Debt Financing For The Small Business

 Debt Financing For The Small Business

When it is necessary to look to someone other than yourself or a close friend or relative for business funds, it helps to be aware of other sources.

Banks

Banks are financial institutions that accept deposits and make loans. They fall into several categories, such as savings and loans, thrift institutions and commercial banks. Knowing the category in which they include themselves can tell you a lot about the kinds of loans these banks are interested in making.

Savings banks are more experienced in dealing with consumer loans, such as home mortgages and automobile loans. Commercial banks have more experience and interest in business loans. This doesn’t mean that you can’t go to a savings bank for a business loan. It may be a good choice. Just be sure to consider that bank’s primary focus and level of experience with your type of request. Probably the most important point to keep in mind when dealing with a bank is that bankers don’t like risk. Their primary concern is always the safety of their funds. More…

Value Added

Value Added

Dan Rabinovitch
University of Southern California

The valuation expert plays the role of the detective.He or she must delve through the complexities of a business’ performance; culture; key players and clients; and industry trends to arrive at a fair judgment of its worth.The IRS defines fair market value (FMV) as an amount the buyer is willing to spend and the seller willing to accept, neither under any compulsion to act and with equity to both.

This formula may shadow the very subjective “story” behind a business and its value. What is the mission of the company?What is the culture of the business?Who are the key players?For example, the opinion of a 5% stakeholder in a public company is not, by definition, weighty enough to dictate company decisions.On the other hand, if that same person holds 5% interest in a family business and she is the mother, no one is going to disregard her opinion. More…