1 Chapter 13 OTHER FINANCING ALTERNATIVES ENTREPRENEURIAL FINANCE

2 Chapter 13 : Learning Objectives Identify relevant sources of debt-oriented financing Discuss government loan guarantee and micro-credit programs Identify several potential sources of funding for minority-owned enterprises

3 Chapter 13 : Learning Objectives Explain what differentiates venture lending and leasing from traditional lending and leasing Describe factor financing and compare it to receivables financing through a bank

4 Helping Start-up Ventures Locate Funding 帮助新创公司寻找资金 Facilitators Consultants 顾问 Intermediaries 中介

5 Commercial vs. Venture Bank Lending 商业银行或风险投资银行贷款 Commercial Bank: Use traditional conservative measures of borrower’s ability to repay and value of assets recovered in case of default Venture Banks Interest and principal represent only part of return to Venture Lender Warrants (right to buy equity at a specific price) provide remainder of return

6 Five “C’s” of Credit Analysis 五 “C” 信用分析 Capacity to repay – most critical 偿付能力 Capital – money you personally have 个人资金 personally invested in business; indication of extent of personal risk if business fails Collateral – additional forms of security or guarantees provided to lender 担保品 - 其他形式的担保或提供贷款担 保 Conditions – focus on the intended purpose of the loan 条件 - 关于贷款的目的 Character – general impression you make on the potential lender or investor 个性特征 - 潜在贷款人或投资者对你的总体印象

7 Common Loan Restrictions 普通贷款的限制 Maintenance of accurate records and financial statements 维持准确的财务记录和财务报表 Limits on total debt 债务总额的限制 Restrictions on dividends or other payments to owners and /or investors 限制股息或其他支付给业主和 / 或投资者款项 Restrictions on additional capital expenditures 额外资本支出的限制

8 Common Loan Restrictions 普通贷款的限制 Restrictions on sale of fixed assets 限制出售固定资产 Performance standards on financial ratios 评价业绩的财务比率标准 Current tax and insurance payments 支付税费和保险费情况

9 Why Ventures May Not Get Debt Financing 为什么新创企业可能无法获得债务融资？ Large portion of startup assets are intangible and provide no collateral 大部份是无形的资产，并无抵押资产 Receivables either don’t yet exist or collection history is inadequate 应收账款或者不存在或收集的不够全 Not economically plausible for bank to use management involvement in a defaulting new venture 银行无法对公司管理实施风险管理 Risk characteristics not a good match to demand deposits or other bank liabilities 公司风险管理不能满足银行贷款要求

10 Some Reasons for Using Credit Card Financing 使用信用卡融资的几个原因 Ease of obtaining credit card debt 信用卡债务融资比较容易获得 Potential low cost when rolling balance across various cards 较低的使用成本 Personal guarantees required on regular bank loans 定期银行贷款必须提供个人担保

11 Small Business Administration (SBA) 小企业管理局 Created by an act of Congress for the purpose of fostering the initiation and growth of small businesses 小企业管理局由美国国会创建启动和培育的，其目 的是为小企业成长提供资金和信贷服务的机构 Provides capital and credit 提供资金和信贷 Guarantees general business loans Helps create new jobs in small business 帮助小型企业创造新的就业机会 Facilitates investments through venture capital programs 通过风险资本促进投资计划

12 Small Business Administration (SBA) Provides disaster loans Works with regulatory agencies Helps small firms obtain government business Provides management and technical assistance Implements asset sales programs

13 Small Business Administration (SBA) Programs Debt financing and other financing- related programs Surety bond program Federal procurement programs Research and development Business counseling & training Business information services

14 Small Business Administration (SBA) Programs Advocacy programs Disaster assistance Assistance for armed forces veterans Assistance for exporters Assistance for Native Americans Assistance for small and disadvantaged businesses Assistance for women

15 Other Government Financing Programs There are many state and municipal agencies that have been charged with supporting the formation and growth of small businesses

16 Receivable Lending and Factoring Factoring: selling receivables to a third party at a discount from their face value Receivables Lending: use of receivables as collateral for a loan

17 Debt, Debt Substitutes, and … Vendor financing: Accounts payable and trade notes Terms like “2 in 10, net 30” Mortgage lending Venture leasing: leasing contracts where one component of the return to the lessor is a type of ownership in the venture usually through warrants

18 Direct Public Offerings DPO: security offering made directly to a large number of investors At this time direct public offerings have not been a significant challenge to traditional venture capital funding or investment banking services