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
