Financing the venture Flashcards
a business project need to have substantial start up capital requirement nor does one have to be a millionaire to start an entrepreneurial business endeavor.
Financing the venture
Capital requirement
- Fixed capital
- Working capital
- Growth Capital
refers to the money needed to purchase fixed assets or capital goods.
fixed capital
it is needed to fund day to day business operation
working capital
it is not related to daily or seasonal requirments for funds of the business.
it is needed when an existing business is set to expand, diversity, or change its directions.
growth capital
internal funds sources generally refers to the funds which are owned by the entrepreneur himself or the company, whereas external capital essentially refers to those beyond the means of the entrepreneur and the company.
sources of capital
it means sourcing or borrowing funds from organizations or institutions duly authorized by government or by the law to extend financial support services to the business and industry.
the formal and informal sources
the contribution of the owner to the capital of the business is called?
it is evidenced by the issuance of stockholders certificate issued by the corporation.
owner’s equity
refers to organizations whose main businesses are generally meant for providing such form of financial assistance.
long term borrowing
Forms of fund sources
1.mortgage
2. bonds
3. long term commercial papers
form of fund generation by the way of pledging a designated property as security or collateral for the loan.
mortgage
of indebtedness of the issuing company that promises a fixed amount of interest to the bondholders upon maturity or call by its holders.
bonds
are commercisl documents issued by large companies with credible track records.
long term commercial papers
take the form of financers on a short term basis lasting to one year or less
-serve as a stand by credit facility to the entrepreneurs, which can be tapped as needed.
short term creditors
Types of creditors
- commercial banks
- merchandise suppliers
- credit card companies
- capital equipment suppliers
refer to private and for profit organizations that provide funds to new business ventures by way of purchasing equity positions in new or young businesses that have potentials to produce maximum returns within short period of time.
venture capital company
other souces :
- lending investors
- government institutions
- Non government organization (NGO)
- Political sources
- friends and relatives
- purchase order financing
- employees
- usurers
entrepreneurs may start up capitals with private investors called “angels” as reffered to by the entrepreneurs magazine
Angel investors
it means going through the stock market system under auspices of the philippjne stocks echsnge.
IPO
The C’s of credit
- collateral
- capacity
- characder
- contract
- conditions
are duty bound to provide both short term and long term financing to any viable business project
commercial banks
the company’s inventory or stock can be procured either through cash or credit terms.
merchandise suppliers
it is the most convenient. yet the most expensive loan terms.
credit card companies
desire to sell equipment, suppliers will often make every favorable term even to new companies.
Capital equipment suppliers
the sellers retains ownership or title until the last installment payment is made and received
capital equipment suppliers
procurement of capital items or equipments for the company
leasing and companies
specialized organizations like credit and collection companies or even individuals who take risk of buying receivables and discount rates
receivable factors
some of the employees might be willing to defer portions of their salary or other benefitsbas gesture of solidarity, loyalty, fellowship
defferal of payables in general
refer to private and for profit organizations that provide funds to new business ventures by way of purchasing equity positions
venture capital companies
small business organizations duly licensed by Bangko Sentral ng Pilipinas BSP to provide quick financing with less paper works
lending investors
are special government financing packages meant for enterpreneurs in need of funds as seed capital as assistance to those in dire need of funds
government institutions
mandates or major programs really meant for upcoming small scale enterpreneurs
Non Government organizations (NGOs)
politicians are philanthropist and are, therefore, in a position to provide grants of financial assistance for self employment and livelihood projects
political sources
they are abound or are just around willing to be tapped
friende and relatives
called PO financing, arranged with commercial banks or financing institutions like technology and livelihood resource center
purchase order financing
has a greater stake in the health of the company other than the entrepreneur/owner and the employee
employees
they helped a thousand and more small entrepreneurs mostly in sari-sari store business
usurers
start up capital with private investors as reffered to by the entrepreneurs magazine
Angel investors entrepreneurs
it means going through the stock market system under the auspices of the Philippines Stocks exchange
IPO
it means going through the stock market system under the auspices of the Philippines Stocks exchange
IPO
