Sources of business finance How to find out the type of funds your business needs How to negotiate with fund providers

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Accessing Business Finance
By:
Highnet Resources Ltd
Phone: +234 (0) 8179084185, +234 (0) 8158300437
Email: info@highnetresources.biz
Website: www.highnetresources.biz
Facebook: https://web.facebook.com/HighnetResourcesLtd
Twitter: https://twitter.com/Highnet_R
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2. Presentation Objectives
• Know your funding options
• Learn how your balance sheet determines the
kind of funding you need
• Find out who has funds and what they are
looking for
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Presentation outline
1. The entrepreneurs' funding options
2. The Balance sheet
3. Typical funding needs of the exporter
4. The borrowing rules
5. Types of fund providers/Lenders
6. What do the lenders want?
7. Negotiating with fund providers
8. The dreaded FAQs in fund raising
9. The approval process
10. How Highnet Resources can work with you
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Entrepreneurs’ Funding Options
Your Personal Funds
“3F” – Friends, Family, and Fools
Personal Credit Cards and Other
Borrowings
Business Angels
Venture Capital
Grants
Venture Leasing
Mezzanine Financing
Merger and Acquisition
Initial Public Offering
Secondary/Follow-on Public
Offering
Private Placements – Debt
& Equity
Buyout/Acquisition
Financing
Corporate Debt

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Before you seek for funding, understand
this first

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Your Balance Sheet
• To understand your funding
needs, you must understand the
balance sheet.
• Balance sheets are financial
statements that show investors
what a company owns versus
what a company owes at a given
point in time. This relationship is
often depicted using the
following equation:
Assets = Liabilities + Owners Equity.
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Assets
• Assets are what a company owns. There are three basic types
of asset: current assets, fixed assets, and intangible assets.
• Current assets are cash or assets that will be converted to
cash within the next year. A company’s current assets may
include: cash, inventories, or accounts receivable.
• Fixed assets are the tangible (non-cash) assets that a
company may own. These are assets that are not scheduled to
be converted into cash within the next year and include
buildings, machinery, and land.
• Intangible assets are those assets that cannot be physically
touched, such as intellectual property, branding, and good
will.
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Liabilities
• Liabilities are the debts of a company. There are two basic
types of liabilities: Current Liabilities and Non-Current
Liabilities.
• Similar to current assets, current liabilities are the debts
and financial obligations of a company that will be repaid
within the next year i.e. Accounts payable and accrued
interest, wages, and taxes
• Conversely, non-current liabilities are the debts and
financial obligations that will not come due within the next
year such as long term debt, pensions, and provisions.
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Owners’ Equity
• Owners equity is the equity stake currently held by a firm’s
equity investors.
• Paid in capital and retained earnings make up Owner’s Equity.
• Equity funds come from personal moneys of the business
owners i.e. savings, inheritance or personal borrowings from
financial institutions, friends, relatives and business associates
and from stockholders of the shares in a corporation.
• These funds are normally unsecured and have no registered
claim on any of the assets of the business.
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The Full Balance Sheet Equation
Currentassets+fixedassets=Totalassets
Currentliabilities+longtermliabilities=Totalliabilities
Currentassets–currentliabilities=workingcapital
Totalliabilities+equity=TotalcapitalorTotalAssets
Assets = Liabilities + Owners Equity.
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Working Capital
• The working capital represents the business temporary funds;
these funds are needed to support the normal short-term
operations of the business.
• The accountant’s definition of working capital is current assets
minus current liabilities. It is normally needed to buy
materials, pay bills, pay salaries and take care of unexpected
emergencies.-
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Typical Funding Needs of Entrepreneurs
The need
• Stocking facilities to buy raw
materials
• Start and continue marketing
campaigns
• Expand office space and outlets
• Storage facilities to hold raw
materials prior to manufacturing
• Equipment to process raw
materials
• Vehicles to transport
commodities from factory to
markets
Assets or Expense type
• Current assets
• Selling expenses
• Fixed assets
• Current assets/rental expense
• Fixed assets
• Fixed assets
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Borrowing Rules
• Match the Need with the Funds
• The kind of fund you need
depends on what you are
funding.
• Borrow short to finance short and
borrow long to finance long.
• Leverage: This is the relationship
of debt financing to equity
financing (leverage or debt-to-
equity ratio). the lender would
like to see a new business owner
who is just building a reputation
have this at 2:1 or even 1:1.
• Working capital: LPOs finance, Export
contract finance, Inventory finance
• Receivables finance: Invoice
discounting
Short term
loans (to be
paid in 1 year or
less)
• Fixed assets acquisition: Equipment,
cars, furniture, fittings
• Organic Market expansion
Medium term
loans to be paid
after 1 – 4 years
• Fixed assets: Plant, equipment, land,
buildings
• Mergers, acquisitions, market
expansion
Equity, grants
and Long term
loans to be paid
back after 4
years

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Types of Lenders/Fund Providers
Short Term Medium Term Long Term Equity Grants
DMBs DMBs –
intervention
funds
DMBs –
intervention
funds
Unique Capital
Ventures
Etisalat
NEXIM Grofin Grofin Grofin Diamond bank
Bank of
Industry
Bank of
industry
Tony Elumelu
Foundation
NEXIM NEXIM
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DMBs means deposit money banks also called commercial banks.
See a list of intervention funds on the next slide

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Relevant Intervention Funds
• National Economic Reconstruction
Fund (NERFUND) – N200B
• Small and Medium Enterprise Credit
Guarantee Scheme (SMECGS) –
N200B
• The Agricultural Credit Guarantee
Scheme Fund (ACGSF) - N 2 billion
(USD 12.9 million)
• Commercial Agriculture Credit
Scheme (CACS) - N200billion
• Agricultural Credit Support Scheme
(ACSS) - N50 billion
• BOI/State MSME Funds- N19.8 billion in
15 states
• BOI/UNDP access to renewable energy
programme - US$4m
• Fund for Refinancing and Restructuring
for the Manufacturing Sector - N200 B
• AFDB Line of Credit - US$500m
• Rice Intervention Fund- N10 B Micro
Enterprise Development Fund
• CBN’s Intervention Fund -= N500 B
• Cotton Textile and Garment Industries
Revival Scheme – N100B
• Dangote Foundation’s Small Business
Development Fund - N 5B
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What the Lenders want
A business plan and or feasibility study with supporting
documents containing this information:
• Cash Flow- A lender wants to ensure that there will be
adequate cash flow available to pay for all operating expenses,
including all salaries (even the owner’s) and other overheads,
loans principal and interest. This will reflect in the financial
accounts of the business.
• Equity contribution of 20% or more of the total cost of the
project.
• Credit track record – A history of bankruptcy and loan default(s)
will work against you. Having a good credit reputation will help
ensure that you are a favoured creditor.
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What the Lenders want
• Collateral - It is the amount of the commitment that a
borrower makes to a loan and can be cash, stock, real estate
e.t.c. In the event of a default, collateral helps mitigate the
bank’s exposure.
• Character. Who you are, what you do, what strengths you
have, how you work, your past successes, your present
working habits are parts of your character that a bank
considers.
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What the Lenders want
• Conditions of the industry and macro economy - What is
going on in these areas will affect the transaction and banks
will analyse the issues before considering your facility.
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Sample Documentation Required (NEXIM)
• A certified true copy of Certificate of
Incorporation;
• Three years audited statement of
accounts or a complete set of
management report signed by two
directors of the company1
• A feasibility study report/business
plan;
• Certified true copies of forms CO2
and CO7;
• Certified true copies of proforma
invoice(s) for new/used equipment
from a reputable supplier(s);
• Evidence of licence/permit from
relevant agencies where applicable;
• Evidence of export commitment or
any other arrangement acceptable to
NEXIM;
• Copy of Environmental Impact
Assessment Report;
• Evidence of availability of
counterpart funding (for new
projects);
• Copies of title of documents that are
available as security; and
• Any other document that may be
required.
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Sample Documentation Required (BOI)
• Formal Application
• Photocopy of Certificate of Registration
(Form CAC/BN/A1).
• Business Plan
• Valuation report on existing assets
prepared by an accredited BOI valuer.
• Value of equipment to be purchased from
a BOI accredited supplier (including
invoices).
• Source(s) and value of raw materials to be
purchased expressed in units.
• Updated annual returns for a company
• 3 years audited financials
• Two (2) passport photographs of the
Promoter (business owner)
• Photocopy of the Current Tax Clearance
Certificate of the Proprietor.
• Means of Identification (i.e.
International Passport or Driver’s
License or National Identity Card) of
the owner.
• Bank Statement of the Business for six (6)
months.
• Declaration of Outstanding Liabilities to
other Banks and Individuals.
• Reference letter from a recognized
traditional ruler or authorized Local
Government Official.
• Provision of a minimum of two (2)
External Guarantors to guarantee the
loan.
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Negotiating with Lenders
• Never select your Banker out of sentiment.
• Ask the right questions and be insistent before account opening.
• Keep financial business records and pay yourself a salary.
• Write and update a good business plan.
• Maintain a good business and credit reputation.
• Be confident and knowledgeable
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The Dreaded Lending FAQs
• What collateral do you have?
• Where is the C of O for your office or factory building?
• We need depth and breath of management/ ownership
• We must have your audited annual accounts for 3 or 5 years
and a Business plan.
• Submit a list of your current loan facilities for a Credit Bureau
check.
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The Approval Process
• The decision maker- Even if the MD/CEO makes the final
decision he might rely on feedback from someone else.
• The influencer, wise sage or muse who exerts strong influence
on the MD/CEO. Bond with this person.
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TheApprovalProcess 2
• Your mentor/coach- If you are new to the Bank seek a longer
serving, generally respected executive to guide you.
• One of the big five with veto power. The nasty point scorers or
spoilsport who says the credit request is flawed because it
was not their idea.
• Your opponents who could be motivated by personal grudges,
jealousy, personality disorders and will pick holes in your
proposal.
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TheApprovalProcess 3
• Your supporters who have more detailed knowledge of the
request but you should rely more on facts and good business
documentation than on them.
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How Highnet Resources Ltd
can work with you
www.highnetresources.biz

27. Our MISSION
Our mission is to prepare Nigerian
companies to compete and win in
the global economy by helping
new and existing businesses
operate efficiently and create
products and services that will be
world class.
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28. Our VISION
We have a vision to be
the top consulting
company in Nigeria on
"best practice" and global
competitiveness by the
year 2018
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29. Our Services
• We offer services that enhance businesses which
include:
• Business Plans, Feasibility Studies, Business
Proposals, Data and Research,
Recruitment, Advisory Services and Training
• Finance facilitation services for funding such as
grants, equity or loans for businesses in various
sectors including agriculture processing and
marketing
• We can also help you prepare the loan
documentation required.
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30. Our Business Planning Solutions
Data and
Research
Feasibility Study
Business Plans
Business Plan
Implementation
HR Management
- Training
Management
Consulting
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31. Our Present and Past Clients
• Highnet Resources has worked with the Pan Atlantic
University, International Finance Corporation (IFC- World Bank
Group), First Bank of Nigeria Ltd, GEMS4/DFID amongst
others.
• In 2014 we were nominated as a Finance advisor to the West
African Trade Hub Project funded by USAID.
• In 2015 we were registered as a business development
services provider (BDSP) to Bank of Industry (BOI).
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32. Highnet Resources Ltd
3rd Level OPIC House, OPIC Bus stop,
Isheri North, Km2 Lagos – Ibadan Expressway,
After Ojodu Berger, Lagos
Phone: 08179084185, 08158300437
Email: info@highnetresources.biz
Website: www.highnetresources.biz
Facebook: https://web.facebook.com/HighnetResourcesLtd
Twitter: https://twitter.com/Highnet_R
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