Chapter 10 Flashcards
(18 cards)
A program that accounts for 90 percent of the SBA’s loan activity and is the agency’s most notable SBA program. The SBA guarantees these loans, which private-sector lenders make. The loans are for small businesses that are unable to secure financing on reasonable terms through normal lending channels.
7(A) loan guaranty program
Finding ways to avoid the need for external financing or funding through creativity, ingenuity, thriftiness, cost-cutting, or any other means.
bootstrapping
The rate at which a company is spending its capital until it reaches profitability.
burn rate
The percentage of the profits the venture capitalists receive.
carry
Securing a loan. Commercial banks and Small Business Administration (SBA) guaranteed loans are the most common sources of debt financing.
debt financing
The exchange of partial ownership of a firm, usually in the form of stock, in return for funding.
equity financing
A financial transaction whereby a business sells its accounts receivable to a third party, called a factor, at a discount in exchange for cash.
factoring
IPO
The first sale of a firm’s stock to the public.
IPO
Participants in a partnership, such as a venture capital fund, that have limited liability, meaning that they are only liable up to the amount of their investment and have no management authority.
Limited partners
A type of loan with a borrowing “caps,” borrowers can use the credit at their discretion. A line of credit requires periodic interest payments.
Line of credit
An important source of funding for small businesses. Commercial banks, savings and loans, credit unions, and other specialized lenders are eligible to participate in this loan program.
SBA guaranteed loan program
Small Business Innovation Research (SBIR) competitive grant program that provides over $2.5 billion per year to small businesses for early-stage and development projects.
SBIR program
STTR
A program that is a variation of the SBIR Program involving collaborative research projects of small businesses and research organizations, such as universities and federal laboratories.
STTR program
A common type of loan in which a firm borrows a specific amount of money that it must repay in a fixed amount of time, with interest.
single-purpose loan
The value of the time and effort that a founder puts into a new firm.
sweat equity
Also known as trade credit, a form of credit a vendor extends to a business to allow it to buy its products up front but defer payment until later.
vendor credit
The money that venture capital firms give to startups and small businesses deemed to have exceptional growth potential.
venture capital
The percentage of investment opportunities that people bring to the attention of angel investors that results in an investment.
yield rate
