Capital Landscape

This page is dedicated to understanding different sources of capital arranged in what we call the “Capital Landscape”.

We have categorized these sources of capital as either “Traditional” (common sources folks are most familiar with) or “Alternative” (sources that are more on the creative side). We then separated whether these sources are debt (or debt-like) or equity (investments).

 

Capital Access TEam
Julia_Updated_2020
Julia Smith
Access to Capital Consultant
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Tim Hall
Finance
Neil Shnider - FSBDC at FGCU Small Business Consultant
Neil Shnider
Financial Strategies, Growth Strategies, Budgeting & Forecasting, Business Development
Suzanne Specht - FSBDC at FGCU Small Business Consultant
Suzanne Specht
Access to Capital

While it’s great to have so many different sources of capital, it’s most helpful if folks also know more about them and understand how and when to use them as part of a funding strategy.

We invite you to spend some time exploring the capital landscape to better understand different types of funding that might be available and encourage you to talk to an expert who can guide you through developing a funding strategy of your own.

DOWNLOAD FULL CAPITAL LANDSCAPE DESCRIPTIONS
Traditional Capital Landscape
Traditional Capital Landscape- Debt:

BANKS AND CREDIT UNIONS, CREDIT CARDS, EQUIPMENT FINANCING, FRIENDS AND FAMILY LOANS, GOVERNMENT DIRECT LOAN PROGRAMS, GOVERNMENT LOAN GUARANTEE PROGRAMS, HOME EQUITY LINES OF CREDIT (HELOC). INTERNATIONAL TRADE FINANCE TOOLS, LEASING, LINES OF CREDIT, VENDOR TERMS

bank

BANKS AND CREDIT UNIONS

Traditional banks and credit unions typically serve both consumer and commercial customers providing a full suite of personal and business banking solutions.

credit card

CREDIT CARDS

Consumer and business credit cards are unsecured (uncollateralized) debt with interest rates from 0% (usually short-term introductory) to 28% (usually a penalty rate).

equipment

EQUIPMENT FINANCING

Equipment Financing are loan programs specifically designed for borrowing to purchase different equipment, where the equipment is also collateral for the loan.

family and friends

FRIENDS AND FAMILY LOANS

One of the most common forms of debt capital is loans from friends and family. Whether used for startup or expansion capital, it’s best to treat this source of capital with the same diligence and reverence as any other loan.

government loans

GOVERNMENT DIRECT LOAN PROGRAMS

Hundreds of direct loan and finance programs exist from city, county, state, and federal agencies.

government

GOVERNMENT LOAN GUARANTEE PROGRAMS

Several government loan guarantee programs exist through state and federally funded programs.

home equity

HOME EQUITY LINES OF CREDIT (HELOC)

Home Equity Lines of Credit leverage personal home equity built up over time on residential property.

international trade

INTERNATIONAL TRADE FINANCE TOOLS

Several different international trade financing options are available including export working capital, term loans, and export credit insurance.

lease

LEASING

Sometimes leasing can be an option for gaining access to new (and used) vehicles and other capital equipment.

lines of credit

LINES OF CREDIT

Lines of Credit are obtained from banks and credit unions for covering short-term working capital needs such as employee payroll, labor, materials, payables, and inventory while waiting for receivables to be paid.

vendor

VENDOR TERMS

With vendor terms, a company benefits from the generosity of its suppliers to “finance” the purchasing of goods or services with a promise to repay within a given timeframe as agreed.

Alternative Capital Landscape
Alternative Capital Landscape – Debt:

BANKS AND CREDIT UNIONS, CREDIT CARDS, EQUIPMENT FINANCING, FRIENDS AND FAMILY LOANS, GOVERNMENT DIRECT LOAN PROGRAMS, GOVERNMENT LOAN GUARANTEE PROGRAMS, HOME EQUITY LINES OF CREDIT (HELOC). INTERNATIONAL TRADE FINANCE TOOLS, LEASING, LINES OF CREDIT, VENDOR TERMS

asset based lenders

ASSET BASED LENDERS

Asset-based lenders (ABL) use business assets as collateral to provide entrepreneurs access to non-bank lines of credit or term loan products oftentimes to meet business cash flow or working capital requirements.

certificate of deposit

CERTIFICATE OF DEPOSIT

Creative entrepreneurs sometimes use Certificate of Deposit Accounts (CDs) pledged by friends and family to fill much-needed collateral gaps when their personal and business assets fall short of a bank’s collateral requirements to complete a loan request.

community debt security

COMMUNITY CAPITAL DEBT SECURITIES

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CFDI

COMMUNITY DEVELOPMENT FINANCE INSTITUTIONS AND NON-TRADITIONAL LENDERS

Certified Community Development Financial Institutions (CDFIs) and non-traditional lenders fill the gaps where traditional lenders leave off.

money factoring

FACTORING

When lines of credit are not available, factoring may be a short-term cash flow management solution to explore.

merchant cash lender

MERCHANT CASH ADVANCES

Merchant Cash Advances or MCA is a type of upfront term loan for working capital typically repaid with high-interest rates out of a merchant services account.

unsecure lender

ONLINE UNSECURED LENDERS

Several online non-traditional lenders serve small business capital needs with term loans and working capital lines of credit.

prepaid sales

PREPAID SALES

Prepaid sales, also know as unearned revenues are sometimes used as a debt-based crowdfunding strategy.

seller carry

SELLER CARRY

Seller Carry also known as “Owner Carry” or a “Seller Carry Contract” is when the owner/seller of an asset (equipment, real estate, business acquisition) self-finances, via a direct loan with interest to the buyer.

Traditional Capital Landscape
Traditional Capital Landscape- EQUITY:

BANKS AND CREDIT UNIONS, CREDIT CARDS, EQUIPMENT FINANCING, FRIENDS AND FAMILY LOANS, GOVERNMENT DIRECT LOAN PROGRAMS, GOVERNMENT LOAN GUARANTEE PROGRAMS, HOME EQUITY LINES OF CREDIT (HELOC). INTERNATIONAL TRADE FINANCE TOOLS, LEASING, LINES OF CREDIT, VENDOR TERMS

angel investor

ANGEL INVESTORS AND PRIVATE EQUITY

Angel Investors, Angel Conferences, and Private Equity firms are other sources of equity funding that can bring startup or growth capital into a business.

business partners

BUSINESS PARTNERS

Business partners are another potential source of equity funding that can bring startup or expansion capital into a business.

family and friends

FRIENDS AND FAMILY INVESTMENTS

When friends and family make equity contributions to help start or grow a business in the form of cash or business assets, it makes them investors and part owners in the company.

savings

OWNER EQUITY (SAVINGS)

Owner equity is the cash founders put into the business anytime, whether starting or growing the business or investing personal cash into the business to bolster slow periods of low cash flow.

venture capital

VENTURE CAPITAL

Angel Investors, Angel Conferences, and Private Equity firms are other sources of equity funding.

Alternative Capital Landscape
Alternative Capital Landscape – EQUITY:

BANKS AND CREDIT UNIONS, CREDIT CARDS, EQUIPMENT FINANCING, FRIENDS AND FAMILY LOANS, GOVERNMENT DIRECT LOAN PROGRAMS, GOVERNMENT LOAN GUARANTEE PROGRAMS, HOME EQUITY LINES OF CREDIT (HELOC). INTERNATIONAL TRADE FINANCE TOOLS, LEASING, LINES OF CREDIT, VENDOR TERMS

community debt security

COMMUNITY CAPITAL EQUITY SECURITIES

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crowd funded

CROWDFUNDED EQUITY

The development of the global crowdfunding space and associated online platforms has resulted in a few domestic equity-based crowdfunding platforms for entrepreneurs to choose from.

grants

GRANTS

Grants are outside cash contributions sourced from different types of public, private, and nonprofit organizations.

licensing copyright

LICENSING

While not technically equity, licensing pays the owner (usually) a one-time upfront fee in exchange for providing use of something or access to information, intellectual property, process, or activity.

retirement funds

RETIREMENT FUNDS

After readily accessible capital sources are exhausted, some entrepreneurs may be tempted to look at retirement funds as an option for shoring up small startup budgets, filling expansion capital needs, or adding working capital when cash flow is tight.

reward funding

REWARD-BASED CROWDFUNDING

One of the most common forms of crowdfunding is reward-based, where crowd funders provide monetary contributions, oftentimes through an online platform like Kickstarter.com, in exchange for the promise of tangible and intangible rewards.

royalties

ROYALTIES

While not technically equity, royalties are a type of licensing fee paid to owners based on asset usage often calculated as a percentage of sales revenue.

seed fund

SEEDFUND

Seed funds provide small start-up capital investments in exchange for a small amount of equity, mentoring, and sometimes incubator space.

FSBDC at FGCU

Our capital access Impact

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in Capital Accessed Regionally
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In Client Capital Accessed Statewide
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Capital Access Team Members

Data is for the period from 2018-2019 and based on annual client surveys conducted by Florida SBDC Network Headquarters.

DOWNLOAD FULL CAPITAL LANDSCAPE DESCRIPTIONS