C. Financing a Small Business 4.00 Explain the fundamentals of financing a small business. 4.02 Discuss sources used in financing a small business.

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C. Financing a Small Business 4.00 Explain the fundamentals of financing a small business Discuss sources used in financing a small business.

How are you going to finance a small business? Equity sources: Money or capital contributed by owners; capital sources that trade cash for some portion of ownership or equity in a business.

 Personal savings  Friends and relatives  Partners  Private investors  Venture capitalists  State-sponsored venture capital funds

How are you going to finance a small business? Debt sources: Money or capital that is borrowed and must be paid back with interest.  Banks  Trade credit through vendors  Finance companies  Credit unions  Government agencies

Process for getting a loan Select the bank carefully. Prepare financial statements and a business plan. Make an appointment. Prepare to answer questions.

Types of loans available Secured Loans Short-term loans Lines of credit

Entrepreneurial characteristics needed to obtain financing  Character  Capacity  Capital  Collateral  Conditions

Factors to consider when choosing a financial plan Risk Control Availability