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SMALL BUSINESS TOOL KIT
CHAPTER 5

SMALL BUSINESS FINANCING
  1. Financing Overview
  2. Financing Agencies and Programs
    1. Small Business Administration
      1. SBA 504 Loan Program
      2. SBA 7a Program
      3. Additional SBA Programs
    2. Southern Development Council
    3. Rural Economic and Community Development
    4. Private Financing
    5. Personal Savings
    6. Additional Funds and Programs
  3. Financial Ratio Analysis
  4. Glossary

A. FINANCING OVERVIEW

The Financing of a small business is normally the greatest obstacle that the entrepreneur has to overcome in the attempt to start up a new business. Developing a sound strategy for obtaining the proper type and amount of financing is crucial for the long-term success of any business opportunity.

There are many different types of financing options available to today's entrepreneur and these options include both public and private sources. Some of the more viable financing options that the entrepreneur has to choose from are presented on the following pages:


B. FINANCING AGENCIES AND PROGRAMS
  1. Small Business Administration

    The SBA offers two general types of financing. The SBA 504 CDC loan program, and the SBA 7a loan guaranty program.

     
    1. SBA 504 Loan Program

      The SBA 504 CDC loan program can provide long term, fixed asset financing to eligible small businesses for the acquisition, construction, purchase of long-life equipment, or expansion or renovation of land and buildings.

      A loan form the SBA 504 CDC program is a loan resulting from a 100% SBA guarantee of a debenture sold to the Federal Financing Bank by a Certified Development Corporation (CDC) for up to 40% of the fixed asset costs of a project. With this type of loan there is a $1,000,000 participation limit for the SBA. The terms for an SBA 504 loan include the fact that a private financial institution must provide up to 50% of the project cost, while CDC will provide up to 40% of the cost. The principle borrower provides a minimum of 10% of the costs. In return for its participation in this loan, the SBA requires that a minimum of on e new job be created for every $35,000 with which it participates and that the assets purchased must be used by the small business.

      The process of obtaining this type of loan involves submitting a proposal to a certified development corporation's loan committee, which then submits an application to the SBA. 
      Finance specialists from any one of the following four CDCs will assist the small business in packaging the loan application.

      AGENCY

      Alabama Community Development Corp.
      ALACOM FINANCE
      117 Southcrest Dr., Suite 100
      Homewood, AL 35209
      (205) 942-3360 (800) 239-5909
      All counties in Alabama except, Choctaw, Sumter and Washington

      Birmingham City Wide Local
      Development Co.
      710 North 20th street
      Birmingham, AL 35203
      (205) 254-2799
      City of Birmingham Only

      Southern Development Council
      4104-c Wall Street
      Montgomery, AL 36106
      (334) 244-1801
      All Counties in Alabama, SW Florida and Mississippi

      Greater Mobile Development Corporation
      205 Government Street
      2nd Floor, South Tower
      Mobile, AL 36602
      Phone: (334) 434-7591
      Mobile & Baldwin Counties

    2. SBA 7a Loan Program

      The SBA 7a loan program can provide small businesses with long term financing for either fixed assets or working capital and has no specific job creation requirements. The SBA 7a Program is a guarantee of up to 80% of a bank loan not over $100,000, up to 75% maximum of $750,000 of a bank loan exceeding $100,000. The most attractive feature of the 7a program is that through its risk reduction to the bank, capital is made more accessible to the business.
       
    3. Microloan, a 7(m) Loan Program
       
      FUNCTION - Provides short-term loans of up to $35,000 to small businesses and not-for-profit child-care centers for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and/or equipment. Proceeds cannot be used to pay existing debts or to purchase real estate. The SBA makes or guarantees a loan to an intermediary, who in turn, makes the microloan to the applicant. These organizations also provide management and technical assistance. The loans are not guaranteed by the SBA. The microloan program is available in selected locations in most states. 

      CUSTOMER - Small businesses and not-for-profit child-care centers needing small-scale financing and technical assistance for start-up or expansion

      DELIVERED THROUGH - Specially designated intermediary lenders (nonprofit organizations with experience in lending and in technical assistance)  

    4. Additional SBA Programs

      While the 504 and 7a type loans are the primary lending programs of the SBA, they do provide a number of other assistance programs. Theses additional loan programs includes:
      • Low doc loan program;
      • Export working capital programs;
      • Contract lines of credit;
      • Asset based lines of credit;
      • International trade loans;
      • Pollution control loans;
      • Seasonal lines of credit
      • Small general contractor financing;
      Also, as part of the SBA's goal of helping to provide financing to small businesses, they license financial organizations to act as Small Business Investment Companies (SBIC). These SBIC's are very similar to venture capital companies and are privately owned and managed. For more information, please contact:

      U.S. Small Business Administration
      2121 8th Avenue North, Suite 200
      Birmingham, AL 35203-2398
      (205) 731-1338
  2. Southern Development Council

    The Southern Development Council is a statewide, nonprofit, financial packaging corporation that helps small to medium size businesses arrange long-term, fixed asset financing so that these businesses can finance their expansion or location in Alabama.

    The SDC utilizes both public financing programs and Alabama banks as sources for a financial package that is best suited to each firm's individual needs. The Staff of the SDC is experienced in both private bank financing and public finance programs. By using both of these types of financing, the SDC is able to put together a loan package that spreads the risk each lender must undertake, which results in safer loans for the banker. This in turn, allows the business to receive financing that a single lender is normally unable to provide. For more information on this financing opportunity feel free to contact the SDC at the following address:
     
    Southern Development Council
    4101-C Wall Street 
    Montgomery, AL 36106
    (334) 264-5441
  3. Rural U.S. Department of Agriculture-Rural Development
    (Formerly Farmers Home Administration)

    The U.S. Department of Agriculture (USDA), through the Rural Development state office, guarantees term loans to non-farming businesses in rural areas. The USDA Rural Development does not make direct loans under this program. The program offered by the USDA Rural Development is similar to that offered by the SBA 7a program but is larger in scope. The USDA Rural Development Business and Industry program offers guarantees up to 80% on loans between $750,000 and $10,000,000. One stipulation of the program is that those businesses that apply for this type of loan must be located in communities with populations under 50,000. Priority will be given to those communities with populations less than 25,000.

    This program allows fixed assets to be financed for up to 30 years; machinery and equipment up to 15 years; and working capital up to 7 years. The USDA Rural Development requires existing businesses to provide 10% tangible balance sheet equity and new businesses must provide 20% -25% tangible balance sheet equity. Due to the fact that this is a public program, job creation and retention are priorities.

    Another program that the USDA Rural Development offers is a program aimed at communities that provide low interest loans to finance water and waste infrastructure and other essential community facilities such as fire, rescue and public safety; health services; and community, social and cultural services. The interest rates for this program are based on the community's median family income.

    The USDA Rural Development has a relatively new community program guaranteed program. Under this program, a guarantee will normally not exceed 80%; and loan purposes are the same as community program insured loans.

    For more information on this financing opportunity, please contact:
     
    Ronald D. Wyatt, Rural Development Manager
    USDA Rural Development, Alabama Area 2:
    Phone: (334) 793-7819
    E-mail 

  4. Private Financing

    The major source of private financing is direct bank loans. These are loans that are negotiated directly with a bank and the terms of the loan are based on the bank's requirements.

    The key to successfully obtaining a loan of this type is to be fully prepared before you ever talk to the banker. This preparation includes writing a detailed and accurate business plan. A good business plan tells the banker you are fully prepared to enter into this business opportunity and will increase his faith in your ability to make a success of the business.

    It is estimated that 90% of all the prospective borrowers that come to a bank for a loan are not prepared. Since bankers do not have the time to do the research for the borrower, it is safest and easiest for them to say no. The following is a list of suggestions to help increase your chances of getting a loan:

    • Prepare the detailed business plan complete with financial statements.
    • Choose a bank that has a reputation for making small business loans. 
    • Make an appointment with the banker. Do not just walk in.
    • Demonstrate you good character to the banker. This is one of the most crucial deciding factors.
    • Know what type of loan you want and how much of a loan you will need.
    • Be prepared to personally guarantee the loan or meet certain equity requirements.
    • Be honest with the banker and answer all question openly and honestly.
  5. Personal Savings

    Another widely used source of funds is the savings of the entrepreneur. These savings and those of other family members are a viable source of funds and show future creditors that the owners of the business are willing to personally stand behind their business. This type of faith is what banks and other creditors like to see before lending money to any small business operation.

    Another advantage to financing a business through personal or family savings it the fact that it is less risky than bank financing and it is also less costly. Reducing risk and expenses early in the life of a business are two factors that help to insure the long run success of a business. For these reasons, this financing option should be given every consideration.

    Personal budgeting experience is another factor that bankers look for when they evaluate a person's loan potential. Those people who demonstrate that they can set up and follow a personal budget impress the banker as having the skill and experience necessary to develop and follow a budget for a business, which is critical factor in the success or failure of a business.

    Due to the fact that budgeting is such an important part of the business cycle, it is recommended that anyone considering opening a business should develop a personal budget simply because it is good experience and bankers are impressed with those people who have budgeting experience.

  6. Regional Revolving Loan Fund 

    The Southeast Alabama Regional Planning and Development Commission Revolving Loan Fund (RLF) is a locally controlled source of capital used to finance start-up and expanding businesses whose projects will create permanent jobs and leverage private sector investment. As borrowers repay their RLF loans, the principal and interest payments are returned to the fund for lending to other businesses to create more jobs and investment opportunities.

    The businesses targeted for RLF financing are:
    1. Small manufacturing companies.
    2. Manufacturing related services.
    3. Developing services that have a uniqueness or technology that will add value to the regional economy.
    4. Other businesses that may help a community improve its development potential.
      Generally, retail businesses are not eligible.
    Proceeds from RLF loans can be used to: 
    • Purchase land and buildings.
    • Construct new buildings or renovate/modify existing buildings.
    • Purchase machinery & equipment.
    • Provide for permanent working capital.
    There are many advantages to utilizing the Southeast Alabama RLF for both borrowers and participating banks.
    • Attractive Interest Rates
    • Interest rates on RLF loans are generally below prime and determined by project needs. By combining RLF and bank financing, the borrower can realize an effective rate well below market rates.
    • Bank Participation
    • Local Control
    The RLF was not established to compete with the banking community or to be a lender of last resort. Instead it was established to provide gap financing or "fill the gap" between what the bank can reasonably lend on a project and what the business can provide in equity. Also, by utilizing RLF dollars, banks may offer attractive financing packages that lower debt service. In short, the SEARP&DC RLF should compliment the lending activities of commercial banks. 

    The RLF program is a local economic development initiative. Loan decisions are made locally by the SEARP&DC RLF Loan Administration Board, which is representative of the regional community. This local emphasis means faster responses to loan requests and a minimum of "red tape" for you and your business. However, State and Federal Regulations do apply.
    RLF Guidelines
    • Business start-up or expansion must result in the creation of permanent jobs.
    • RLF can finance up to 1/3 of the total project cost.
    • Businesses must provide 10%-25% of the project cost in cash equity.
    • Below prime fixed interest rates are available.
    • Loans available from $10,000 to $125,000.
    • Loan terms available up to 20 years for fixed assets and up to 5 years for working capital.
    • Principals and business must be credit-worthy and generate sufficient cash flow to repay project debt service requirements.
    • Principals of the business must provide personal guarantees.
    • Hazard and key man insurance naming SEARP&DC as loss payee required.
    • Borrower is responsible for all legal costs associated with the loan.
    • Borrower must pay a onetime processing fee of 1.5% of the RLF loan amount at time of loan closing. An annual servicing fee of .5% of the declining loan balance will be charged thereafter.
    • Business must be located in Barbour, Coffee, Covington, Dale, Geneva, Henry or Houston County.
    The Southeast Alabama Regional Planning and Development Commission (SEARP&DC) and its member counties were designated as an Economic Development District by the U.S. Department of Commerce Economic Development Administration on April 11, 1970. The agency receives assistance annually for economic development planning and technical assistance.

    SEARP&DC
    462 N. Oates Street, 4th Floor
    Dothan, AL 36302
    (334) 794-4093
    www.sanman.net

  7. Additional Funds Programs 

    1. Economic Development Administration

      The Economic Development Administration provides direct loan guarantees to businesses in areas of high unemployment or low family income. For further information please contact:

      Economic Development Administration
      401 W. Peachtree Street, N.W., Suite 1820
      Atlanta, GA 30308-3510 
      (404) 730-3002 FAX: (404) 730-3025

      There is an individual at that office designated to assist businesses in Alabama.

    2. Alabama Linked Deposit Program

      The Alabama Linked Deposit Program is a public/private partnership designed to help stimulate economic growth and development in the state. The State Treasurer will us a small portion of the state investment portfolio to deposit with Alabama banks or savings and loan associations and "link" these deposits to individual loans made to eligible small businesses or farmers. The financial institution will pay up to a 2% lower rate on the state deposits and must charge a corresponding lower rate to the borrower.

      To apply for a "Linked Deposit" loan the following process should be followed:
      • The borrower should go to bank or savings and loan association and complete an application for a "Linked Deposit" loan.
      • The bank of savings and loan association will review the loan application and apply its own criteria for credit worthiness.
      • If the program requirements are met, the treasurer's office will notify the bank or savings and loan association.
      • The bank or savings and loan association will then make the loan to the borrower.
      To qualify for this type of small business loan any person, corporation or partnership engaged in business and that meets the following criteria may be eligible to receive a 'Linked Deposit' loan. The small business must be:
      • Headquartered in Alabama
      • Creating and sustaining job opportunities 
      • Having debts equal to or greater than 35% of assets
      • Organized for profit
      • Having no more than 150 employees
      • Maintaining facilities exclusively in Alabama
      There is no maximum amount for the loan but one job must be created or sustained for each $15,000 of loan. Loan requests above $250,000 must demonstrate that one job can be created for each $10,000 of loan. The " Linked Deposit " is only available for two years; however, the loan may be made for 5-10 years or longer. The lower rate would apply only to the first two years of the loan. Examples of uses of this type of loan include:
      • Wages, Inventory
      • Land, Building and Equipment
      • Legal, Accounting Fees
      • Repairs, Renovations
      • Rent, Utilities, Insurance, Taxes
C. FINANCIAL RATIO ANALYSIS 

Financial ratios are one of the principle tools used by the business community to help in financial analysis planning and control. The analysis of Key Financial Ratios enables a company to thoroughly assess the strengths and weaknesses of its financial position.

The sources of these financial ratios are the Balance Sheet, Income Statement and the Statement of Retained Earnings. The accuracy of the financial ratios obtained from these basic financial statements are dependent upon these statements being properly prepared and up-to-date. It is strongly suggested that an accountant or CPA familiar with small business financing be employed to prepare these statements and perform the ratio analysis. Once the ratio analysis has been completed, the information provided to the decision makers in a company can prove to be invaluable.

Ratios can be used for many things, including making comparison of the firm's present position to its position in prior periods. This ratio comparison allows a firm to know if it is growing stronger or showing signs of weakness. Another use of ratios is to allow management to make comparisons to the current budget. Ratio analysis also allows a company to compare itself to the industry as a whole. When the ratios for a company are compared to the national averages, it allows a company to know its position in comparison to its competitors. Knowing this, a company has a stranger base on which to plan for the future and it has a better idea of the areas that it must improve in order to remain strong and competitive.

There are three basic types of Financial Ratios and they include the following:
  1. Profitability Ratios
  2. Activity Ratios
  3. Liquidity Ratios
The following is an explanation of these ratios and some examples of specific ratios under each of the categories.

The Profitability Ratios help a firm judge how effectively it is being managed. These profitability Ratios include the following:

1) Gross Margin = Net Sales - Cost of Goods Sold
Net Sales
2) Operating Margin = Income Before Taxes and Interest
Net Sales
3) Net Profit Margin =          Net Income        
Net Sales
4) Return on Assets (ROA) =         Net Income       
Total Assets
5) Return on Investment (ROI) =         Net Income        
Shareholders Equity


The Activity Ratios measure how effectively the firm employs the resources it has at its command. These ratios all involve comparisons between the level of sales and the investment in various asset accounts. The Activity Ratios include the following:

1) Accounts receivable turnover =               Net Sales              
Average Accounts Receivable
2) Average collection period =                 360 Days               
Accounts Receivable Turnover
3) Inventory Turnover =   Cost of Goods Sold  
Average Inventory
4) Average Age of Inventory =          360 Days        
Inventory Turnover
5) Average Payment Period =    360 Days x Average Accounts Payable   
Annual Purchases of Goods and Services


The Liquidity Ratios enable a firm to know if it is going to be able to meet its maturing obligations. By relating the amount of cash and other current assets to the current obligations, these ratios determine the degree of liquidity of the company. The Liquidity Ratios include the following:

1) Current Ratios =         Current Assets       
Current Liabilities 
2) Quick Ratio =   Cash, Short-Term Marketable Securities and Net Receivables  
Current Liabilities
3) Cost of Sales to Inventory =   Cost of Sales  
Inventory
4) Sales to Receivables =         Net Sales        
Trade Receivables (Net)


There are several sources that can be used for comparing your results to the results of the industry as a whole. Some of these sources include the following:

1) Dun and Bradstreet The most widely known and used industry average ratios are those complied by Dun and Bradstreet. They provide fourteen ratios calculated for several different industries. These industries include Manufacturing and Construction, Wholesalers and Retailers.

2) Trade Associations and Public Accountants Financial ratios for many industries are compiled by trade associations and constitute an important source to be checked by a financial manager seeking comparative data.

3) Robert Morris Associates The industry average ratios provided by Robert Morris Associates are based on financial statements received by banks in connection with loans they have made. There are eleven ratios computed for a wide range of industries.

4) Quarterly Financial Reports for Manufacturing Corporations
The Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC) jointly publish quarterly data on manufacturing companies. This information includes an analysis by industry group and asset size, as well as financial statements in ratio form. These reports are a rich source of information and are frequently used for comparative purposes.

D. GLOSSARY

Accrued Expenses - Wages, interest, property taxes, etc., which are expenses due at the end of the period but not paid.

Amortization - The process of gradually paying off a liability over a period of time, i.e., a mortgage is amortized by periodically paying off part of the face amount of the mortgage.

Assets-Liquid - The valuable resources or properties and property rights owned by an individual or business enterprise. Some of the most common liquid assets of a business include cash, marketable securities, accounts receivable, and inventory.

Assets-Capital - Equipment that you use to manufacture a product, provide a service, or use to sell, store, or deliver merchandise. Such equipment will not be sold in the normal course of business, but will be used and worn out. Land and building should be included here.

Break-Even Analysis - A method used to determine the point at which the business will neither make a profit nor incur a loss. That point is expressed in either the total dollars of revenue exactly offset by total expenses (fixed or variable); or in total units of production, the cost of which exactly equals the income derived by their sale.

Business Plan - An objective written review of your business to identify areas of weakness and strength, pinpoint needs, and begin planning how you can best achieve your business goals.

Cash Flow - The actual movement of cash within a business: cash inflow minus cash outflow. A term used to designate the reported net income of a corporation plus amounts charged off for depreciation, depletion, amortization, and extraordinary charges to reserves, which are bookkeeping deductions and not actually paid out in cash. Used to offer a better indication of the ability of a firm to meet its own obligations and to pay dividends than the conventional net income figure.

Cash Management - A service designed to help you get the most out of your business' cash resources. Beginning with a plan of your cash needs, it can help you manage collection, disbursement, control and investment of you cash.

Cash Position - See liquidity.

Corporation - An artificial legal entity created by government grant and endowed with certain powers; a voluntary organization of persons, either actual individuals or legal entities legally bound together to form a business enterprise.

Current Assets - Cash or other items that will normally be turned into cash within one year, and assets that will be used up in operations of a firm within one year.

Current Liabilities - Amounts owed that will ordinarily be paid by a firm within one year. Such items include accounts payable, wages payable, taxes payable, the current portion of long-term debt, other short-term bank debt, and interest and dividends payable.

Current Ratio - A ratio of a firm's current assets to its current liabilities. The current ratio includes the value of inventories that have not yet been sold, so it is not the best evaluation of the current status of the firm. The "acid test" ratio, covering the most liquid of current assets, provides a better evaluation.

Debt Capital Financing - Money borrowed with the intention of paying it back plus interest. Banks provide only this type of financing.

Debt to Worth Ratio - A ratio of your business' total liabilities to its net worth. This tells the creditor how much debt your firm has in relation to your equity in the business. The highest this number gets, the more of other people's money, i.e. debt, is in your business.

Deferred Pre-Paid Expenses - Include insurance premiums, interest expense, promotional material, office supplies, etc., which are paid in advance and expensed over a period of time.

Depreciation - A reduction in the value of fixed assets. The most important causes of depreciation are wear and tear, the effect of the elements and gradual obsolescence that makes it unprofitable to continue using some assets until they have been exhausted. The purpose of the bookkeeping charge for depreciation is to write off the original cost of an asset (less expected salvage value) by equitably distributing charges against operations over its entire useful life.

Dividend - A disbursement, usually in the form of cash, of profits to the owners of your business. This is an after tax expense of the business.

Entrepreneur - An innovator of a business enterprise who recognizes opportunities to introduce a new product, a new productive process, or an improved organization, and who raises the necessary money, assembles the factors of production, and organizes an operation to exploit the opportunity.

Equity - The monetary value of a property or business that exceeds the clams and/or liens against it by others.

Equity Capital Financing - Money given to your business, without the intention of paying it back, in return for part ownership of your business. Banks do not provide this type of financing.

Guaranty - A written commitment by an individual or authorized legal entity to pay back a loan in the event the borrower is unable to do so. Guaranties can be unlimited (the full amount of the loan) or limited to a specific amount.

Hypothecate - Occasionally the provider of collateral for a loan is someone other than the borrower. In order to give the creditor the same rights to this collateral as the owner has, he hypothecates it.

Illiquid - See Liquidity

Leasing - A way to finance equipment, fixtures or buildings. It is a type of financing for the full amount of the equipment, etc., and eliminates the need for a business to put a large sum of cash into the purchase. There is no standard way to lease. You can lease with or without maintenance, by the month, year or several years, and with or without the option to purchase.

Leverage - The relationship of other people's money (debt) in relation to your own investment (equity) in your business. This is measured by the debt-to-worth ratio.

Liquidity - A term used to describe the solvency of a business, and which has special reference to the degree of readiness in which assets can be converted into cash to meet current liabilities, the firm is said to be illiquid.

Long-term Liabilities - These are liabilities (expenses), which will not mature within the next year.

Management - The overall responsibility for planning your business's goal and objectives and assuring that these plans are carried out.

Market - The number of people and their total spending (actual or potential) for your product line within the geographic limits of your distribution ability. The market share is the percentage of your sales of your competitors in total for a particular product line.

Net Worth - The owner's equity in a given business represented by the excess of the total assets over the total amounts owed to creditors (total liabilities) at a given moment of time. Also, the net worth of an individual as determined by deducting the amount of all of his personal liabilities from the total value of his personal assets.

Partnership - A legal relationship created by the voluntary association of two or more person to carry on as co-owners of a business for profit; a type of business organization in which two or more persons agree on the amount of their contributions (capital and effort) and on the distribution of profits, if any.

Pro Forma - A projection or estimate of what may result in the future from action in the present. A pro forma financial statement is one that shows how the actual operations of the business will turn out if certain assumptions are realized.

Profit - The excess of the selling price over all costs and expenses incurred in making the sale. Also, the reward to the entrepreneur for the risks assumed by him in the establishment, operation, and management of a given enterprise or undertaking.

Receivables - Short-term credit extended by your business to customers for goods or services purchased. When sales are on a cash basis only, obviously a business would not have receivables as an asset on its balance sheet. As a business asset, receivables usually rank second only to cash in liquid value. As such, banks may frequently request an Aging of Receivables, which is simply a list of accounts receivable according to the length of time they have been outstanding. This shows which accounts are being paid in a timely manner, and may reveal any difficulty in collecting long overdue receivables. It is an important indication of potential cash flow problems.

Sole Proprietorship or Proprietorship - A type of business organization in which one individual owns the business. Legally, the owner is the business and personal assets are typically exposed to liabilities of the business.

Sub-Chapter "S" Corporation or Tax Option Corporation - A corporation that has elected under Sub Chapter S (by unanimous consent of its shareholders) not to pay any corporate tax on its income and, instead, to have the shareholders pay taxes on it, even though it is not distributed. Shareholders of a tax option corporation are also entitled to deduct, on their individual returns, their shares of any net operating loss sustained by the corporation, subject to limitations in the tax code.

Subordination - Deals with the priority of payment of notes payable to creditors. It is common, for example, to see "Notes Payable Officers" in a corporation's liabilities. The bank may wish to strengthen its loan to this corporation by placing it in a preferred position of repayment to "Notes Payable Officers". To do so it will request the Officers to subordinate repayment of their notes to the Bank's.

Takeover - The acquisition of one company by another company.

Target Market - The specific individuals, distinguished by socioeconomic, demographic, and/or interest characteristics, who are the most likely potential customers for the goods and/or services of a business.

Trade Payable - Credit extended by a supplier to you for goods purchased. It is the most used form of short-term credit, especially among small businesses. Your suppliers give you terms, (30-90 days, etc.) and if you pay within this specified period, you get the use of their money at no interest cost. And if you pay early, you sometimes get a discount on the purchase price.

Working Capital, Net - the excess of current assets over current liabilities. These excess current assets are available for carrying on business operations.
 
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