Debt Financing
Debt financing is getting a loan. The most common source of debt financing is commercial banks (through conventional loans and SBA guaranteed loans). Most startups are not eligible for bank financing because banks are primarily interested in minimizing risk. The ideal candidate for a bank loan is a firm with a strong cash flow, low leverage, audited financial statements, and a healthy balance sheet. Most startups are simply too early in their life cycles to have this set of characteristics. However, BEGIN will work with you to find the best financing options available.
Equity Funding
Equity funding (or financing) means exchanging partial ownership in a company, usually in the form of stock, for funding. Angel investors, private placement, venture capital, and initial public offering are the most common sources of equity funding. Equity funding is not a loanÑthe money that is received is not paid back. Instead, equity investors become partial owners in the firm. BEGIN can provide the resources needed to help entrepreneurs make good decisions in this area
Bootstrapping
Bootstrapping is the use of creativity, ingenuity, and any means possible to obtain resources other than borrowing money or raising capital. Some of the more common example of bootstrapping include: minimizing personal expenses and putting profits back into the business, sharing office space or employees with other businesses, leasing equipment rather than buying, and buying items cheaply but prudently through discount outlets or online actions such as eBay. BEGIN can provide the resources needed to help entrepreneurs make good decisions in this area.
Small Business Innovation Research Grants
The SBIR Program is a competitive grant program. Each year, 10 federal departments participate in the program. (Most of the departments that participate are cabinet level agencies, like the Department of Defense.) The SBIR is a three-phase program, meaning that companies that qualify have the potential to receive more than one grant to fund a particular project. Although SBIR grants are tough to get the payoff for a successful proposal is high. The money is essentially free. It is a grant, meaning that it doesnÕt have to be paid back and no equity in the firm is at stake. Companies are also able to patent the technology that results from their SBIR grant work. BEGIN can help you apply for the grants offered from the different agencies.
Exit Strategy
There are two reasons that an entrepreneur might start thinking about selling a business from its onset. First, some people are very good at starting businesses, but are not as good at growing a business over the long-term. These entrepreneurs typically sell their business after they reach a certain size. Second, if a business is funded by equity investors, the investors typically want their money back (plus a hefty return) in three to five years. Meeting this objective many require that the firm be sold and all stockholders (including the founding entrepreneurs) receive cash for their ownership interest in the firm. BEGIN can help you determine an exit strategy that will suit your needs.