Business and Personal Finance © 2007Chapter 19:
Sources of FundingChapter Summaries- An entrepreneur is a person who takes the risk of starting a new business.
- Start-up costs include money for the purchase of assets needed to run a business, including inventory, equipment, furnishing, supplies, and utilities; costs such as legal, professional, and banking fees; licenses; permits; insurance; marketing costs; and remodeling and maintenance costs. Operating capital is the money needed to operate a business for the first few years. Reserve capital is money set aside for unexpected costs or opportunities.
- Sources of personal financing include personal assets, consumer loans, and home equity loans. Sources of private financing include family and friends.
- Some of the options available through bank funding are short- and long-term commercial loans, lines of credit, and secured and unsecured loans.
- The factors banks consider to approve commercial loans include the five C's: character, capacity, capital, collateral, and credit history.
- The Small Business Administration (SBA) is a major source of funding for new small businesses. This agency can also help with management training and organizational guidance.
- Other sources of funding for a business include business credit cards, private investors (angels), commercial finance companies, venture capital companies, and state and local agencies.
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