Maureen Collins‐Williams University of Northern Iowa

1. Economic Development Finance
Maureen Collins-Williams
Director, Entrepreneurship Outreach
University of Northern Iowa
Maureen.Collins-Williams@uni.edu
#McWillie

2. Economic Development Finance
1 The Role of Finance in ED
2 Private and Public Sector
3 Kinds of Business Financing
4 Startup and Growth Finance
5 Finance Programs

3. Finance and the EDO
Core Competency
Multiple Partners
Multiple Rounds
Katy-Bees $15,000

4. Knowledge Base Needed by an ED
o Finance Program Management
o Public Policy Behind the Programs
o Municipal Finance
Classic Kitchen
and Bath
$450.000

5. Debt
Equity
Private Sector Lending
Urban Chickens…
Omlet Chicken Coops
$85,000

6. Commercial Banks
Community Development Finance
Institutions (CDFIs)
Microfinance Organizations
Non-Bank Lenders
Transactional Lenders
Private Sector Lending-Debt Financing

7. Dilutive Investment
o Entrepreneur Loses Portion of Ownership
o Does Not Require Repayment
o Business Capital is Used to Leverage Debt
Sources
o Friends and Family
o Angel Investors (Formal, Informal)
o Venture Capital Organizations
Private Sector Lending-Equity Financing

8. The Role of the Public Sector
o Fill Gaps
o Public Good Exceeds Risk
o Dovetails
Improves Access
Public Sector Financing
Disaster Recovery Technical
Assistance Parkersburg, IA
EF5 Tornado 2008

9. Lowers the Cost of Borrowing
Reduces the Risk
Addresses Special Needs
Provides Packaging
Direct Lending/ Investment
Technical Assistance
Public Sector Financing
NH Transfer and Storage
$250,000

10. Factors Which Influence Finance Options
Stage
Industry
Economic Conditions

11. Two Kinds of Need
o Working Capital
o Fixed Assets
Use of Funds
MainStreet Waterloo

12. Seasonal Industries
Contractors
Business w/Rapid
Growth
New to Exporting
Replacement/Repair
Typical Needs
New Hampton MetalFab
$650,000

13. Factors
o Debt:Equity
o Collateral
o Amount of Funding
Needed
o Term
Choosing the Financial Tool
EntreFest 2013

14. EDO Direct Lending
Revolving Loan Funds
Microloan Funds
State Finance Programs
Federal Finance
Programs
Crowdfunding!
Tools and Programs
Soybasics Candles
$1.2 Million

15. EDO Direct Lending
Revolving Loan Funds
Tools and Programs
Peach Tree Tea Room
$38,000

16. Microloan Funds
State Finance
Programs
Federal Finance
Programs
Tools and Programs
Buchanan County EDC

17. Microenterprise Programs
self-sufficiency
o increase economic self-sufficiency
o 500 to $5,000 loans (peer lending)
self-employment
o encourage start-up & expansion
o $5,000-$15,000 loans
small-scale enterprise
o existing businesses poised for expansion
o $15,000 to $25,000 loans
Maggie
Vandewalle,
Nashville, TN

18. Direct Microlending
advantages
o Control of Funds
o Group solidarity
o Borrowers Accountable
disadvantages
o Time
o Identifying LRC
Please See Your SBE
Manual For Elements
Of Effective
Micro-loan Fund
Lending
Pages 162-166

19. Cost Effectiveness
Delivering Microcredit is Costly
o extensive technical assistance & training
Self Sufficiency Ratio
o internally generated funds
o total program costs
Income Sources
o application fees and closing costs
o interest earned from lending or uncommitted funds
o fees for technical assistance & training
The One
Hat Band

20. Federal Programs SBA
7(a)
504
Microloan Program
Disaster Assistance
Small Business Investment Company
(SBIC)
MoGo Organics

21. Crowdfunding
Small Investments Made by Many
Tokens of Appreciation
Online
JOBS Act
o Waiting on Rules
Seed Money, Kickstarter

22. Platforms
Kickstarter
Indiegogo
RocketHub
GoFundMe
Razoo
Crowdrise
Pledge Music
Sellaband
Appbackr
Crowdfunder
CrowdLever
Fundarole
iCrowd
Petridish
Ulule
Earlyshares
Startsomegood
Sportfunder
33needs
ChipIn
Buzzbnk
InventionBuy.com
Crowdtilt
Go4Funding
Cumplo
Dancefunder
CrowdBnk
FundAGeek

23. Inventory $ 30,000
Furniture and Fixtures $ 15,000
Equipment $ 5,000
Supplies $ 5,000
Accounting and Legal $ 1,000
Signage $ 2,000
Pre-Opening Training Costs $
Insurance $ 500
Deposits on real estate $ 1,000
Deposits on utilities $ 500
Remodeling $ 20,000
Operating Capital $ 20,000
Total Financial Need $100,000
Bartlett’s Boutique

24. $100,000 total need
$ 15,000 owner equity
$ 85,000 outside investment needed
Her package should look something like this:
$100,000 total need
$ 18,000 more owner equity
$ 15,000 owner equity
$ 67,000 outside investment needed
Bartlett’s Boutique

25. Cost Collateral Value
Inventory $ 30,000 $15,000 (50%)
Furniture and Fixtures $ 15,000 $ 7,500 (50%)
Equipment $ 5,000 $ 2,500 (50%)
Supplies $ 5,000 $ 0
Accounting and Legal $ 1,000 $ 0
Signage $ 2,000 $ 0
Pre-Opening Training Costs $ $ 0
Insurance $ 500 $ 0
Deposits on real estate $ 1,000 $ 0
Deposits on utilities $ 500 $ 0
Remodeling $ 20,000 $ 0
Operating Capital $ 20,000 $ 0
Total Financial Need $100,000 $25,000
Bartlett’s Boutique

26. Economic Development Finance
Maureen Collins-Williams
Director, Entrepreneurship Outreach
University of Northern Iowa
Maureen.Collins-Williams@uni.edu
#McWillie