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It’s no secret that you will need capital — money — to launch your new business. In fact, many entrepreneurs struggle to get their businesses off the ground because they’re unable to secure adequate funding1 . The good news is that billions of dollars are available to fund small business ventures like yours.

Before you begin the process of securing capital, you will need a written business plan that defines your business, management team, market, products and services, competitive advantage and the financial forecast and analysis that determines the proper amount and type of financing.

In this guide, certified public accountants (CPAs) offer their most helpful tips for planning your startup capital requirements and successfully acquiring funding for your new business
List, on a monthly basis, projected sales revenue based on your market research and marketing plan. Be sure to include the assumptions on which your sales projection is based and build your forecast out at least 36 months from your launch date. For businesses that have longer development cycles, you may need to forecast up to 60 or even 72 months. Forecasts beyond 72 months, however, generally are impractical because of changing market conditions. To determine monthly cash inflows, your revenue forecast should be broken down by cash sales (including credit card sales) and credit sales (sales made on trade terms) because days of accounts receivable outstanding will be a key input to determine operating capital needed.
Now compile a list of monthly expenses, including product costs, salaries, rent, utilities, insurance, software subscriptions, travel, interest on loans, credit card processing fees and any other significant expenses (except depreciation).
To forecast your cash outflows, add to your monthly expenses any non-financed fixed asset purchases, product purchases that remain in inventory and principal payments on loans.

The difference between your monthly cash inflows and your monthly cash outflows will determine how much operating capital you will need until you reach a positive cash flow position or break-even point. This process is known as cash flow forecasting.



The types and terms of working capital loans vary significantly depending on their intended purpose and corresponding risk. The following are some of the more common ones.

LINES OF CREDIT Lines of credit are common sources of short-term working capital financing. Often, a business is approved for a line of credit up to a certain amount — much like a credit card — and the line can be used for fluctuations in accounts receivable, inventory and seasonal business cycles. Many banks won’t extend a line of credit until your business has been operating for 12 months. Generally, you will pay interest on your outstanding balance on a monthly basis. The principal of your loan is “callable” by the bank subject to the notification requirement of the note. Lines of credit typically are secured by accounts receivable and inventory and can also be required to be personally guaranteed by the business owner and subject to restrictive covenants.

TRADE CREDIT As your business begins to grow, establishing trade credit with your primary suppliers will help you finance your growth — often at no cost to you. Trade terms usually are 30 days, but in some industries (retail for example), you can negotiate substantially longer terms once you’ve established a relationship with a supplier. The key to establishing trade credit is “ask,” and when terms are extended to you always pay on time. Your first trade account will serve as a credit reference for your next and so on


As you prepare the financial part of your business plan, you’ll need to provide a detailed list of your capital needs separated into the following categories that correspond to common asset categories and specific types of business loans. Consider the following as you create your list of capital needs. Your CPA can help you as well.

Location — Will you buy, build or lease? What kind of materials and labor might you need to build out the space?

  Equipment — List every major piece of equipment you will need and provide the cost for each and consider options for a capital lease versus making a purchase.
Technology — Divide your list into hardware and software. Don’t include software, data storage or website hosting that will be acquired on a subscription basis. Those services generally should be listed as operating expenses.

Furniture and fixtures — List the quantity and prices from major distributors for desks, file cabinets, tables, chairs, shelving, displays, cubicles and so on.

 Vehicles — List cars and trucks essential to the operation of your business, such as delivery or service vehicles. Fleet vehicles may also be leased.


Although your personal assets may seem small compared to the amount of capital needed to start your business, potential lenders and investors want to see you demonstrate financially your commitment to the success of your business. Often this involves a personal loan guarantee or pledging as collateral the equity in your home, your retirement savings and any securities that you own.
Lenders and investors also will want to see a track record of financial responsibility demonstrated by your personal credit rating.
If your net worth is less than 10 percent of the capital you’re seeking or you have a less than perfect credit history, you should do everything possible to get your personal finances in order before you seek business financing. You will need to explain any past financial problems to potential lenders and investors. Don’t wait for them to uncover a surprise on your credit report or background check.
Your CPA can help you prepare a personal financial statement and adjustments to your projected financial statements for your business at various milestones such as 6, 12 and 18 months from your launch date
When your business plan is complete and you’re confident in your financial analysis, consider the following types of potential lenders and investors. You and your CPA can discuss these options in more detail to determine the possibilities as well as risks associated with each.

• Bank loans
• U.S. Small Business Administration Loans (
• Leases
• Credit unions
• Venture capital
• Grants and community development loans
• Crowdfunding


In an ideal world, you would have one funding source. But reality for most businesses is that multiple funding sources are necessary. Consider the following example for financing a craft brewery.

You have $50,000 in stock and personal savings. Fifty thousand dollars is a nice start, but it’s not enough to launch a brewery. Your brewery will provide 10–15 full-time jobs averaging $15 to $25 per hour that will qualify you for a $50,000 job creation grant from your regional economic development authority. You found an empty warehouse downtown perfectly suited to your brewery — but it needs renovation. You apply for a $50,000 grant from the downtown development corporation to restore a historic building.

 Through your professional networking, you’ve found a local business owner (an angel investor) who will contribute $25,000 in exchange for an equity stake and active participation in decision making. Now with $175,000 in hand, you can approach a bank for a $200,000 capital equipment loan.


As you make your way through the financing process and begin evaluating your funding options, keep in mind that your local CPA can be your most trusted professional business adviser. Your local CPA already advises other small businesses in your area and has relationships with local banks, insurance agents, attorneys, investors, municipal and county regulatory officials and more. Your CPA can be an important ally in helping you determine how much capital you need, evaluate available funding options and choose the ones that best meet your needs.

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