This document discusses various sources of financing for new business ventures. It identifies three types of capital needs: fixed, working, and growth capital. Sources of funding can be internal, such as the entrepreneur's own equity, or external through borrowing. External sources include formal sources like banks, bonds, and venture capital firms, as well informal sources like friends, family, suppliers, and government programs. The document also outlines factors like collateral, capacity, and conditions that lenders consider, and cautions that using borrowed money carries more risk than investing one's own capital.

1. FINANCING THE
VENTURE
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.

2. *Capital Requirement
1.Fixed Capital
- refers to the money needed
to purchase fixed assets or capital
goods.

3. 2.Working Capital
- is needed to fund the day-
to-day operations of the
business.

4. 3.Growth Capital
- is not related to daily or seasonal
requirements for funds of the business.
It is needed when an existing business
is set to expand, diversity, or change its
directions.

5. *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.

6. *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.

7. *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.

8. *Long-term Borrowings
Refer to organizations whose main
businesses are generally meant for
providing such form of financial
assistance.

9. FORMS 0F FUND SOURCES:
1.Mortgage- form of fund generation by way of
pledging a designated property as security or collateral
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.

10. * 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.

11. 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.

12. 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.

13. 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.

14. 5.Leasing and companies
-they make possible the
procurement of capital items or
equipment for the company.

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

16. 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.

17. *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.

18. 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.

19. 2.Government institutions
- are special government financing
packages meant for entrepreneurs in need
of funds as seed capital as assistance to
those in dire need of funds.

20. 3.Non-Government Organization (NGOs)
- mandates or major programs are
really meant for upcoming small-
scale entrepreneurs and providing
assistance to the unprivileged.

21. 4.Political Sources
- politicians are philanthropist and are,
therefore, in a position to provide grants of
financial assistance for self employment and
livelihood projects without bothering to pay
later.

22. 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.

23. 7.Employees
- nobody has a greater stake in
the health of the company other than
the entrepreneur/owner and the
employee.

24. 8.Usurers
- usurers have helped a thousand and
more small entrepreneurs mostly in sari-sari
store business to bankroll their daily financial
needs.

25. *Angel Investors
Entrepreneurs may start-up
capital with private investors called
“angels” as referred to by the
entrepreneurs magazine.

26. *The stock market and the IPO
- 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 via
initial public offering can be explored.

27. What is IPO
 it means going through the stock
market system under the auspices of
the Philippine Stocks Exchange (PSE).

28. 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.

29. 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.

30. 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.

31. Borrowing from the banks
The banks exist to lend money
and this is up for entrepreneurs
to grab.

32. 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.

33. 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.

34. 5.Conditions – forming part of the
major content of the contract or
the terms and conditions set forth
in the contract or agreement.

35. 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.

36. “ if the business is successful, you will need your cash later to help
it grow and expand. If it is not successful you will have some cash
left to start another business”
G. Green