Free Online Course in International BusinessKnowledge StatementKnowledge of Resources: Ex-Im Bank, SBA, Private Banks, Non-bank Private Sector LendersGoalThe goal of this material is to introduce you to the resources available to aid companies in developing their financial plans for internal and external international trade financing.Learning ObjectivesYou will be able to• describe the key components of a financial plan • identify the key financial ratios • identify key financial resources--the Ex-Im Bank, SBA, private banks, non-bank private sector lenders required to develop a financial plan • identify advantages and disadvantages of each resource • describe how to find these resources IntroductionAll forms of financing require financial data to be submitted and evaluated by the financier. Financial planning demonstrates the ability based on historical data to forecast and project anticipated results. A financial plan is generally a key element of a more comprehensive business plan which covers all aspects of a company. Projections are made to see if the company can meet its objectives. The ability to understand and use the financial information contained in the plan gives outside sources, such as banks and investors, confidence. Without this understanding and confidence, an outside source will be reluctant to provide funding. The balance sheet and income statement reveal the key financial data for a business. The two statements combined tell a story. A reader may find some aspects of these statements mysterious or confusing, and they will elicit questions that must be answered. The company's ability to field and answer these questions to the satisfaction of that reader will determine the success of getting the financing required. The fewer the questions the better the chances are of getting funding from a bank or investor. Answering all questions does not, however, supersede the minimum requirements to become bankable: being in business for two years, having a positive net worth, and being a profitable company. These are not the only requirements; but without these at a minimum, a lender will ask for other assets or collateral. The balance sheet lists:Assets consisting of: • cash • inventory • accounts receivable Liabilities from: • accounts payable • short-term • long-term debt • Equity reflecting the owners' investment • all accumulated earnings The business plan and financial statements are prepared for internal use but are often presented to external entities to demonstrate the strength and expertise of a company. Presentation of a business plan is critical to gaining investor confidence. Many factors may result in a company needing to borrow money. The ability to project these needs based on growth through a cash flow analysis or demonstrated through the planning process will convince outsiders to invest in the company. The profitability of the company should demonstrate the ability to provide a return on investment and/or pay back any debt incurred. A Financial PlanA financial plan consists of sections that will enlighten the reader about the organization. Each section serves a specific purpose to accomplish this task. Many of the sections are not directly related to financial data. The plan should give the philosophy of the company, the way it is structured, its desired goals/ achievements, and the plans to get there. The major sections that follow provide a basic outline for a financial plan:Cover page and table of contentsThe cover page, like the whole document, should be of professional quality. It identifies the preparer and lists the contents. The table of contents allows the reader to skip quickly to the information that is critical to his or her needs. It also provides an introduction to what the organization thinks is important for the reader to know about the business.Mission statementThe mission statement is often overlooked or given little consideration; yet it sets the stage for the entire plan and should be considered one of the most important parts of the plan. The opening statement describes the objectives and philosophy of the company.Executive overviewThe executive overview provides the opportunity to describe senior management and their qualifications. The decisions of this group will determine the outcome of the plan. It is important that this section to cover the experience, education, background and successes of senior management.Executive summaryThis statement justifies the reason for the preparation of the plan and assists a reader in quickly determining whether to proceed. The writing of this section must be consistent with the objectives of the company. Caution should be taken in the preparation of this statement to know the specific needs of a reader who is examining it.Organization chartThe organization chart is a visual presentation that provides a look at the size of the organization, its efficiency and potential succession. Succession is critical for providing continuity within an organization since most objectives are met over the long term.Product and market overviewHere the way the business operates is detailed. This presentation also demonstrates where the company fits in relationship to other competing businesses.
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