Professional Documents
Culture Documents
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Inventory is often a basis for a loan, particularly when
inventory is liquid and can be sold easily.
Finished goods inventory can be financed up to 50%
of value.
Trust receipts are a type of inventory loan used to
finance floor plans of retailers such as auto dealers.
The bank advances a large percentage of the invoice
price of the goods and is paid a pro rate basis as the
inventory is sold.
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Trust receipts are a type of inventory loan
used to finance floor plans of retailers such as
auto dealers.
The bank advances a large percentage of the
invoice price of the goods and is paid a pro
rate basis as the inventory is sold.
The creditor has title to given goods but
releases them to borrower to sell on the
creditorƞs behalf.
As goods are sold, the borrower remits the
funds to the lender
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Equipment can be used to secure longer
term financing up to 3 to 10 years.
When new equipment is bought, 50 to
80% of value can be financed.
In sale-
sale-leaseback financing the
entrepreneur "sells" the equipment to a
lender and then leases it back.
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They are easily obtained to finance
Land
Plant
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usually up to 75% of value.
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Installment loans can be obtained by a
going venture with a track record of sales
and profits.
These funds are used to cover working
capital needs, usually for 30 to 40 days.
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Straight commercial loans
In this hybrid of the installment loan,
funds are advanced to the company for 30
to 90 days.
These self-
self-liquidating loans are used for
seasonal financing.
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These loans are usually only available to
more mature companies.
Funds are available for up to 10 years with
the debt repaid according to a fixed
interest and principle schedule.
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When the business does not have assets
to support a loan, the entrepreneur may
need a character loan.
These loans must have assets of an
individual pledged as collateral, or have
the loan cosigned by another
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Contract
Sponsoring Company
Limited Partners
General Partners
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contract is established and the money
invested
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The company performs the actual research
In which with both parties reaping the benefits
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It provides the needed funds with a
minimum of equity dilution
The sponsoring companyƞs financial
statements are strengthened
It reduces the risk
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There is considerable time and money
involved.
0ost R&D limited partnerships are
unsuccessful.
The restrictions placed on the technology
may be substantial.
The exit from the partnership may be
too complex.
S£IR Grant Program
(Small £usiness Innovation Research)
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Sell stock to the Public
Registering the securities with the Securities
and Exchange Commission (SEC) requires a
number of reporting procedures once the firm
has gone public.
This public process was established to protect
unsophisticated investors.
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It is faster and less costly than other funding.
Direct ale of an issue of securities to a large
institutional investor
When private public offering ƛ Not public
offering take place
These sophisticated investors still need access
to material information about the company.
No prospectus is required
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Regulation D contains:
A number of broad provisions designed
to simplify private offerings.
General definitions of what constitutes a
private offering.
Specific operating rules-
rules-Rule 504, Rule
505, and Rule 506.
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Under Rule 504 a company can sell up to $500,000 of
securities to any number of investors in any 12-
12-month
period.
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Rule 505 permits the sale of $5 million of unregistered
securities in the private offering in any 12-
12-month
period.
These can be sold to any 35 investors, and an
unlimited number of accredited investors
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Rule 506 allows an issuing company to sell an
unlimited amount of securities to 35 investors and an
unlimited number of accredited investors
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It includes:
(I) Institutional investors
(ii) Investors who purchase over $150,000 of
the issuerƞs securities.
(iii) Investors whose net worth is $1 million.
(iv) Investors with incomes in excess of $200,000
in the last two years.
(v) Directors, officers, and general partners of
the issuing company.
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PSIC has developed 14 industrial estates in various
areas of the Punjab
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PSIC has also launched ƠRural Industrialization
Programơ to control unemployment and strengthen
the marginal household income.
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The SSIC also launched a credit scheme in 88,/89.
In October 1992, a self-
self-employment scheme was
started for locally manufactured machinery
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