It’s the end of the month, and your small business is booming. Wouldn’t it be great to have a financial statement that shows you what you did well, how you could improve, and potential ways to manage money more effectively?
A statement of cash flows can break down your inflows and outflows every month or year to help you better understand your business’s spending habits. Continue reading to learn how to calculate cash flow in five simple steps, and download a handy cash flow template.
Parts of a cash flow statement
There are three core parts to a cash flow statement. To create a cash flow statement, review each cash transaction on record, and assign the dollar amount to one of three categories.
Operating activities
Statement of cash flows operating activities refers to day-to-day business management activities. The majority of your cash will be from operating cash flows. Buying materials, managing payroll, and collecting customer payments are all examples.
Investing activities
Investing activities in a cash flow statement refer to the inflow and outflow of investment capital for your small business. If your business purchases or sells an asset for cash, you’ll post the impact here.
Financing activities
Financing activities in a cash flow statement refer to transactions that create funding for your small business. When a company raises money from investors, borrows funds, or pays down a loan, those cash transactions are classified as financing activities.
How to calculate cash flow
Calculating cash flow might be easier than you think. You can begin preparing a statement of cash flow in five simple steps:
1. Find the starting balance: You’ll need your starting balance from your latest income statement if you are using the indirect method to calculate cash flow.
2. Calculate operating activities: Subtract all your operating expenses from any earnings gained through business operations.
3. Calculate investing activities: Report any earnings or losses from company assets here. This includes land, vehicles, and equipment.
4. Calculate financing activities: Share any funding or financing you receive here. This includes debt payments, equity, and fundraising.
5. Share the ending balance: Combine the totals from your operating activities, investing activities, and financing activities calculations to achieve your end balance for this reporting period.
A cash flow statement lists the cash inflows and outflows of cash for a period of time, and the ending cash balance is the same dollar amount reported on the balance sheet.
You can calculate operating cash flow using the direct or indirect method:
- The direct method refers to assigning cash inflows and outflows to the operations section by reviewing the firm’s cash account and line items of major transactions.
- The indirect method for cash flow from operations begins with net income. The report then makes adjustments to reconcile net income to net cash flow from operations.
Here are the main differences between the two methods:
Statement of cash flows template
After you calculate your operating activities, investing activities, and financing activities, use this template to calculate your statement of cash flows for this reporting period.
If possible, keep a copy of your income statement and balance sheet nearby to plug in your available cash across all of your financial statements and are ready to prep for the next reporting period.
Statement of cash flows examples
Here’s an example of how a small-business owner uses the direct method to produce a cash flow statement:
Julie owns Centerfield Sporting Goods—a firm that manufactures sporting goods products and sells them to retailers. Here’s Centerfield’s income statement and balance sheet as of 12/31/23:
With the ending cash balance, Julie will be able to make informed decisions about how to use her cash in the next reporting period.
Navigate midsize business challenges and opportunities
Organizing your financial statements is even more important as your small business begins to scale into a midsize company.
Utilizing reliable accounting software ensures that your finances are easy to reach and update so that you can maintain your focus on what matters most.
If you haven’t already, consider using our free template to craft a new business plan that addresses your needs and goals as a growing business.
This article originally appeared on the QuickBooks Resource Center and was syndicated by MediaFeed.org.
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18 loans for Hispanic-owned businesses
There are nearly 5 million Hispanic-owned businesses in the U.S., making this the fastest-growing segment of U.S. small businesses, according to the U.S. Small Business Administration (SBA). Yet, despite these big numbers, Hispanic and Latinx business owners frequently face challenges accessing capital and, as a result, often can’t successfully scale their businesses.
Fortunately, a number of organizations and government agencies in the U.S. are stepping up to address this unmet need, offering loans, grants, and other financing options to Hispanic and other minority entrepreneurs. These minority business loans may have lower interest rates and be easier to qualify for than some traditional loans. Here are 18 financing options that are worth checking out.
(Learn more: Personal Loan Calculator)
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To qualify as a Hispanic-owned business, more than 50% of the company must be owned by people of Mexican, Puerto Rican, Cuban, or other Hispanic origin. Currently, nearly one in four businesses are Hispanic-owned.
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A minority business loan is a small business loan designed to provide financing options for underserved communities. While minorities are free to apply for any business loan, minority business loans may offer more competitive rates and have less stringent qualification requirements.
Groups that are considered minorities in the U.S. include African Americans, Asian Americans, Hispanic Americans, and Native Americans. Women are also considered minorities for many types of loans, as well.
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The following lenders offer different types of small business loans to Hispanic and minority entrepreneurs and were chosen based on our analysis of search volume.
1. Accion
Accion is a nonprofit financial institution that invests in underserved communities and offers low-cost lending opportunities to Hispanic- and minority-owned businesses. The Accion Opportunity Fund provides loan amounts from $5,000 to $100,000, and is quick and easy to apply for online.
Accion offers two types of small business loans — the Southern Opportunity and Resilience (SOAR) Fund and the Small Business Progress Loan. SOAR is geared toward those in the south and southeast who experienced economic hardship from the COVID-19 pandemic and have been in business since September 2019 or earlier. The Small Business Progress Loan, on the other hand, is open to all minority-owned businesses and women entrepreneurs, and is partnered with American Express.
Accion also offers online resources, events, and networking opportunities (in Spanish and English) to help minority business owners learn and grow their companies.
(Learn more at: Home Affordability Calculator)
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The Community Development Financial Institutions Fund (CDFI Fund), which is part of the U.S. Treasury, gives funds to companies and organizations that help underserved people and communities. Minority business owners can reach out to local banks and nonprofit groups that have received CDFI funds to discuss and apply for low-cost business loans.
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The owners of Camino Financial were inspired to start their lending business in order to help people like their mother, who lost her Mexican restaurant business when they were children. To that end, they offer simple and affordable loans to small businesses who find it difficult to borrow through banks. They offer bad credit loans, secured and unsecured loans, microloans, and working capital loans up to $35,000. To qualify, your business must have been in operation for at least nine months and generate annual sales of $30,000 or $2,500 a month.
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The U.S. Small Business Administration (SBA) offers several financing programs that can help minority-owned businesses get access to the funding they need. Here are two programs you may want to check out to find a Hispanic small business loan:
Microloans
The SBA microloan program is administered by an intermediary network of nonprofit community-based lenders, rather than traditional banks. Through these lenders, the SBA aims to reach lower-income communities and minority-owned businesses that are often overlooked by traditional lenders. These loans come with low interest rates, six-year terms. and loan amounts up to $50,000.
Community Advantage Loans
The SBA’s Community Advantage loan program provides up to $350,000 in capital and is specifically designed to meet the needs of business owners in underserved communities. To qualify for an SBA community advantage loan, business owners need to have good credit and a strong business plan. However, the business’s balance sheet and amount of collateral will not affect eligibility.
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By offering crowdfunded loans with 0% interest, nonprofit Kiva is working to lift barriers to capital often faced by entrepreneurs from underserved communities. To apply, you need to market your Hispanic business to the community of 1.9 million individual lenders. These lenders can then choose to lend your company as much as $15,000 and you’ll have up to three years to repay them.
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CDC Small Business Finance is a nonprofit whose mission is to provide access to affordable and responsible capital to underserved entrepreneurs, including minority, veteran, and hispanic business owners. CDC offers loan amounts of $20,000 to $350,000 with five- to 10-year terms. They also offer SBA 504 commercial real estate loans of $250,000 to $40 million.If you are looking for advice to rebuild your credit, develop your business strategy, or manage financial reports, you’ll appreciate having access to small business advisors through CDC.
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Grameen America strives to achieve racial and gender equity by providing microloans of up to $2,000 to female and minority business owners. As part of their program, borrowers can open free savings accounts with commercial banks and build personal credit as they pay off their microloans. Grameen also offers training and support to women who want to start businesses and rise out of poverty.
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The Latino Economic Development Center (LEDC) offers Hispanic small business loans of $500 to $250,000 that can be used to purchase equipment, expand a business, hire staff, or purchase inventory. The three types of loans offered by the LEDC are as follows:
- LEDC Growth Loan: Loan amounts up to $250,000 for established small businesses that have been in operation for a minimum of two years.
- LEDC Startup Loan: Loan amounts up to $20,000 for new businesses with less than two years of business history.
- LEDC Seed Loan: Loan amounts up to $5,000 for businesses with less than one year of experience and with plans to launch a company within three months of funding.
LEDC also offers free business advice and credit-building services, as well as a directory of latino-owned small businesses.
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The National Association of Latino and Community Asset Builders (NALCAB) provides funding to a network of over 200 nonprofit organizations that serve diverse Latino communities throughout the U.S. With NALCAB support, these partner organizations offer Hispanic loans, grants, professional training, and support.
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Hispanic small business loans aren’t the only way for your business to get funding. There are also minority business grants that can provide capital that you don’t have to repay. These grants are offered by federal and local government agencies, corporations, and nonprofits.
10. Grants.gov
Grants.gov is the largest database of federal grant opportunities. While most grants are not specifically targeted to Hispanic small business owners, awards are available for all types of entrepreneurs, especially those focused on healthcare, U.S. defense, and environmental protection.
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digitalundivided’s BREAKTHROUGH Program (powered by JPMorgan Chase’s Advancing Black Pathways) offers $5,000 grants to Black and Hispanic women in the Dallas, Texas area. digitalundivided also provides training and resources to help businesses understand their customers, find financing, and choose the right business model.
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The National Association of the Self-Employed (NASE) works to provide resources for all self-employed individuals, including Hispanic business owners. They offer Growth Grants of $4,000, which can be used for a variety of business expenses, including marketing, advertising, hiring employees, and expanding facilities.
Besides access to grants, becoming a NASE member allows you to connect with experts who can advise you on subjects like finance, healthcare, strategy, law, and marketing. NASE membership also gives you access to discounts on healthcare, software, tax filing, and business travel.
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Hispanic businesses located in rural areas that have fewer than 50 employees and less than $1 million in gross revenue may want to consider applying for a Rural Development Grant from the USDA. Grants vary in size and can be used for a variety of projects that aid business development in rural areas, including training, technical assistance, acquisition or development of land, building construction or renovations, equipment purchases, and pollution control.
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The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are government grants from five different federal government agencies. These competitive grants are focused around tech and science and offer up to $1 million in capital (divided into two phases) to qualified small businesses.
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You may be able to find funding for your Hispanic small business through Candid.org’s Foundation Directory Online, which contains information on over 240,000 grantmakers in the U.S. Access to the directory requires buying a monthly subscription, but you can cancel at any time.
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Comcast RISE, which stands for Representation, Investment, Strength, and Empowerment, is a grant designed for businesses that were hit hardest by COVID-19. The grant is worth $5,000 and is given to small business owners hoping to expand and recover from the effects of the pandemic. Awards go to those looking to uplift their communities with a focus on diversity, inclusion, and community investment.
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The Entrepreneurial Spirit Fund by SIA Scotch Whiskey awards $10,000 in grants to small businesses owned by people of color in the food and beverage industry. Created by Hispanic entrepreneur Carin Luna-Ostaseskis, one of SIA’s goals is to provide funding, mentorship, and community to small businesses.
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If you’re a woman entrepreneur, consider applying for the Amber Grant, named after Amber Wigdahl, who passed at the age of 19 and never got to fulfill her business dreams. Each month, at least $30,000 is given in Amber Grant money. Applying takes just a few minutes and winners are announced by the 23rd of the following month.
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In addition to the grants and loans, there are organizations that can provide technical assistance, training, workshops, and networking opportunities to Hispanic businesses. Below are some you may want to check out.
digitalundivided
With a focus on assisting Black female and Latinx business owners, digitalundivided offers virtual training and a fellowship program for entrepreneurs. It also offers a pre-accelerator program for tech-enabled startup founders who have already begun to build their startup, are pre-revenue, and need assistance in developing their business model, marketing, and strategy.
Minority Business Development Agency
The Minority Business Development Agency is an advocate for Hispanic and other minority-owned businesses, and offers research, conferences, and resources to help entrepreneurs. Its Enterprising Women of Color Initiative is aimed to help minority women succeed in business through various offerings.
USHCC
The United States Hispanic Chamber of Commerce actively promotes the economic growth, development, and interests of Hispanic-owned businesses. Members have access to events and business resources to support them in their growth. In addition, members get listed in the Chamber’s online Hispanic business directory.
SCORE
SCORE is a national organization that connects business owners to free mentors to help them learn and grow their companies. SCORE also offers free workshops and a robust online database of useful business content.
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Looking for — and applying for — a Hispanic business loan can feel like an overwhelming task. Here are some ways to simplify the process.
Consider Your Options
Before applying for a small business loan, it’s a good idea to take a look at your credit profile and business financials, as this will give you an idea of what type of loan you might qualify for. If you have excellent credit, solid revenue, and have been in business at least two years, you may be able to qualify for a long-term, low interest loan from a bank or SBA lender. If not, you may want to look into financing offered by lenders and grantmakers listed above, as well as online lenders (who often have less strict qualification requirements for loans).
Determine How Much Money You Need
To figure out how much of a loan you need to start or grow your Hispanic business, consider how you would like to use the funds from a loan, then create a detailed budget for your project, adding in some padding to account for unexpected expenses.
Consider the Best Location for Your Business
If you haven’t yet launched your business, consider what might be the best environment for doing so. You may want to explore the best metros for minority businesses, since they may have established communities of hispanic business owners and resources to help you.
Gather All Your Paperwork
Whatever type of funding you decide to pursue, you will likely need to supply an extensive amount of information about your business in order to apply. This often includes:
- Business EIN
- Industry
- Entity type
- Business license and permits
- Annual business revenue and profit
- Bank account statements (personal and business)
- Personal and business tax returns
- Balance sheet
- Proof of collateral
- Accounts receivable and payable reports
- Existing debt
- Commercial lease
- Purpose of the loan/grant
- Business plan
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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