There are several factors these investors will account for. Most valuation professionals use Ibbotson’s SBBI Valuation Edition for RF, ERP, IRP, and SP. The CSP is the more subjective topic open to negotiation between buyer and seller. The cost of equity (K) is equal to the sum of the following discount factors (excluding risk-free rate, all figures vary by industry and business):
2. Be able to articulate how the business model actually solves a consumer problem. Be able to answer the question…”Is there a need for this type of business”. Rely heavily on industry reports.
3. Thoroughly do the sensitivity analysis in the financial model. Banks and the SBA will want to pressure test your ability to service fixed debt in the worst of times.
4. Approach the SBA under the sponsorship of at least two creditors. If asking for unsecured money, two sponsoring banks will be critical.
5. Have your own credit under control and be able to demonstrate financial responsibility and your commitment to put all the skin you have left into the game.