FINANCING

VENTURE

Group 6
INTRODUCTION
a business project need to have substantial
start-up capital requirement nor does one
have to be a millionaire to start an
entrepreneurial business endeavor.
 CAPITAL REQUIREMENT
1.Fixed Capital-refers to the
money needed to purchase fixed
assets or capital goods.
3.Growth Capital- is not related to
daily or seasonal requirements for
2.Working Capital-is needed to
funds of the business. It is needed
fund the day- to-day operations of
when an existing business is set to
the business.
expand, diversity, or change its
directions.
SOURCES OF CAPITAL

• Internal fund sources generally refers to the funds which are

owned by the entrepreneur himself or the company, whereas
external capital essentially refers to those beyond the means of
the entrepreneur and the company.
THE FORMAL OR INFORMAL
SOURCES

• It means sourcing or borrowing funds from organizations

or institutions duly authorized by government or by the law
to extend financial assistance or other forms of support
services to the business and industry.
OWNERS EQUITY

• In a corporation, the contribution of the owner

to the capital of the business is called equity and
is evidenced by the issuance of stockholders
certificate issued by the corporation.
LONG-TERM BORROWINGS

• Refer to organizations whose main businesses

are generally meant for providing such form of
financial assistance.
FORMS OF FUND SOURCES

1.Mortgage- form of fund generation by way of pledging

adesignated property as security or collatera for the loan.

2.Bonds-forms of indebtedness of the issuing company that

promises a fixed amount of interest to the bondholders upon
maturity or call by its holders.

3.Long-term commercial papers- are commercial documents

issued by large companies with credible track records.
SHORT-TERM CREDITORS
- take the form of financiers on a short-term basis lasting
to one year or less.

- serve as a stand-by credit facility to the entrepreneurs,

which can be tapped as needed.
TYPES OF CREDITORS:
1.Commercial Banks
-are duty-bound to provide both short- term and long-term
financing to any viable business project.

2.Merchandise Suppliers
-the company's inventory or stock can
be procured either through cash or credit terms.

3.Credit card companies

-is the most convenient, yet the most expensive loan terms. It is
actually one of the most overlooked avenues in obtaining start-up capital.
 4.Capital equipment suppliers
-desire to sell equipment, suppliers will often make every favorable
term available even to new companies. The sellers retains ownership or title until the last installment payment is made and
received

5.Leasing and companies

-they make possible the procurement of capital items or equipmen
for the company.

6.Recievable factors
-specialized organizations like credit and collection companies o
even or even individuals who take risk of buying receivables and discount rates.

7.Deferral of payables in general

-entrepreneurs should not overlook the fact that in crisis periods, some of
the employees might be willing to defer portions of their salary or other benefits either as gesture of solidarity, loyalty,
fellowship, or practical measures to avoid being laid-off.
VENTURE CAPITAL COMPANIES

• Refer to private and for profit organizations that provide

funds to new business ventures by way of purchasing equity
positions in new or young businesses believed to have
potentials to produce maximum returns within short period of
time.
OTHER SOURCES:
1.Lending investors
-small business organizations duly licensed by Bangko
Sentral ng Pilipinas (BSP) to provide quick financing with less paper works as
compared to commercial lending sources like the banks.
2.Government institutions
-small business organizations duly licensed by Bangko
Sentral ng Pilipinas (BSP) to provide quick financing with less paper works as
compared to commercial lending sources like the banks.
OTHER SOURCES:
3.Non-Government Organization (NGOs)
-mandates or major programs are really meant for upcoming small- scale
entrepreneurs and providing assistance to the unprivileged.
4.Political Sources
-small business organizations duly licensed by Bangko
Sentral ng Pilipinas (BSP) to provide quick financing with less paper works as
compared to commercial lending sources like the banks.
OTHER SOURCES:
5.Friends and relatives
- they are abound or are just around willing to be tapped.
6.Purchase order financing
-also called PO financing, this scheme can be arranged
with commercial banks or financing institutions like Technology and
Livelihood Resource Center.
OTHER SOURCES:
7.Employees
-nobody has a greater stake in the health of the company
other than the entrepreneur/owner and the employee.
8.Usurers
-usurers have helped a thousand and more small
entrepreneurs mostly in sari-sari store business to bankroll their daily
financial needs.
ANGEL INVESTORS
• Entrepreneurs may start-up capital
with private investors called "angels"
as referred to by the entrepreneurs
magazine.
THE STOCK MARKET AND THE IPO
50%
• entrepreneurship is not purely new venture creation, but
also connotes expansion of efforts and through some
innovations. When ownership decided over having loans
or borrowings, availing of the benefits of the stock market
70%
via initial public offering can be explored.
WHAT IS IPO
• it means going through the stock market
system under the auspices of the Philippine
Stocks Exchange (PSE).
THE IPO PROCESS:
1.The entire process can take as little as six months to
complete, but some companies take eighteen months or longer
to go public.
2. Minimum of one and preferably two or more officers of
the corporation will spend much of their time interfacing
their attorneys, auditors etc.
THE IPO PROCESS:
3.As the effective approaches, roadshows as a
means of showing off the company and improving
the potential price performance in the after market.
4. During the process, the firm's owner and
managers will be answering questions.
 THE RISK IN GOING PUBLIC

A. The entrepreneur may lose some focus and direction in life, focus
that had been provided by owning a company.

B. Managing the liquidity resulting from the company sale become

burden for some.
BORROWING FROM THE
BANKS
• The banks exist to lend money and this
is up for entrepreneurs to grab.
THE C'S OF CREDIT
1.Collateral
- all formal sources of funding generally require a collateral in the form of real
estate, equipment, or any other form saleable property.

2.Capacity
-refers to the capacity of the entrepreneur or borrower to pay the loan.
THE C'S OF CREDIT
3.Character
-more of the personal standing of the
entrepreneur or borrower in his community, as well as his own personal capability

4.Contract
- each loan or borrowings transaction has to
have contract or agreement defining the obligations of the contracting parties.
THE C'S OF CREDIT
5.Conditions
-more of the personal standing of the
entrepreneur or borrower in his community, as well as his own personal
capability.
• On using someone else's money It is
conventional for prospective entrepreneur to
shell out personal capital in putting up the
business, rather than borrowing from someone
else.
• If the business is successful, you will need your cash
later to help grow and expand. If it is not successful you
will have some cash left to start another business"

G. GREEN
THANK YOU FOR
LISTENING!!!

GROUP 6