Presentation on theme: "FINANCE, PROTECT, AND INSURE YOUR BUSINESS"— Presentation transcript:
1 FINANCE, PROTECT, AND INSURE YOUR BUSINESS Entrepreneurship4/16/2017Chapter 7FINANCE, PROTECT, AND INSURE YOUR BUSINESS7.1 Put Together a Financial Plan7.2 Obtain Financing for Your Business7.3 Protect Your Business7.4 Insure Your BusinessChapter 7
2 Chapter 77.1 ReviewWhat are the one time only expenses that are paid to establish a businessStart-up costsDescribes how much cash goes in and out of a business over a period of timeCash flow statementExpenses that are incurred by a business every monthOperating expense
3 Chapter 77.1 Review cont.A financial statement that shows how much money a business earns or losesIncome statementShows the assets, liabilities, and capital of a business at a particular point in timeBalance SheetWhat is the accounting equation?Assets= Liabilities+ Owner’s equity
4 7.1 Review cont. Types of Assets Types of Liabilities Chapter 77.1 Review cont.Types of AssetsFixed, current, A/RTypes of LiabilitiesLong-term, current, A/PThe amount a company estimates it will not receive from customersUncollectible accountsLowering of an assets value to reflect its current worthdepreciation
5 Lesson 7.2 OBTAIN FINANCING FOR YOUR BUSINESS Chapter 7Lesson 7.2 OBTAIN FINANCING FOR YOUR BUSINESSGOALSConsider different types of bank loans.Explain Small Business Administration loans.Evaluate other sources that can provide debt capital.
6 Chapter 7Many companies take out loans from banks. You obtain debt capital when you borrow from banks. Debt capital is money loaned to a business with the understanding that it will be repaid, with interest, in a certain time period.
7 Chapter 7BANK LOANSTypes of bank loansSecured loansUnsecured loans
8 Chapter 7Secured LoansSecured loans are backed by collateral, which is property that the borrowers forfeit of he or she defaults on the loan.Types of secured loansLine of credit- money whenever the borrower needs it.Short-term loan- made for a specific purpose; repaid within a year.Long-term loan- payable over a period longer than a year.
9 Chapter 7Unsecured LoansLoans that are not guaranteed with property. These loans are only made to the bank’s most creditworthy customers.
10 REASONS A BANK MAY NOT LEND MONEY Chapter 7REASONS A BANK MAY NOT LEND MONEYThe business is a start up- has no record of repaying loansLack of a solid business plan- poorly writtenLack of adequate experienceLack of confidence in the borrowerInadequate investment in the business- banks are suspicious of entrepreneurs who don’t invest their own money
11 SMALL BUSINESS ADMINISTRATION LOANS Chapter 7SMALL BUSINESS ADMINISTRATION LOANSSBA loan assistanceRequirements of SBA loansApply for an SBA loan
12 REQUIREMENTS OF SBA LOANS Chapter 7REQUIREMENTS OF SBA LOANSYour business must be considered a small business.Your business must not be the leader in its field.Your business must comply with all federal employment laws.Your business cannot create or distribute ideas or opinions.You must have been unable to obtain financing from a commercial bank.You must invest a reasonable amount of your own money in the venture.You must provide adequate collateral.
13 OTHER SOURCES OF LOANS Small Business Investment Companies—SBIC Chapter 7OTHER SOURCES OF LOANSSmall Business Investment Companies—SBICMinority Enterprise Small Business Investment Companies—MESBICDepartment Of Housing And Urban Development—HUDEconomic Development Administration—EDAState governmentsLocal and municipal governments
14 FINANCE YOUR BUSINESS WITH EQUITY CAPITAL Chapter 7FINANCE YOUR BUSINESS WITH EQUITY CAPITALEquity capital is money invested in a business in return for a share in the business’s profits.Sources of equityPersonal financingFriends and familyVenture capitalist- people or companies who make a living by providing loans to start-up businesses