Small Business Exam3

Define balance sheet, income statement, and proforma financial statement

1. A balance sheet is a sheet that is prepared the last day of the month and is a 'snapshot' of a business providing an estimate of its worth on a given date and its financial statement. It is built on the fundamental accounting equation: Assets = Liabilities + Owner's equity. A balance sheet helps provide a baseline from which to measure future changes in assets, liabilities, and equity. a. A balance sheet is divided into two separate parts which include: i. Part one: Assets the business owns (valued at cost, not actual market value)- This includes current assets and fixed assets. o Current Assets: include cash and other assets to be converted to cash in one year or one business cycle (accounts receivables and inventory). Asset values are listed on one side of the balance sheet. o Fixed assets are those acquired for long-term use in the business. Intangible assets include items such as goodwill, copyrights, and patents that, although valuable, are not tangible. ii. Part two: Liabilities to creditors and owners- consists of following: o current liabilities: debts that must be paid in one year or one business cycle (accounts payable, wages payable and taxes payable) 1. Income Statement: (prepared periodically or annually)- Provides a 'moving picture' of a business comparing expenses against revenues over a period in order to show net profit (or loss). The annual income statement reports the bottom line of the business over the fiscal or calendar year. a. To calculate net income or loss, an entrepreneur records sales revenues for the year, which includes all income that flows into the business from sales of goods and services. The owner also has to make sure they record the rent, investments, and interest when figuring out their income statement. i. To determine net sales revenue, owners subtract the value of returned items and refunds from gross revenue. ii. Cost of goods sold-represents the total cost, including shipping, of the merchandise sold during the accounting period. iii. Subtracting the cost of goods sold from net sales revenue results in a company's gross profit. iv. Dividing gross profit by net sales revenue produces the gross profit margin, a ratio that every small business owner should watch closely. If a company's gross profit margin slips too low, it is likely that it will operate at a loss (negative net income). v. Operating expenses include those costs that contribute directly to the manufacturing and distribution of goods. vi. Subtracting total expenses from total revenue gives the company's net income (or loss) for the accounting period. 2. Pro forma Financial Statement- they estimate the profitability and the overall financial condition of a company in the future. They are an integral part of convincing potential lenders and investors to provide the financing needed to get the company off the ground a. Being that it is a little harder for a business start-up, entrepreneurs typically rely on published statistics that summarize the operation of similar-size companies in the same industry. It is also important to understand that should use values that apply to their own particular circumstances to derive their forecasts. A started-up company will have different data compared to your starting-up so it is important to take that into consideration. b. (Budgets)- Helps owner to transform business goals into reality. Both the balance sheet and income statement are projected (estimated). Also includes projected sales roll and production plan. c. After completing these forecasts, an entrepreneur should perform a break-even analysis for the business. The break-even point is important for an entrepreneurial venture as it tells the point where the business is able to sustain itself through cash generated by operations and should not need any additional start-up capital.

Describe inventory control

Describe inventory control a. Inventory Control is the biggest expense for small businesses and many large businesses too. If you are carrying too much inventory it lowers company profitability because it involves additional production, warehousing, handling, insurance, and borrowing costs. Whereas too little inventory can cause problems with your reputation and customers. b. A typical manufacturing company pays 25 percent to 30 percent of the value of the inventory for the cost of borrowed money, warehouse space, materials handling, staff, lift-truck expenses, and fixed costs. A big mistake that businesses run into is having too much inventory and having too much of the wrong type of inventory. c. Quantity discounts-give businesses a price break when they order large quantities of merchandise and supplies and exist in two forms: noncumulative and cumulative. A company earns a noncumulative quantity discount only if it purchases a certain volume of merchandise in a single order. Cumulative quantity discounts apply if a company's purchases from a particular vendor exceed a specified quantity or dollar value over a predetermined time period. Types of Inventory: 1. Perpetual Inventory System- maintains a 'running count' of items in inventory (beginning inventory + additional items - items used= ending inventory). 2. Visual Control System- purchaser conducts a periodic inspection of items to determine if additional items should be ordered.3 80/20 Control System- 20% of items account for 80% of total items costs. Control the inventory of the 20% if all items inventory

Describe the 5 C's required by bankers for a business loan application

a. Capital ($)- company must have a stable capital base (equity base of owners). i. Most lenders refuse to make loans that are capital investments because the potential for return on the investment is limited strictly to the interest on the loan, and the potential loss would probably exceed the reward. ii. Most loans get rejected because undercapitalization or too much debt. b. Capacity (synonym for 'cash flow')- company must have adequate cash flow. i. Lenders and investors must be convinced of a company's ability to meet its regular financial obligations and to repay the bank loan. Many businesses fail due to a lack of profits flowing back into the business. ii. Lenders expect a business to pass the test of liquidity; they study closely a small company's cash flow position to decide whether it has the capacity required to succeed. c. Collateral- assets that the owner pledges to the bank as security (banks rarely agree to an unsecured loan). i. For example, if an entrepreneur defaults on the loan, the bank has the right to sell the collateral and use the proceeds to satisfy the loan. ii. Typically, lenders do not do many unsecured loans due to the fact that they are very risky. iii. Lenders see the dedication to making the venture a success when entrepreneurs take that risk of using their stuff as collateral. Which means that entrepreneurs have to understand the risk when taking on a loan that they will have to repay. d. Character- loan officer evaluates the honesty, competency, intelligence, and ability of the applicant (is subjective). i. Some believe the qualities judged are abstract, this evaluation plays a critical role in a lenders or investor's decision. Banks have also begun to use what potential clients post on social networking sites such as Facebook, LinkedIn, and Twitter to assess character. This is because the lender wants to associate themselves with someone who is professional and able to keep the lenders reputation positive. Along with that, the lender needs to be able to trust that individual. e. Conditions- includes potential growth, competition, location and form of ownership i. Another important factor is the shape of the overall economy, including interest rate levels, the inflation rate, and demand for money. Although these factors are beyond an entrepreneur's control, they still are an important component in a lender's decision.

Define capital, and describe three types of capital

a. Capital is any form of wealth used to produce more wealth for a company (includes cash, inventory, equipment and plant). b. Capital is the most important things you are going to need to continue to grow and stay afloat within a business. Three Types of Small Business Capital: 1. Fixed Capital (long-term) a. used to purchase permanent or fixed assets such as buildings and equipment. i. This type of money helps maintain business and is used for more of long-term items. For example, a building is long-term whereas wages are more of a short-term thing. ii. These types of things with fixed capital are not easily turned into to cash but can be resold. 2. Working Capital (short-term) a. funds used to support a company's short-term operations such as wages, utility payments and rent. i. This is the difference between current assets and current liabilities. Working capital is the measure of a company's liquidity, efficiency, and short-term financial health. ii. It is important for a company to have a positive working capital because this means it has the potential to grow and pay back loans/costs. Also, the working capital= current assets-current liabilities and with the working capital, you pay for things like rent, wages, and short-term operations. 3. Growth Capital a. used to finance company expansion or a change in company dire i. This money is used for large projects like entering a new market, adding a new location, expanding a building, etc. This type of capital is also known as expansion capital and is normally provided to mature companies. ii. With growth capital, it helps expand a company and it helps them meet the demands of the economy. For example, some companies use this to increase their attraction to new markets.

List the 12 elements of a business plan

a. Executive Summary- presents the 'essence' of the business plan in capsulized form. Explains the purpose of the business plan, dollar amount required and how funds will be used and repaid. It is also known as an elevator pitch. i. It should be maximum of one page—and should summarize all of the relevant points of the proposed deal. You want this to be clear and after anyone reads it, they will be able to understand the concept of your business, the financial requirements, and what make them stand out. ii. It should explain the basic business model and the problem the business will solve for customers, briefly describing the owners and key employees, target market(s), financial highlights (e.g., sales and earnings projections, the loan or investment requested, plans for using the funds, and projections for repaying any loans or cashing out investments), and the company's competitive advantage. o The following five-part framework helps entrepreneurs develop a meaningful elevator pitch: o 1. Context. What does your company do in easy-to-understand words? o 2. Benefit. What benefit or advantage does your company offer customers? o 3. Target customers. For whom does your company provide the benefit? o 4. Point of differentiation. How is your company different from other companies that provide similar products, services, or solutions? o 5. Clincher. Can you leave the listener or reader with a memorable, bottom-line sound bite about your company. b. Mission Statement- explains the 'who, what, where, and why' of the company. i. It is the broadest expression of a company's purpose and defines the direction in which it will move. It serves as the thesis statement for the entire business plan by answering the question, "What business are we in?" ii. It should clearly state the product or service the business sells, keeping it under 25 words is key. c. Company History i. This is a powerful tool that will enable investors and different people to better understand the company's past and to help shape its future. IT helps investors and possible partners to understand how the company works, how it has worked in the past, what the future looks like, and problems they have ran into in the past. ii. Having a clear company history is very important if you want to continue to grow your company efficiently. d. Business and Industry Profile- describes the company goals/objectives within its industry and market(s). i. This section should provide readers with an overview of the industry or market segment in which the business will operate. Data such as key trends or emerging developments within the industry, market size and its growth or decline, and the relative economic and competitive strength of the major firms in the industry set the stage for a better understanding of the viability of a new business. ii. This section should also describe significant industry trends and key success factors as well as an overall outlook for its future. e. Strategy for Success- explains the company's plan to meet and beat the competition. i. How is the business going to stand out and beat the other competition? How is our business supposed to get from point A to point B successfully? With the strategy plan, you want to map the road out for a successful business. ii. You are also going to need to know how to complete these steps. For example, are you going to increase marketing, pick a certain location, etc.? f. Description of Company's Products/Services i. An entrepreneur should describe the company's overall product line, giving an overview of how customers will use its goods or services. Adding drawings, diagrams, and illustrations may be required if the product is highly technical or to just give an overall idea of the product/service. ii. An entrepreneur should include a summary of any patents, trademarks, or copyrights that protect the product or service from infringement by competitors. This is important so that other businesses and buyers understand they are buying a product that is rightful the companies. iii. A feature is a descriptive fact about a product or service (e.g., "an ergonomically designed, more comfortable handle"). A benefit is what the customer gains from the product or service feature (e.g., "fewer problems with carpal tunnel syndrome and increased productivity"). o It is important to focus on the benefit that the product provides because this is what draws a customer in. g. Marketing Strategy- explains the need for the products/services, identifies target market(s), and the strategy to penetrate the target market(s). i. The business modeling process helped to identify and describe a company's target customers and their characteristics and habits. A target market is a huge thing to establish right from the start because you need to know who you want to sell to. ii. Proving that a profitable market exists involves two steps: showing customer interest and documenting market claims. iii. Customer Interest o Entrepreneurs must be able to prove that their target customers actually need or want their goods or services and are willing to pay for them. iv. Documenting Market Claims o Entrepreneurs must support claims of market size and growth rates with facts, and that requires market research. o They must understand the competition through market surveys, customer questionnaires, and demographic studies to lend credibility to an entrepreneur's frequently optimistic sales projections contained within the formal business plan. v. An effective market strategy should address the following items in detail based on the framework developed in the business model: o Target market which is who you want to sell your items to. o Advertising and Promotions: they design a promotion and advertising campaign to reach those customers most effectively and efficiently. o Market Size and Trends: Assessing the size of the market is a critical step. o Location: For many businesses, choosing the right location is a key success factor. o Pricing: What does the product or service cost to produce or deliver? o Distribution: This plan should describe the specific channels of distribution the business will use (e.g., the Internet, direct mail, in-house sales force, sales agents, retailers) to distribute its products and services. h. Competitor Analysis- gather information on competitor products/services, market share and strategies. i. It is important to discuss the competition and where you stand against the competition. Failing to assess competitors realistically makes entrepreneurs appear to be poorly prepared, naive, or dishonest, especially to potential lenders and investors. ii. Gathering information on competitors' market shares, products, and strategies is usually not difficult. Trade associations, customers, industry journals, marketing representatives, and sales literature are valuable sources of data. o Who are the company's key competitors? o What are their strengths and weaknesses? o What are their strategies? o What images do they have in the marketplace? o How successful are they? o What distinguishes the entrepreneur's product or service from others already on the market, and how will these differences produce a competitive edge? i. Officer's and Owner's Resumes: The most important factor in the success of a business venture is its management, and financial officers and investors weight heavily the ability and experience of a company's managers in financing decisions. i. It is key an understanding that the résumés of business officers, key directors, and a person with at least 20 percent ownership in the company should provided resumes. An investor needs to know that there is experience behind this business and not just a bunch of random people. ii. This part of the plan will help sell the qualifications and the experience of their management team. iii. Remember, A résumé should summarize each individual's education, work history (emphasizing managerial responsibilities and duties), and relevant business experience. j. Plan of Operation Flowchart- an entrepreneur should construct an organization chart identifying the business's key positions and the people who occupy them. i. A plan of operation should also describe how the business operates, including space requirements, inventory management if applicable, staffing plans, and accounting processes and policies. Not only that, a description of the form of ownership (e.g., sole proprietorship, partnership, joint venture, C corporation, S corporation, LLC ) and of any leases, contracts, and other relevant agreements pertaining to the operation is helpful. k. Financial Data- contains all available financial statements, up to three years prior, audited by a Certified Public Accountant (CPA). i. These are things such as daily accounts receivables, accounts payables, and cash balances. ii. It is important to have neat and organized financial data so that a company can understand where the largest costs and profits are coming from. Along with that the financial data helps a possible partner/investor understand where your company stands financially. l. Loan Proposal- explains the purpose of the loan, amount requested and plans for repay i. The loan or investment proposal section of the business plan should state the purpose of the financing, the amount requested, and the plans for repayment or, in the case of investors, an attractive exit strategy. ii. The proposal should include all sources of funding for the business from all intended sources including money the entrepreneur is investing into the business. Most bankers and investors will want to see evidence that the entrepreneur is willing to "put skin in the game" and put some of his or her own money at risk in the venture. The banker does not want to be the putting all the money into it because that is a huge financial risk. iii. Another important element of the loan proposal is the repayment schedule or exit strategy. o A lender wants to make sure that the applicant will repay, whereas an investor's major concern is the rate of return.

List the formulas for four key business ratios

a. Liquidity Ratios (used to determine if a business can meet its short-term financial obligations) i. These ratios forewarn a business owner of impending cash flow problems. A small company with solid liquidity not only is able to pay its bills on time but also has enough cash to take advantage of attractive business opportunities as they arise. Financial Analyst suggest a 2:1 ratio for a comfortable ration. This means $2 of current assets for $1 of current liability. ii. The primary measures of liquidity are the current ratio and the quick ratio. o Current ratio= current assets/current liabilities (at least a 2:1 ratio is desired). o Quick Ratio= current assets-inventory value/current liabilities (at least 1:1 ratio is desired). o Current assets are those that an owner expects to convert into cash o Current liabilities are those short-term obligations that come due within one year b. Net Profit on Sales Ratio (used to measure management efficiency as it relates to profit per dollar of sales) i. Net Profit on Sales Ratio=net profit/net sales (compare final calculation to the industry standard). ii. This ratio shows the portion of each sales dollar remaining after deducting all expenses. iii. If a company's profit margin on sales is below the industry average, it may be a sign that its prices are too low, that its costs are excessively high, or both. c. Debt Ratio (used to determine the amount of assets financed by debt (also called leverage). The higher the ratio the more leveraged the company. i. Debt Ratio= total debt (current, long-term liabilities minus owner equity)/total assets (compare the final calculation to the industry standard). ii. Total assets represent the sum of the firm's current assets, fixed assets, and intangible assets. iii. A high debt ratio means that creditors provide a large percentage of a company's total financing and, therefore, bear most of its financial risk. d. Average Inventory Turnover Ratio (used to determine the amount of money tied up in unused inventory-businesses desire as many turnovers as possible within the business cycle). i. Average Inventory Turnover Ratio= cost of goods sold/average inventory value (inventory value at the beginning of the cycle added to the inventory value at the end of the cycle/2) (compare final calculation to the industry standard) ii. It indicates whether a business's inventory is understocked, overstocked, or obsolete. This is very important because it helps investors understand if a company can handle its inventory properly. iii. Average inventory is the sum of the value of the firm's inventory at the beginning of the accounting period and its value at the end of the accounting period, divided by 2. iv. The inventory turnover ratio can be misleading, however. For example, an excessively high ratio could mean that a company does not have enough inventory on hand and may be losing sales because of stock-outs. Similarly, a low ratio could be the result of planned inventory stockpiling to meet seasonal peak demand. Along with that, this is only a calculation from two days and inventory can fluctuation day to day.

Define motivation, and describe three motivation technique

a. Motivation involves the amount of effort a worker exerts to accomplish a task. Motivation is also defined as the desire or willingness of someone to do something and why they want to do that. b. At times, motivating workers is a very difficult endeavor. c. There are many types of Motivation Techniques, but here are 3 of them: 1. Empowerment- giving workers the power and freedom to control their own work by making decisions and taking actions to achieve company objectives. o Making employees feel empowered is a huge thing in making employees want to do better. If you constantly baby workers and degrade them, then there will be no motivation to want to be better or to feel like you can do better. It is important to empower workers a little at a time and show them that they are capable of more. In addition, if they make a mistake that is the best time to teach them how to do better. 2. Job Rotation- cross-train workers so that they can move from one job to another. o Job Rotation is important because it motivates workers to learn different things and to try new things. In addition, cross-training allows for them to get experience all over and feel motivated to take over different areas when needed. Job Rotation can also be beneficially to the company because it allows for workers to move around if unexpected things do come up. 3. Flexplace- working remotely from the traditional work site o Flexplace is something that can motivate a lot of people since schedules can be complex at times. With this the requirements should have to be the same as they are in the work areas, but if you are sick and can work from how this would be great. This would motivate workers to take less time off is they were able to get things done from home on days where things way be complicated. This would motivate workers to get things done and it would help the company out by having more work being accomplished.

Define purchasing, and list the five elements of a purchasing plan

a. Purchasing- the acquisition of needed materials/services of the right quality, quantity, price and time of delivery from the right supplier (vendor). Elements of a Purchasing 1. Quality of materials/services- must meet or exceed the minimum acceptable quality requirements. o When purchasing a product, you want it to be quality and you want it to be what you expected. If you buy a product that is poor quality, then you are not going to return. So, you have to make sure a company is reliable, and the company has to make sure it is delivering quality things. As a company, you have to make sure you are getting quality products delivered to you so you can deliver quality products to your customers. 2. Quantity of materials/services- purchase just enough materials/services to minimize inventory carrying costs (these costs include storage, insurance, taxes, interest, depreciation, spoilage, obsolescence, and pilferage). 'Safety stock' often comes into play and is the minimum amount of inventory that must always be on-site. o You want to make sure that you are carry what is needed of a business. If you are carrying too much, you are taking up space and wasting money. However, you want to carry enough where you are able to meet customer demand and not run out within a short period of time because you had too little inventory. 3. Price of materials/services- the lowest price at which materials/services meet or exceed minimum quality requirements. When doing this, it may involve quantity discounts, where larger quantities provide lower unit prices. In addition, it may involve 'cash' discounts, which are offered to the purchaser as an incentive to pay early. o When you are pricing a product, you need to be able to understand your market and their income level. If you are offering products that are for single parents and they cost thousands of dollars, it is going to cause a problem. Doing research and understand how to price and when to discount is key in capturing the most sales possible. 4. Delivery timing of materials/services- purchaser must consider delivery 'lead times' or the gap intime from purchase to delivery. o It is important to make customers aware of how long things are going to take to get there. People order things for certain days and if you do not get information on when the product is going to arrive, they will probably not order from you. In addition, it is important to make customers aware if there are any delays on shipping. It is about building that trust and making customers aware of where their product is and if it is going to get to them on time. 5. Supplier (vendor) reliability- represents a reliable supply source of materials/services over time. o Making sure that your company is associated with a reliable source is very important. Especially in today's day and age, people are very concerned about where their products are coming from. So, making sure your company is partnered with ethical vendors is very crucial in keeping customers. If you are associated with vendors who are unethical and have a bad reputation and customers find out, you could lose people. In addition, making sure your vendor is reliable is important for the company, so you know you are getting quality products. As a business owner, you need to have products and need to trust that your vendor will deliver that. 2.

Define leadership

a. the process of influencing and inspiring followers to work and achieve a common goal. Leadership is about providing followers with the resources to achieve the goal. b. With leadership, companies are able to rise above mediocrity through dedication, discipline, and hard work. Leadership is no longer about command and control; it is about the best and brightest people that create an environment in which they can use their intelligence and judgment to make decisions. c. Leaders of small companies must gather information and make decisions with lightning-fast speed, and they must give workers the resources and the freedom to solve problems and exploit opportunities as they arise. d. Leaders: 1. Delegate authority and responsibility 2. Empower employees to act in the best interest of the business. 3. Have trust in employees 4. Have respect for employee's ability to make decisions. 5. Innovative: Leaders must step out of their own comfort zones to embrace new ideas; they avoid the comfort of complacency. 6. Passionate: One of entrepreneurs' greatest strengths is their passion for their businesses. Members of their team feed off of that passion and draw inspiration from it. 7. Willing to take risks: Playing it safe is not an option for any company that wants to be solvent ten years from now. 8. Adaptable: Although leaders must stand on a bedrock of resolute values, they must adapt their leadership styles to fit the situation and the people involved. 9. They define and then constantly reinforce the vision they have for the company. 10. They create a set of values and beliefs for employees and passionately pursue them. 11. They establish a culture of ethics. 12. They develop a strategic plan that gives the company a competitive advantage. 13. They respect and support their employees. 14. They set the example for their employees. 15. They are authentic. 16. They create a climate of trust in the organization and build credibility with their employees and leaders do so much more. e. Leadership Challenges Facing Companies: 1. Hire the right people and constantly improve their skills. o You want a worker that is going to pull their weight and constantly be improving themselves. If you have someone who thinks they are the best and no one can compare then it will cause conflicts. 2. Build a company culture that allows both followers and the company reach full potential. Company culture includes its values/beliefs and rules. o When having a leader, you want to make sure they will create and environment that empowers everyone and follows the rules. It is important that not only the leader feels empowered, but the employees feel that way too so they can keep improving as well. 3. Motivate followers to reach ever higher levels of performance. o A leader needs to be able to motivate their company to work hard and to keep growing. If everyone stays stagnant and no one wants to get better, then a company will stay in the same place. 4. Have a succession plan where followers can become lead o Leaders will change and that is okay, but you want to make sure that if a follower must take over, they are ready for that. That connects with the empowerment of employees, you want them to feel connected and they should feel ready at any time to be a leader. In all honestly, the followers should all feel like sub leaders and have that knowledge on what it does take.

define equity and debt capital

o Equity or (owner and investor equity capital) is defined as the personal investment of owners and investors who assume 'primary' risk, but also may share in substantial gains. Usually have a 'voice' in the company's direction. o The primary advantage of equity capital is that it does not have to be repaid like a loan does. With this, the investors are entitled to share in the company's earnings and these investors normally have a voice in the company's future direction. o The disadvantage of this capital is that the entrepreneur must give up some most of the ownership in the business to outsiders. This can be a big disadvantage because as the owner, you want to have the most ownership of your business. So, as a start-up business you should strive to spend the least amount of money that you can and give a way very little ownership. o Debt Capital or (possessed by banks and other lending institutions) is defined as consisting of the money one has borrowed and must pay back with interest. Borrowers assume risk for all debt capital repayment. o Very few entrepreneurs have adequate personal savings to finance the total start-up costs of a small business; many of them must rely on some form of debt capital to launch their companies. It can be very difficult to obtain a loan and if you do, it often comes with a hefty interest. Though unlike equity financing, debt financing does not require entrepreneurs to dilute their ownership interest in their companies, but the liability with it can be large.

Describe the Small Business Administration (SBA)

o SBA is designed to help finance both startup and existing small businesses that do not qualify for traditional loans because of inadequate assets and/or high risk for failure. The SBA works with local lenders (both bank and nonbank) to offer many other loan programs to help aid those small businesses in getting a loan. Due to the fact that banks have made their loan policies even stricter, it leaves a lot of small businesses without the proper loans to start-up their company. So, the SBA has several programs designed to help finance both start-up and existing small companies that cannot qualify The SBA guarantees more than 52,000 small business loans which ends up totaling more than $19 billion each year. o With this process, the money lent to entrepreneurs does not come directly from SBA; instead, entrepreneurs borrow money from a traditional lender, and the SBA guarantees repayment of a percentage of the loan. o The average interest rate on SBA-guaranteed loans is prime-plus-2 percent (compared to prime-plus-1 percent on conventional bank loans). However, with SBA they allow you to hold loans for an average duration of 12 years which is far larger than other banks would do. § loan guaranty program is the SBA's flagship loan program. This program has allowed 3,500 private lenders in the United States make SBA loans to small businesses, but the SBA guarantees them 85 percent of loans up to $150,000 and 75 percent of loans that range from $150,001 up to the loan cap of $3.75 million. § certified development company (CDC), which is a nonprofit organization licensed by the SBA and designed to promote economic growth in local communities. § SBA offers many programs for example: · SBA's Microloan Program: loans made through an SBA program aimed at entrepreneurs who can borrow amounts of money as small as $100 up to a maximum of $50,000. · SBAEXPRESS PROGRAM: program that gives entrepreneurs responses to their loan applications within 36 hours. · SMALL LOAN ADVANTAGE AND COMMUNITY ADVANTAGE LOAN PROGRAMS: The Small Loan Advantage program is designed to encourage existing, experienced SBA lenders, known as preferred lenders, to make smaller loans, which are most likely to benefit disadvantaged borrowers. The Community Advantage Loan program encourages new lenders that operate in economically challenged communities that have had little or no access to SBA loans to enter the SBA's 7(a) loan program. · THE CAPLINE PROGRAM: offers short-term capital to growing companies seeking to finance seasonal buildups in inventory or accounts receivable under five separate programs, each with maturities up to five years.