Financing and Access to Capital Overview of Enterprise

Financing and Access to Capital

Overview of Enterprise Florida • Enterprise Florida (EFI) is Florida’s principal public-private economic development organization devoted to statewide economic development. • EFI works in collaboration with the Florida Department of Economic Opportunity and a statewide network of regional/local economic development organizations to promote job creation and diversify Florida’s economy. • EFI focuses on a wide range of industry sectors, including clean energy, life sciences, information technology, aviation/aerospace, homeland security/defense, financial/professional services, and manufacturing.

DEO programs to facilitate access to capital to small businesses in Florida

How the SSBCI program works… Provides a lender with a partial guarantee as the credit enhancement required to ultimately approve a loan.

SSBCI Parameters ü Typical guarantee up to 50% of loan amount (1: 1 min) ü Maximum guarantee is $1, 000 ü Total private financing cannot exceed $20, 000. ü Maximum guarantee term is five (5) years, norm is three (3) years (cash flow stabilization). ü Interest rate and terms are determined by the lender ü Up-front fee is 1. 50%, annual fee is 1. 00%.

Microfinance Guarantee program Created as part of the Florida Microfinance Act in 2014, provides a lender with a partial guarantee as the credit enhancement required to ultimately approve a loan. Microfinance Guarantee • • Loan amount between $50, 000 and $250, 000 Maximum guarantee 50%, up to $125, 000. Maximum guarantee term is three (3) years. Interest rate and terms are determined by the lender (Max: Prime + 1000 bps) • Up-front fee is 2. 00% of guaranteed portion. Eligible borrowers: • Located in FL • 25 employees or less • Max $1. 5 MM average revenues for the last 2 years • Start-ups eligible

In essence… two programs SSBCI For loans $250, 000 to $20 MM* Up to 500 employees Microfinance Guarantee For loans $50, 000 - $250, 000 25 employees or less *Smaller transactions considered on a case-by-case basis Max $5, 000 Loan Participation Max $1, 000 Loan Guarantee

Objective of these two programs…

What you should know… • There is no 100% financing, with no “skin in the game” • Your personal credit is important • The lender will require your Personal Guarantee • There is no “free money” (grants)

Pursuing financing requires: Anticipate questions, such as: • What's the purpose of the financing? • How much you need? • How much will you invest of your OWN money? • When is the money needed? • How soon will you pay it back, and how? • What will be the collateral? • Have supporting documentation

Main issue for the lender: Repayment Capacity The lender will examine: q q Historical Cash Flow • Tax returns • Business Financial Statements (last 3 years) Projected Cash Flow • Projections for 3 or 5 years • Monthly cash flow projections • Assumptions are key!

Collateral The lender will typically require… Short term assets (AR, Inventory…) Equipment Real Estate + plus… personal assets

Business Plan Purpose Amount Term Repayment Collateral Business Description Market Products / Services Management Financial Information

Financial Information Its a basic factor in securing financing, as it supports your profitability and repayment capacity. Balance Sheet Income Stateme nt (P&L) Cash Flow Stateme nt Personal Financial Stateme nt

“Tips” when pursuing financing… Be brief, concise and to the point. Highlight management capacity and strengths. Projections must be attractive, but realistic and well documented Develop a relationship with the lender and anticipate future financing needs Know your lenders’ credit policy Learn from your mistakes. If you are declined, ask WHY and fix the problem!

Questions? Marianne Arbulu Small Business Programs Manager Florida Department of Economic Opportunity Bureau of Economic Development Marianne. Arbulu@deo. myflorida. com 850. 717. 8519 Garry Thomas Government Analyst – Microfinance Programs Florida Department of Economic Opportunity Bureau of Economic Development Garry. Thomas@deo. myflorida. com 850. 717. 8479 www. floridajobs. org/smallbusinessprograms ENTERPRISEFLORIDA. COM