Small Business MGMT Ch. 15

Credit Reporting Agency

A business that collects, collates, and reports information concerning an entity's use of debt

Corporation

A legal "artificial" entity that is formed by filing specific documents with a state government

Limited Liability Company (LLC)

A legal form of business organization that is created by filing required documentation with a state government. They have a choice, under feral tax law, of being taxed as either corporations or partnerships

Limited Partnership

A legal form of business organization that is created by filing required documentation with a state government; within a limited partnership, one or more partners may have no liability for the debts and actions of the partnership

Tax Abatement

A legal reduction in taxes by a governement

Financial Leverage

A measure of the amount of debt relative to total investment

Financial Management

A set of theories and techniques used to optimize the receipt and use of capital assets

Angel Investor

A wealthy individual who invests in companies in relatively early stages of development

Foundation

An institution to which private wealth is contributed and from which private wealth is distributed for public purposes

Community Development Organization

An organization authorized by the SBA to make insured loans to small businesses that are expected to increase economic activity within a specific geographic area

Accelerator

An organization that supports start-up technology businesses by providing inexpensive office space, a variety of support services, and resources; most accelerators are associated with universities

Tax Credits

Direct reductions in the amount of taxes that must be paid, dependent upon meeting some legal criteria

Debt Capital

Money borrowed for the purpose of investment in a business

Equity Capital

Money contributed to the businesses in return for part ownership of the business

Outside Equity

Money from selling part of your business to people who are not and will not be involved in the management of the business

Small Business Investment Companies

Private businesses that are authorized to make SBA insured loans to start-ups and small businesses

Weighted Average Cost of Capital (WAC)

The expected average future cost of funds

Gain on Investment

The percentage amount that the payout of an investment differs from original cost: calculated as: (payout-investment+dividends)/investment

Cost of Capital

The percentage cost of obtaining future funds

Optimum Capital Structure

The ratio of debt to equity that provides the maximum level of profits

Return on Equity

The ratio of profits to owner investment in a business

Diversify

To invest in multiple investments of differing risk profiles for the purpose of reducing overall investment risk

Fair Credit Reporting Act

U.S. federal legislation specifying consumers' right vis-a-vis credit reporting agencies