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FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT & & FINANCING YOUR BUSINESS FINANCING YOUR BUSINESS NOTES NOTES BMA – ENT – 8: Analyze financial issues BMA – ENT – 8: Analyze financial issues relating to successful business ownership. relating to successful business ownership.

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Page 1: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT &&

FINANCING YOUR FINANCING YOUR BUSINESS NOTESBUSINESS NOTES

BMA – ENT – 8: Analyze financial issues relating BMA – ENT – 8: Analyze financial issues relating

to successful business ownership.to successful business ownership.

Page 2: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

ESSENTIAL QUESTIONSESSENTIAL QUESTIONS

• Why are budgets so important?Why are budgets so important?

• What financial records do small businesses need to keep?What financial records do small businesses need to keep?

• What is the foreign exchange rate and what does it mean?What is the foreign exchange rate and what does it mean?

• How does a small business owner know the financial status How does a small business owner know the financial status

of their business? of their business?

• What are start-up costs and operating costs?What are start-up costs and operating costs?

• Why is it important to create an effective business plan for Why is it important to create an effective business plan for

investors?investors?

Page 3: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

THE PURPOSE OF THE THE PURPOSE OF THE FINANCIAL STATEMENTFINANCIAL STATEMENT

• Financial Plan Financial Plan – set of documents that – set of documents that

outline the essential financial facts about the outline the essential financial facts about the

new venture.new venture.

• Purpose:Purpose:

• Guides a company into the futureGuides a company into the future

• Attracts investors; lenders & investors Attracts investors; lenders & investors

provide money to businesses with sound provide money to businesses with sound

financial plansfinancial plans

Page 4: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

AN EFFECTIVE FINANCIAL AN EFFECTIVE FINANCIAL PLANPLAN

• An effective financial plan:An effective financial plan:

• Identifying business assetsIdentifying business assets

• Determining needed capitalDetermining needed capital

• Describing start up and operating Describing start up and operating expensesexpenses

• Describing financial records managementDescribing financial records management

• Forecasting future financesForecasting future finances

• Describing growth financingDescribing growth financing

Page 5: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

AN EFFECTIVE FINANCIAL AN EFFECTIVE FINANCIAL PLAN:PLAN:

IDENTIFYING BUSINESS IDENTIFYING BUSINESS ASSETSASSETS

• A financial plan identifies the assets that need to be A financial plan identifies the assets that need to be

purchased for the business or project.purchased for the business or project.

• Assets like cash, equipment, buildings, supplies, and Assets like cash, equipment, buildings, supplies, and

land must be researched, analyzed, and compared land must be researched, analyzed, and compared

before buying.before buying.

• The information obtained might show that buying The information obtained might show that buying

used items instead of new ones, or renting them used items instead of new ones, or renting them

would be best.would be best.

Page 6: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

AN EFFECTIVE FINANCIAL AN EFFECTIVE FINANCIAL PLAN: DETERMINING NEEDED PLAN: DETERMINING NEEDED

CAPITALCAPITAL

• A financial plan describes and estimates the A financial plan describes and estimates the

amount of money a business needs to start and amount of money a business needs to start and

operate.operate.

• CapitalCapital - money supplied by investors, banks, or - money supplied by investors, banks, or

owners of a business.owners of a business.

• Start Up Capital Start Up Capital – the money used to pay for the – the money used to pay for the

various assets and expenses of a new venture or various assets and expenses of a new venture or

business.business.

• Major sources of start up capital for entrepreneurs Major sources of start up capital for entrepreneurs

are personal resources, like friends & family, are personal resources, like friends & family,

savings, loans, and investments.savings, loans, and investments.

Page 7: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

AN EFFECTIVE FINANCIAL PLAN: AN EFFECTIVE FINANCIAL PLAN: DESCRIBING START UP & DESCRIBING START UP & OPERATING EXPENSESOPERATING EXPENSES

• A financial plan describes the expenses the A financial plan describes the expenses the

business will incur during start up and operations business will incur during start up and operations

and explains how a business will cover its expenses.and explains how a business will cover its expenses.

• Start up expenses often requires a large amount of Start up expenses often requires a large amount of

cash to cover expenses like business assets, cash to cover expenses like business assets,

remodeling costs, security deposits, advertising, remodeling costs, security deposits, advertising,

insurance, supplies, & permits.insurance, supplies, & permits.

• Operating expenses include payroll, rent, utility Operating expenses include payroll, rent, utility

bills, delivery charges, and bank fees.bills, delivery charges, and bank fees.

Page 8: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

AN EFFECTIVE FINANCIAL PLAN: AN EFFECTIVE FINANCIAL PLAN: DESCRIBING FINANCIAL RECORDS DESCRIBING FINANCIAL RECORDS

MANAGEMENTMANAGEMENT

A financial plan describes who and how the business A financial plan describes who and how the business

will document and report financial records.will document and report financial records.

Some business owners maintain their own records Some business owners maintain their own records

using accounting software while hire professionals.using accounting software while hire professionals.

A financial plan also describes any legal agreements A financial plan also describes any legal agreements

that influence the way records are kept. that influence the way records are kept.

Page 9: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

AN EFFECTIVE FINANCIAL AN EFFECTIVE FINANCIAL PLANPLAN

Forecasting Future Forecasting Future FinancesFinances

• A financial plan forecasts finances A financial plan forecasts finances

to project future profitability.to project future profitability.

• Financial forecast - Financial forecast - an estimate an estimate

of a business’s financial outlook of a business’s financial outlook

for each of the next few years.for each of the next few years.

• The forecast should consider The forecast should consider

business condition in the future business condition in the future

and should list conservative and should list conservative

figures. For example, estimates figures. For example, estimates

for income should be low and for income should be low and

estimates for expenses should be estimates for expenses should be

high.high.

Describing Growth Describing Growth FinancingFinancing

• A financial plan explains how A financial plan explains how

the business will acquire the business will acquire

money to grow or expand, in money to grow or expand, in

order to remain competitive.order to remain competitive.

• Unexplained growth can be Unexplained growth can be

chaotic.chaotic.

• Investors and lenders want to Investors and lenders want to

know that a business has know that a business has

thoughtfully developed thoughtfully developed

strategies to finance strategies to finance

controlled growth.controlled growth.

Page 10: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

BUDGETSBUDGETS

• BudgetBudget – a plan specifying how money will be used – a plan specifying how money will be used or spent during a particular period. or spent during a particular period.

• Budgeting helps business owners predict how much Budgeting helps business owners predict how much money the business will need and helps to control money the business will need and helps to control spending.spending.

• There are three main types of budgets:There are three main types of budgets:• Start up budget that plans income & expenses Start up budget that plans income & expenses

from the time of start up until a profit is madefrom the time of start up until a profit is made• Cash budget that plans the actual money the Cash budget that plans the actual money the

business owner spends on a daily, weekly, or business owner spends on a daily, weekly, or monthly basis.monthly basis.

• Operating budget that plans for the amount Operating budget that plans for the amount expected to be spent and earned over a given expected to be spent and earned over a given period of time, usually six months or a year.period of time, usually six months or a year.

Page 11: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

ACCOUNTING FOR BUSINESSACCOUNTING FOR BUSINESS

•AccountingAccounting – the systematic process – the systematic process

of recording and reporting the of recording and reporting the

financial position of a person or an financial position of a person or an

organization. organization.

• Purpose:Purpose:• Keeping track of the money that a company spends Keeping track of the money that a company spends

and receivesand receives

• To collect, record, report financial transactions that To collect, record, report financial transactions that

affect the operation of a businessaffect the operation of a business

Page 12: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

ACCOUNTING FOR BUSINESSACCOUNTING FOR BUSINESS

• An An accountantaccountant maintains and reviews business maintains and reviews business

records. An records. An auditaudit is a review of accounting records. is a review of accounting records.

• Accounting is often referred to as the “language of Accounting is often referred to as the “language of

business” because it is the way of communicating business” because it is the way of communicating

how well a business is doing and it has its own how well a business is doing and it has its own

terminology.terminology.

• A business manager, an employee of a firm, or A business manager, an employee of a firm, or

investor can use accounting records to gauge the investor can use accounting records to gauge the

health of the firm that they are working for or in health of the firm that they are working for or in

which they want to invest.which they want to invest.

Page 13: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

FINANCIAL CLAIMS IN FINANCIAL CLAIMS IN ACCOUNTINGACCOUNTING

• AssetsAssets – property and other items of value – property and other items of value

owned by a business. They are either current owned by a business. They are either current

or fixed.or fixed.• Current Assets Current Assets – assets that are either used up or – assets that are either used up or

converted to cash during the normal cycle of the converted to cash during the normal cycle of the

business or one year. Cash, supplies, merchandise, business or one year. Cash, supplies, merchandise,

and accounts receivable are all current assets. and accounts receivable are all current assets. • Accounts Receivable Accounts Receivable – the total amount of money owed to – the total amount of money owed to

a business. It represents money to be received in a business. It represents money to be received in

payments after good or services are sold on credit.payments after good or services are sold on credit.

• Fixed Assets Fixed Assets – items of value that will be held for more than – items of value that will be held for more than

one year. Equipment and buildings are fixed assets.one year. Equipment and buildings are fixed assets.

Page 14: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

FINANCIAL CLAIMS IN FINANCIAL CLAIMS IN ACCOUNTINGACCOUNTING

• EquityEquity – financial claims to all assets or the present – financial claims to all assets or the present value of an asset less all claims against it.value of an asset less all claims against it.

• LiabilitiesLiabilities – creditors’ (creditor: the business or – creditors’ (creditor: the business or person selling the property or services a person/ person selling the property or services a person/ business has agreed to pay later) claims to the assets business has agreed to pay later) claims to the assets of a business; they are the debts of the company. of a business; they are the debts of the company. Liabilities include accounts payable.Liabilities include accounts payable.• Accounts payable Accounts payable – represents the short-term liabilities that – represents the short-term liabilities that

a business owes to creditors.a business owes to creditors.

• Owner’s Equity Owner’s Equity – an owner’s claim to the assets of – an owner’s claim to the assets of the business; owner’s capital the business; owner’s capital

Page 15: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

THE ACCOUNTING EQUATIONTHE ACCOUNTING EQUATION

Assets = Liabilities + Owner’s EquityAssets = Liabilities + Owner’s EquityAssets show the value of everything that the business owns or Assets show the value of everything that the business owns or

possesses.possesses.

Liabilities are the right that credits have to the assets.Liabilities are the right that credits have to the assets.

Owner’s Equity shows the rights that the owner has to the assets.Owner’s Equity shows the rights that the owner has to the assets.

Financial Statements Financial Statements – documents that summarize the – documents that summarize the

changes resulting from business transactions that occur changes resulting from business transactions that occur

during an accounting period. Financial statements provide during an accounting period. Financial statements provide

information that business owners use to make financial information that business owners use to make financial

decisions.decisions.The federal government requires corporations to release their The federal government requires corporations to release their

financial records to the public.financial records to the public.

Income Statement Income Statement (aka profit or loss statement) – a report of (aka profit or loss statement) – a report of

revenue, expenses, and net income or net less over an revenue, expenses, and net income or net less over an

accounting period. accounting period.

Page 16: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

THE ACCOUNTING EQUATIONTHE ACCOUNTING EQUATION

• Balance Sheet Balance Sheet – a report of the balances in all assets, – a report of the balances in all assets,

liability, and owner’s equity accounts at the end of an liability, and owner’s equity accounts at the end of an

accounting period. accounting period.

• Statement of Cash Flows Statement of Cash Flows – a financial report that – a financial report that

shows incoming and outgoing money during an shows incoming and outgoing money during an

accounting period.accounting period.

• Cash Flows Cash Flows – the money that is available to a business at – the money that is available to a business at

any given time.any given time.

• Firms can run out of cash even when they make a profit Firms can run out of cash even when they make a profit

most things are sold on credit. Lenders and investors most things are sold on credit. Lenders and investors

expect business loan applicants to show a consistently expect business loan applicants to show a consistently

positive cash flow.positive cash flow.

Page 17: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

FINANCING YOUR FINANCING YOUR BUSINESSBUSINESS

Page 18: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

VOCABULARYVOCABULARY

1.1. AssetsAssets – what you own – what you own

2.2. LiabilitiesLiabilities – what you owe – what you owe

3.3. Net worth Net worth ((equityequity) - the difference between ) - the difference between

what you own (assets) and what you owe what you own (assets) and what you owe

(liabilities)(liabilities)

4.4. PersonalPersonal financialfinancial statementstatement – prepared to – prepared to

calculate your net worthcalculate your net worth

5.5. DebtDebt – dollars you have borrowed – dollars you have borrowed

6.6. EquityEquity – dollars you have invested in your – dollars you have invested in your

businessbusiness

Page 19: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

VOCABULARYVOCABULARY

7.7. Debt-to-Equity RatioDebt-to-Equity Ratio – the relation between dollars you – the relation between dollars you

have borrowed (debt) and dollars you have invested in your have borrowed (debt) and dollars you have invested in your

business (equity).business (equity).

8.8. EquityEquity capitalcapital – money invested in a business in return for – money invested in a business in return for

a share in the profits of the business.a share in the profits of the business.

9.9. VentureVenture capitalistcapitalist – individual or company that make a – individual or company that make a

living investing in startup companies.living investing in startup companies.

10.10. Debt capital Debt capital – money loaned to a business that must be – money loaned to a business that must be

repaid with interestrepaid with interest

11.11. CollateralCollateral – property that the borrower forfeits if s/he – property that the borrower forfeits if s/he

defaults on the loandefaults on the loan

Page 20: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

ASSESS YOUR FINANCIAL ASSESS YOUR FINANCIAL NEEDS- START-UP COSTSNEEDS- START-UP COSTS

• Itemizing your startup costs is an important part of Itemizing your startup costs is an important part of

determining how much money you need and determining how much money you need and

ensure you have accounted for all items and ensure you have accounted for all items and

money neededmoney needed

• Common startup itemsCommon startup items• Equipment and suppliesEquipment and supplies

• Furniture and fixturesFurniture and fixtures

• Licensing and permitsLicensing and permits

• InsuranceInsurance

• Legal and accounting feesLegal and accounting fees

• RemodelingRemodeling

Page 21: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

ASSESS YOUR FINANCIAL NEEDS- ASSESS YOUR FINANCIAL NEEDS- PERSONAL FINANCIAL PERSONAL FINANCIAL

STATEMENTSTATEMENT

• In order to determine if you have the resources you In order to determine if you have the resources you

need to finance your business, begin by assessing need to finance your business, begin by assessing

your net worth.your net worth.• Total Assets – Total Liabilities = Net Worth (aka equity)Total Assets – Total Liabilities = Net Worth (aka equity)

• When obtaining financing, you must consider your When obtaining financing, you must consider your

company’s debt to equity ratio which measures how company’s debt to equity ratio which measures how

much money a company can safely borrow over time.much money a company can safely borrow over time.• Total Liabilities / Total Equity = Debt to Equity RatioTotal Liabilities / Total Equity = Debt to Equity Ratio

• A high ratio indicates a business is mostly financed through A high ratio indicates a business is mostly financed through

debt; a low ratio indicates a business is primarily financed debt; a low ratio indicates a business is primarily financed

through equitythrough equity

Page 22: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

SOURCES OF FUNDING - SOURCES OF FUNDING - CONTRIBUTIONSCONTRIBUTIONS

• Personal Contributions: Many entrepreneurs use Personal Contributions: Many entrepreneurs use

their personal savings to finance the start of their their personal savings to finance the start of their

business which can, in turn, help them get a bank business which can, in turn, help them get a bank

loan.loan.

• Friends and Relatives: A good source of equity Friends and Relatives: A good source of equity

capital because they are familiar with your capital because they are familiar with your

business idea and know whether you are business idea and know whether you are

trustworthy and a good risk taker.trustworthy and a good risk taker.

• Venture Capitalists: Carefully research Venture Capitalists: Carefully research

opportunities that they believe will make above opportunities that they believe will make above

average profitsaverage profits

Page 23: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

SOURCES OF FUNDING – DEBT SOURCES OF FUNDING – DEBT CAPITALCAPITAL

• Friends and Relatives: Be aware the loan may also Friends and Relatives: Be aware the loan may also

come with advice and the business owner may lose come with advice and the business owner may lose

a friend if s/he is unable to repay the loan.a friend if s/he is unable to repay the loan.

• Commercial Bank Loans: Most businesses take out Commercial Bank Loans: Most businesses take out

loans to repay with interest over a certain time loans to repay with interest over a certain time

period.period.• Secured LoansSecured Loans: backed by collateral: backed by collateral

• Unsecured LoansUnsecured Loans: not guaranteed by collateral: not guaranteed by collateral

Page 24: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

TYPES OF SECURE LOANSTYPES OF SECURE LOANS

• Line of creditLine of credit: An agreement by a bank to lend up : An agreement by a bank to lend up

to a certain amount of money. Most businesses to a certain amount of money. Most businesses

establish lines of credit so that funds are readily establish lines of credit so that funds are readily

available to help them make purchases.available to help them make purchases.

• Long term loanLong term loan: Loan repayable over a period : Loan repayable over a period

longer than a year; generally made to help a longer than a year; generally made to help a

business make improvements that will boost profits.business make improvements that will boost profits.

Page 25: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

TYPES OF SECURE LOANSTYPES OF SECURE LOANS

• Accounts receivable financingAccounts receivable financing: Balances owed by : Balances owed by

customers who have charged merchandise and services at customers who have charged merchandise and services at

your business (accounts receivable) . As the account your business (accounts receivable) . As the account

receivable are paid by customers, those payments are receivable are paid by customers, those payments are

forwarded to the bank has loan repayment.forwarded to the bank has loan repayment.

• Inventory financingInventory financing: Occurs when banks use the inventory : Occurs when banks use the inventory

held by a business as collateral. Banks usually require the held by a business as collateral. Banks usually require the

value of the inventory be at least double the amount of the value of the inventory be at least double the amount of the

loan. Banks are often reluctant because if the business loan. Banks are often reluctant because if the business

defaults on the loan, the bank ends up with inventory it may defaults on the loan, the bank ends up with inventory it may

have trouble selling. have trouble selling.

Page 26: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

REASONS A BANK MAY NOT REASONS A BANK MAY NOT LEND MONEYLEND MONEY

• The business is a startup: The business is a startup: • New businesses have no record of repaying loansNew businesses have no record of repaying loans

• Lack of a solid business plan: Lack of a solid business plan: • A company with a poorly written or poorly conceived A company with a poorly written or poorly conceived

business plan will not be able to obtain financing from a business plan will not be able to obtain financing from a

bankbank

• Lack of adequate experience:Lack of adequate experience:• Banks want to be sure the people setting up or running a Banks want to be sure the people setting up or running a

business show they are familiar with the industry and business show they are familiar with the industry and

have the management experience to operate their own have the management experience to operate their own

business.business.

Page 27: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

OTHER SOURCES OF LOANSOTHER SOURCES OF LOANS

• Small Business Administration Small Business Administration – SBA aids – SBA aids

entrepreneurs most often by guaranteeing loans entrepreneurs most often by guaranteeing loans

made by commercial banks which means the SBA made by commercial banks which means the SBA

will repay a certain percentage of the loan to the will repay a certain percentage of the loan to the

bank if the entrepreneur defaults.bank if the entrepreneur defaults.

• Small Business Investment Companies Small Business Investment Companies – –

SBICs are licensed by the SBA to make loans to SBICs are licensed by the SBA to make loans to

and invest capital with entrepreneurs.and invest capital with entrepreneurs.

Page 28: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

OTHER SOURCES OF LOANSOTHER SOURCES OF LOANS

• Minority Enterprise Small Business Investment CompaniesMinority Enterprise Small Business Investment Companies

– MESBICs are special kinds of SBICs that lend money to small – MESBICs are special kinds of SBICs that lend money to small

businesses owned by members of ethnic minorities.businesses owned by members of ethnic minorities.

• Department of Housing and Urban Development Department of Housing and Urban Development – HUD – HUD

provides grants to cities to help improve impoverished areas. provides grants to cities to help improve impoverished areas.

Cities use these grants to make grants to make loans to private Cities use these grants to make grants to make loans to private

developer who must use the loans to finance projects in needy developer who must use the loans to finance projects in needy

areas.areas.

Page 29: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

OTHER SOURCES OF LOANSOTHER SOURCES OF LOANS

• The Economic Development The Economic Development

Administration Administration – The EDA partners with – The EDA partners with

distressed communities throughout the US distressed communities throughout the US

to foster job creation, collaboration, and to foster job creation, collaboration, and

innovation by lending money to businesses innovation by lending money to businesses

that operate in and benefit economically that operate in and benefit economically

distressed parts of the country.distressed parts of the country.

Page 30: FINANCIAL MANAGEMENT & FINANCING YOUR BUSINESS NOTES BMA – ENT – 8: Analyze financial issues relating to successful business ownership

OTHER SOURCES OF LOANSOTHER SOURCES OF LOANS

• State Governments State Governments – Almost all states have – Almost all states have

economic development agencies and finance economic development agencies and finance

authorities that make or guarantee loans to small authorities that make or guarantee loans to small

businesses.businesses.

• Local and Municipal Governments Local and Municipal Governments – City, county, – City, county,

or municipal governments sometimes make loans of or municipal governments sometimes make loans of

$10,000 or less to local businesses.$10,000 or less to local businesses.