Entrepreneurship Chap 14
Microlenders
SBA approve partners who offer SBA-guaranteed microloans to eligible small business. These loans require much less paperwork than regular SBA or bank loans, and are for amounts under $50,000.
Fair credit reporting act
U.S. federal legislation specifying consumer's rights vis-à-vis credit reporting agencies.
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
a legal form of business organization that is created by filing required documentation with a state government.
Debt
a legal obligation to pay money in the future.
Tax abatement
a legal reduction in taxes by a government.
Financial leverage
a measure of the amount of debt relative to owner 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.
Interest
charge for the use of money, usually figured as a percentage of the principal.
Tax credits
direct reductions in the amount of taxes that must be paid, dependent upon meeting some legal criteria.
Grants
gifts of money made to a business for a specific purpose.
Unsecured debt
loans that do not allow the lender to seize assets in event of non-payment.
Secured debt
loans that provide the lender with the legal right to seize specific assets in the event of nonpayment. Most automobile loans are secured debt and if you don't make your payments your car will be repossessed.
Debt capital
money borrowed for the purposes of investment in a business.
Equity capital (or equity)
money contributed to the businesses in return for 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.
Dividends
payments of profits to the owners of corporations.
Small business investment company
private businesses that are authorized to make SBA insured loans to startup and small businesses.
Harvest
recover value through sale of a firm or profits
Collateral
something of value given or pledged as security for payment of a loan.
SaaS
stands for Software as a Service and refers to an Internet-based program that you would use in work or leisure. These are paid for by a time-frame, project of some measurement of usage.
Profit, profitability
the amount that revenues exceed expenses.
Weighted average cost of capital (WAC)
the expected average future cost of funds.
Risk
the level of probability that an investment will not produce expected gains.
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.
Diversify
to invest in multiple investments of differing risk profiles for the purpose of reducing over-all investment risk.
Partnership
two or more people cooperating to conduct a business enterprise.
Financial risk
uncertainty of returns, the probability of losing money.
Bootstrapping
using funds generated by business operations to capitalize growth.
Gift capital (or gift)
valuable assets or services donated to the business without any obligation to repay or any ownership interest.
