Professional Documents
Culture Documents
Sources of Funds: Equity and Debt
Sources of Funds: Equity and Debt
Sources of Funds: Equity and Debt
Sources of
of Funds:
Funds:
Equity
Equity and
and Debt
Debt
The “Secrets” to Successful
Financing
1. Choosing the right sources of capital is a
decision that will influence a company for a
lifetime.
2. The money is out there; the key is knowing
where to look.
3. Creativity counts. Entrepreneurs have to be as
creative in their searches for capital as they are
in developing their business ideas.
The “Secrets” to Successful
Financing
(continued)
$25.0 1,800
Amount Financed (in
1,600
Number of Deals
$20.0 1,400
Billions of $)
1,200
$15.0 1,000
$10.0 800
600
$5.0 400
200
$- -
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
1995 1996 1997 1998 1999 2000
n Competent management
n Competitive edge
n Growth industry
n Viable exit strategy
n “Intangibles”
Going Public
800 $60.0
600 $50.0
$40.0
400 $30.0 Number
200 $20.0
$ Raised (Billions)
$10.0
0 $0.0
81
83
85
87
89
91
93
95
97
99
19
19
19
19
19
19
19
19
19
19
Advantages of “Going Public”
n Ability to raise large amounts of
capital
n Improved corporate image
n Improved access to future financing
n Attracting and retaining key
employees
n Using stock for acquisitions
n Listing on a stock exchange
Disadvantages of “Going Public”
n Commercial banks
Commercial Banks
...the heart of the financial market for small businesses!
n Short-term loans
w Commercial loans
w Lines of credit
w Floor planning
n Intermediate and long-term
loans
w Installment loans and contracts
Sources of Debt Capital
n Commercial banks
n Asset-based lenders
Asset-Based Borrowing
Accounts
n Discounting accounts Receivable
receivable
n Inventory financing
Sources of Debt Capital
n Commercial banks
n Asset-based lenders $$
n Trade credit
n Equipment suppliers
n Commercial finance companies
n Saving and loan associations
Sources of Debt Capital
(continued)