Reasons for Going into Business for Yourself
• Be Your Own Boss• Job Security• Creative Freedom • Determine Your Own Destiny• The Challenge of Building Your
Legacy• Financial Independence -
Opportunity to realize the American Dream
Reasons for Not Going into Business for Yourself
• Risk of Failure (no guarantee of success)• Long Hours (you have to make it happen)• No Guaranteed Pension Plans • Headaches (you are the boss)• Employee Problems (they all go to you)• Liability (you are the owner)• It’s not easy to quit if you tire of it
Do YOU have what it takes?
• Time & Ability to Manage Your Biz• Discipline / Work without Supervision• People Skills – Clients / Vendors• Flexibility – No Day is the Same• Vision – to lead in a changing world• Risk Tolerance• Can You Sell – Really Sell?
Starting a New Business
• Be thoroughly prepared• Seek counseling (it’s free!)• Talk it over with family and friends• Prepare a business plan• Prepare a cashflow statement• Know your competition• You’re the expert on your business
Alternatives to Starting Your Own Business
Alternatives
Purchase an existing business•Seller financing as part of the sales price•Get a business valuation•Work in the business if possible•Negotiate for seller to stay on during transitionFranchise•Proven business model and operations manual•Check SBA Franchise Registry
What is the least expensive source What is the least expensive source of money for your business?of money for your business?
Where to Get Money to Start Your Where to Get Money to Start Your BusinessBusiness
What are your start-up funding options?•Personal Savings•Family & Friends•Partners who can bankroll you•Seller Note•Collaborative venture •Credit Cards (not recommended)
Where to look for $ Where to look for $
• Home Equity Line of Credit • Retirement Funds:
o Loan against your 401K (non taxable event)o Profit Sharing Funds from former employer
• SBIR for tech start-ups that produce certain technologies the government needs
Grow with Outside Sources of Grow with Outside Sources of FinancingFinancing
o Bankso Non Bank Lenderso Credit Unionso Certified Development Companieso Community Loan Fund o Angel Investorso Venture Capitalo Economic Development Program in City or Towno Regional Economic Development Corporationso Factors and Merchant Cash Advance Lenders
What Lenders Are Looking For• Owners and operators of good character
• Feasible business plan
• Management expertise andcommitment necessary for success
• Sufficient funds, including SBA guaranteed loan, to operate the business on a sound financial basis
• Adequate equity invested in the business
• Sufficient collateral• Ability to repay the loan on time from the projected operating cash
flow
• Character
• Cash Flow
• Collateral
• Capital
• Conditions
The 5 “C’s” of CreditThe 5 “C’s” of Credit
• Basic Questions: • Who are you and why should they lend to
you?• How much money do you need?• What is the purpose of the loan?• How will you repay the loan?• What’s the fall back plan?
What Will A Lender Need to Know?What Will A Lender Need to Know?
• Working Capital Line of Credit
• Short-Term Business Loan
• Equipment Loan
• Equipment Line of Credit
• Commercial Real Estate Loan
• Construction Loan
• SBA Financing
Types of Commercial Loans
What you need to show a lenderWhat you need to show a lender• Cover letter of introduction• Summary of financial needs• Business Financial Statements (3 years)• Projected Cash Flow Statement (12 months)• Collateral (business and personal)• Personal financial statements & tax returns (3 yrs)
• Resumes
• Collateral inadequate
• Longer maturity needed
• Lender’s legal or policy limit
• Start-up or certain types of businesses
• Leverage high (thin on equity)
Why Need an SBA Guaranteed Loan?Why Need an SBA Guaranteed Loan?
The Role of the SBAThe Role of the SBA
• Provide a Credit Enhancement for Lenders
• In 2013 SBA guarantees supported:o National: 54,000 loans for $30.25 Billion to small
businesses. o NH: 481 loans that supported $152 Million in
lending to small businesses
New Hampshire SBA New Hampshire SBA Top 10 SBA Lenders in FY 2013:
# Loans $ millions1.Northway Bank 63 6.3 2.St Mary’s Bank 49 1.43.T.D. Bank 25 6.64.The Provident Bank 23 6.35.Connecticut River Bank 21 2.66.Centrix Bank 20 2.57.Meredith Village SB 18 .98.Peoples United Bank 14 3.49.Claremont Savings Bank 13 1.510.Merrimack County Savings 13 2.3
Access to CapitalAccess to CapitalHow SBA Helps• 7(a) Loan Program:
Guaranty 50 to 90% of loans up to $5 million• 504 Loan Program:
Loans up to $5.5 million to finance 40% of fixed asset project cost at fixed rates for 10 or 20 years; lender provides other 50%; you put in 10%
• Microloans up to $50,000• Loans for Exporters up to $5 million
Tips About Business Financing
“The Rest of the Story”– Banks want to make you a loan
• Banks only make money by making loans• Banks must make money to survive
– Risk, collateral, and credit– Banks only want two things from you
• Repayment of the loan as agreed• Your deposits and your future business
– It is critical that you are prepared– Banks make loans to people…. not businesses aloneIs the Bank Your Business Partner?
Collateral
• Lender’s second way out• Business assets always required• Personal assets usually required• Personal guaranties of all 20% or more owners
always required
Reasons for Loan Declines
• Applicant is not properly prepared– No business plan, no current financials, etc.
• Poor credit - no credit– History of late payments / charge-offs / collection accounts / tax liens /
low credit scores
• Lack of experience in the business, no partners, no experienced employees under contract
• Too little personal investment into the business• No earnings history / questionable loan repayment
Top Reasons for Business Failure
• Poor management• Inadequate financing
How Can SBA Help You?
SSeek OOut ut SSBABA
• Training and Counseling• Access to Capital• Government Contracting• Disaster Assistance• International Trade Programs
SCORE Counselors to America’s Small Business
Manchester603-666-7561
Keene603-352-0320
Conway603-447-4388
Laconia603-524-0137
Portsmouth603-433-0575
Lebanon603-448-3491
www.score.org
Regional Business Advising CentersSeacoast 603-842-8341 Nashua - 603-397-7001Keene - 603-358-2602 Manchester - 603-641-4370
Belknap & Grafton Counties - 603-397-8404North Country (multiple satellite locations) 603-342-3174
Program Offices
Education Programs - 603-227-0417 Environmental Management 603-641-4379
Administrative Offices and State Director’s Office UNH Peter T. Paul College of Business & Economics
603-862-2200
www.nhsbdc.org
Center for Women’s Business Advancement Manchester 603-629-4697
www.cwbanh.com
SBA Online Resources
Business Resources 24/7
• SBA has a Small Business Training Network of free training courses and resources:
• www.sba.gov/services/training/onlinecourses/index.html
• Calculate Startup Costs: www.sba.gov/services/financialassistance/basics/estimating/index.html
• Calculate Your Breakeven Point: http://www.bplans.com/startingcosts/sbaentrance.cfm
• Size Up the Competition: www.sba.gov/sizeup• Link to government wide business resources:• www.Business.USA.gov
www.sba.gov
www.sba.gov/nh
Other Resources to Check OutOther Resources to Check Out• Crowdfunding: where people network and pool resources and money via the internet
– GoFundMe.com (fund raising benefits & personal event funding)– IndieGoGo.com (international site: music, charity, small business, film)– Kickstarter.com (start up funds)– RocketHub.com (launch pad for creative projects)– RockThePost.com (entrepreneurs get $ and swap resources)
Miscellaneous Resources to Explore: – Verizon: “We Commerce” on Facebook: find simpatico businesses for barter/trade/team – Staples: “Give Your Business The Push It Needs” contest, $50,000 in TV ads, submit short video– Starbucks: “Create Jobs for USA”; donations go thru Opportunity Finance Network to CDFIs to bus. loans– Guidant Financial: 401K borrowing advice– eCoast Angels, Portsmouth (www.ecoastangels.com)– Borealis Ventures, Portsmouth– National Venture Capital Association (www.nvca.org)– 128 Innovation Capital Group, Waltham Ma, www.128icg.com – Launch Pad Venture Group; MassVentures (VCs)– Grant opportunities: www.Grants.gov– SBA Community website for small business info: www.sba.gov/community– Small Business Innovative Research/ Small Business Technology Transfer (www.sbir.gov)– Small Business Investment Companies—(SBA licensed) www.sba.gov/sbic– National Family Mortgage—structure real estate loans with relatives (spinoff of Circle Lending & Virgin Money US)– Free copy of your credit reports: www.annualcreditreport.com– Get your FICO score (fee apx. $20) at www.myfico.com– SBA Size-Up Tool: http://www.sba.gov/community/blogs/free-sources-market-data-plus-tips-using-data-business-planning
Jumpstart Our Business StartupsJumpstart Our Business Startups(JOBS) Act(JOBS) Act
• Crowdfunding allows businesses to raise smaller amounts of equity capital at earliest stages
• IPO “On Ramp” reduces regulatory burdens • Jobs Act helps entrepreneurs go public and access equity capital up
to $1 million/year so they can grow• Makes it easier to raise capital from customers and local
community• Allows more investors in small business* • Investments up to $50 million exempt from SEC filings (was $5 mil)• Creates new category of IPO stock called Emerging Growth
Companies (< $1 Billion gross revenue prior year)• Raises threshold for mandatory registration w/ SEC to 2000
shareholders (was 500).
Start-Up AmericaStart-Up AmericaEarly Stage SBICsEarly Stage SBICs
• 4/27/12 Final Rule in Fed Register• $1 Billion over 5 years (up to $50 Million per
SBIC) to invest in Early Stage businesses• Must invest 50% of funds in “Early Stage”
companies, which may include “Seed Stage”• An “Early Stage” company is one that has never
achieved a positive cash flow from operations in any fiscal year
• SBIC applications for year two due 3/1/2014
CDFA Programs
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COMMUNITY DEVELOPMENT BLOCK GRANT
Women & MoneyWomen & MoneyStarting and Growing a BusinessStarting and Growing a Business
New Hampshire District Office(603) 225-1400
Hugh CurleySBA New Hampshire District Office
55 Pleasant StreetConcord, NH 03301
603-225-1402 [email protected]