Venture Financing

  

Raising Funds for a Startup

 

Debt vs. Equity

 
   

How to obtain a commercial loan for your venture

What Banks Look For

 

 Venture Financing Gestation Stage Inception Stage Prototype Roll-Out Stage Growth Stage Expansion Stage Maturity Stage Founders: Bootstrapping Methods Business Angels Corporate Investing in External Ventures Venture Acquisitons IPO Venture Capital Firms Dealing with Banks Venture Management Venture Financing Revenue Model VC Investors Venture Funding Stages Venture Financing Chain, Venture Financing Curve: Sources of Funds for High-Growth Firms

 
 

Mr. Bob Fujii, formerly of Bank of Hawaii, and a National SBA Small Business Advocate of the Year offers these insights into what the bank looks for in a business in order to make the decision to grant a loan.

Key points included: 

 

Dealing with Banks

Steps to Open a Business Bank Account

Forms of Loans

  

 
 

What type of industry are you involved with?

Is it new, emerging or growing?

Is it dependent upon other industries?

How long has the business been in existence? Also, include market share, size, product line (supply, sales, and distribution), and profile of customers.

  

 
 

What is the legal form of the business? Is it a partnership, proprietorship, corporation (what type), joint venture, etc.?

Factors that impact the business risk, such as management experience, depth and integrity.

Quality of management. What type of experience does the management team have with this specific industry, and what is the commitment? Are the owners involved directly with the business or are they absentee owners? What assets or liabilities are involved with the business? How does management take out their salaries/bonuses?

What facilities are used and where are they located? What are the terms of the lease? How does it compare to competitors' facilities? What are the capital expenditures, insurance coverage, etc.?

  

Venture Financing Funnel

Ideas for Funding Your Startup Business

Real Ways To Finance Your Startup

4Cs of Lending

Successful Startup

7 Characteristics

Strategic Business Success

Startup Founding Team

Venture Management

  

 
 

Existing financing. Do you presently owe trade suppliers, other banks, principal shareholders, relatives, friends, and others?

Who are your sources of suppliers, including history and discounts?

What are your existing loan arrangements, bank relationships, borrowing/repayment history, estate planning?

  

 
 

Provide a financial analysis, which includes accounts receivable/payable, credit policy, collections/bad debt experiences, and conditions of inventory. Are your taxes current? How is the company capitalized compared with the industry? What are your marketing plans, sales projections?

  

How to Determine a Software Development Budget?

Have a Professional Business Plan

  

 
 

Also include your business plan and associated documentation, including balance sheets, income statements, expenses vs. sales, operating profit margin, asset management, liability management, cash flow summaries, and projections and sensitivity analysis.

  

 
 

The Most Important Questions

In your ability to answer the above questions, you help the bank answer the most important questions:

What is the purpose of the loan?

What are the sources of repayment and quality of those sources so that the bank can devise a program of repayment that makes sense to the small business owner?

  

7 Routes to High Profits

Relationship Banking

After the Loan: Maintain Good Communication with the Bank

  

 
Mark Twain wisdom jokes

A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain.

Mark Twain