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If you dont know who the fool is on the deal, its you!...Michael Wolff
Capital: any form of wealth employed to produce more wealth Fixed capital: to purchase a companys permanent or fixed assets such as land, buildings, computers, and equipment Working capital: to support a businesss short-term operations Growth capital: to finance a companys growth or its expansion in a new direction
Equity capital: represents the personal investment of the owner (s) of a company Debt capital: the financing that a small business owner has borrowed and must repay with interest
Personal savings Friends and family members Angels Partners Corporate venture capital Venture capital companies Public stock sale
Angels
Private investors, wealthy individuals, entrepreneurs themselves, who provide money in exchange for equity stakes Ranging from $10,000 to $2M Every year: 230,000 angels , $23 B, 50,000 companies Average: 10% of opportunities, 2 investments per year, $80,000 in 3.5 firms Angel networks: 200 Patient money
Debt Financing
Commercial banks Non-banks Federally-sponsored programs State and Local Development Programs Internal methods of financing
Commercial Banks
Short-term loans Commercial loans Lines of credit Floor-planning Intermediate and long-term loans Installment loan Term loan
Non-Bank Sources
Asset-based lenders Vendor financing Equipment suppliers Commercial finance companies Savings and loan associations Stock brokerage houses Insurance companies Credit unions Bonds Private placements Small business investment companies Small business lending companies
Economic Development Administration Department of Housing and Urban Development Department of Agricultures Rural Cooperative Service Small Business Innovation Research Program Small Business Technology Transfer Program Small Business Administration
Low Doc Loan Program SBA Express Program 7A Loan Guaranty Program CAPLine Program Loans Involving International Trade Section 504 Certified Development Company Program Microloan Program Prequalification Loan Program Disaster Loans
Capital access programs: encourages lending institutions to make loans to businesses that do not qualify for traditional financing because of higher risk Revolving loan funds: offered by communities that combine private and public funds to make loans to small businesses, often at below-market interest rates
Internal Methods