MGT Chapter 7

debt

A generic term to describe any type of non-equity funding tied to the business.

asset-based lending

A loan provided for the purchase of a necessary asset for the business.

factoring

Accounts receivable that are sold at a discount to another company to receive immediate cash.

supplier credit

Another form of non-equity funding that is available. Suppliers often will provide credit on both physical assets (refrigerators, molding equipment, etc.) and the actual supplies provided.

Non-Equity Funding

Debt is a major source of such non-equity financing and can come from banks, credit cards, asset leasing companies, individuals, and/or suppliers. Grants are another type of non-equity funding to which some businesses may have access. A grant may come from the government or a nonprofit agency; it is simply money designed to help the new business begin operations with no expectation of repayment.

crowdfunding

Funds received by a business by soliciting a large number of very small investors usually via the Internet.

equity investment

Funds received by a business in exchange for a percentage ownership of the business.

business angels

High-net-worth individuals who invest in businesses not as a business, but as an individual.

Chart of Accounts

The chart of accounts is the master system for tracking the activity of the business

shrinkage

The difference between what is sold and what was brought into the business

venture capital fund

fund that is organized to make significant equity investments in high-growth new ventures.