1. Business Financing Options

2. Lesson Objectives Describe why businesses might need to raise capital Compare and contrast funding options available to businesses Explain short-term and long-term funding

3. Key Vocabulary 401(k) financing 504 loans Angel investors Asset-based loans Bank-term loans Community Development Financial Institutions Equipment leasing Federal government venture capital Initial public offering Institutional venture capital Long-term financing Microloans Private loan guarantees Royalty Financing SBA guaranteed loans Short-term financing

4. Understanding Sources of Business Capital Think about your life from today to old age. Imagine your family, your job, your hobbies—try to think of everything you plan to do. What are the events in your life that you will need money for?  Think major purchases not so much food or gas

5. Understanding Sources of Business Capital The business life cycle  Start-up  Growth  Maturity  Decline  Which phases need the most money? Starting the business Expanding (growing) the business Maintaining the business during difficult times

6. Exploring Business Financing Options Work in pairs to explore possible ways businesses can secure capital

7. Business Financing Options Startup financing Equipment leasing Community development financial institutions (CDFIs) Microloans Asset-based loans Bank-term loans SBA-guaranteed loans Private loan guarantees 504 loans Royalty financing Federal government venture capital Angel investors Initial public offerings (stock issuing) Institutional venture capital

8. Business Financing Options Download- Matrix- Business Financing Options  This information will be transferred to a poster to present to the class  http://www.entrepreneur.com/howto/raisemoney/in dex.html http://www.entrepreneur.com/howto/raisemoney/in dex.html

9. Completion of the Poster Download- Assignment: Business Financing Options Poster Download- Example: Business Financing Poster  In what ways does and doesn’t this example meet the assessment criteria for the assignment?

10. Sharing Business Financing Options Download- Matrix: Gallery Walk of Financing Options  Complete this individually by walking around and observing your classmate’s posters

11. Financing Time Frames Financing options can also be categorized by time frame:  those that help businesses in a pinch  providing financing to fund relatively short-term needs  others that provide long-term funding solutions

12. Financing Time Frames Short-term financing usually applies to money needed for the daily operations of the business.  For example, this might be purchasing supplies or seasonal inventory or paying the wages of employees. The repayment for short-term loans is generally less than 1 year. Long-term financing usually applies to assets the business is purchasing, such as equipment, buildings, or land.  The scheduled repayment for long-term financing extends over more than 1 year, with most being between 3 and 10 years.

13. Group Work Download- Worksheet: Exit Slip One interesting fact about the particular business financing option that I researched was… I contributed to the overall completion of the activity by…

14. Group Work The type of financing that is best suited for a particular business is an important consideration when seeking capital Understanding the costs of each option as well as the situations for which a given funding option is appropriate is critical to the financial health of any business

15. Enrichment Research derivatives and the effect they had on the financial meltdown in the late 2000s. Work in pairs and develop two lists: one with facts suggesting that derivatives caused the financial crisis, and one with facts suggesting they did not. We will perform a debate when complete.

16. Enrichment Write a summary explaining how an individual’s personal credit history can impact the availability of different financing options.

17. Cross-Curricular Integration Have students imagine that they are entrepreneurs seeking financing for a new business. Have them write a short essay in which they showcase their business idea and explain their capital needs. Refer to www.raisecapital.com and review actual business ideas for examples. Once the class has written text descriptions of their business venture have students exchange papers and write a response from the point of view of an angel investor. As an angel investor, they must decide whether or not they would like to help finance the particular business idea. In order for students to accurately write from the point of view of an angel investor, students may need to research angel investors to understand who they are and their purpose. www.raisecapital.com