Beruflich Dokumente
Kultur Dokumente
SMEDAN
Outline
Entering behaviour The three core issues The need for finance Sourcing the finance Starting a banking relationship Getting money from banks Cannons of credit A Little More About Loans Critical Dos and Donts Final word
SMEDAN 3
SMEDAN
Start-up capital
Venture capital
Early stage
SMEDAN 7
Supplier Credit esp. where there are vertical linkages between LEs and SMEs. Leasing/Hire Purchase
SMEDAN 9
3.
4.
Cannons of Credit
The 5 Cs of credit are: 1. Character
Willingness to pay back Fulfillment of terms Capacity to pay back Identification of the sources of repayments Review of future cash-flow Ability to meet financial obligations outside the loan
SMEDAN 15
2. Capacity
Cannons of Credit(2)
3. Capital Equity contribution Shareholders fund Creditors Cushion for the lender in case of default Assets of the company Adequacy of equity/ asset and value of assets
SMEDAN
16
Cannons of Credit - 3
4. Collateral - security for the loan
Security is supposed to be a secondary issue in a good credit It must be adequate Must be marketable Must be adequately insured Must be free from encumbrances Must be realizable Define who keeps the security Define whether it is moveable or not What percentage of loan is the security?
SMEDAN 17
SMEDAN
18
Cannons of Credit - 4
5. Cash-flow
Certainty of stream of cash from the business Evidence of ability to meet maturing financial obligations such as interest and capital payments. Cash-flow signifies the health of the business.
SMEDAN
19
Final Words
Many business ideas have remained mere ideas for lack of money Many good business ideas have been choked out of existence by money If you must borrow, you must ensure that the interest rate compares very well About the right time to borrow, this is the commandment: thou shalt not cross bridges before thou comes to them.
SMEDAN
22