Banker's Guide to New Small Business Finance E-Book

Charles H. Green

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Finance Editions
• Sprache: Englisch

Seitenzahl: 384

Veröffentlichungsjahr: 2014

Beschreibung

Detailed, actionable guidance for expanding your revenue in the face of a new virtual market Written by industry authority Charles H. Green, Banker's Guide to New Small Business Finance explains how a financial bust from one perfect storm--the real estate bubble and the liquidity collapse in capital markets--is leading to a boom in the market for innovative lenders that advance funds to small business owners for growth. In the book, Green skillfully reveals how the early lending pioneers capitalized on this emerging market, along with advancements in technology, to reshape small company funding. Through a discussion of the developing field of crowdfunding and the cottage industry that is quickly rising around the ability to sell business equity via the Internet, Banker's Guide to New Small Business Finance covers how small businesses are funded; capital market disruptions; the paradigm shift created by Google, Amazon, and Facebook; private equity in search of ROI; lenders, funders, and places to find money; digital lenders; non-traditional funding; digital capital brokers; and much more. * Covers distinctive ideas that are challenging bank domination of the small lending marketplace * Provides insight into how each lender works, as well as their application grid, pricing model, and management outlook * Offers suggestions on how to engage or compete with each entity, as well as contact information to call them directly * Includes a companion website with online tools and supplemental materials to enhance key concepts discussed in the book If you're a small business financing professional, Banker's Guide to New Small Business Finance gives you authoritative advice on everything you need to adapt and thrive in this rapidly growing business environment.

Leseprobe

Contents

Figures and Tables

Preface

Acknowledgments

About the Author

Part One: Survey of Funding Small Business

Chapter 1: How Small Businesses Are Funded

Defining Small Business

ABCs of Small Business Funding

Usual Suspects Providing Business Capital

The Rise of Alternative Financing

Chapter 2: Elusive Nature of Bank Funding

Risk Appetite Is an Oxymoron

Source of Bank Funding Limits Its Use

Small Business Credit Is Difficult to Scale

Loan and Bank Size Are Inversely Related

Chapter 3: Capital Market Disruptions, Post-2008

Didn’t Anyone See Bubble Coming?

This Time Was Different

Where Did Main Street Funding Go?

SBA—Main Street’s Federal Bailout?

Supply versus Demand—Did Anyone Ask for a Loan (and What Was the Answer)?

Post-Crisis Reflections on Financial Regulation

Part Two: A Perfect Storm Rising

Chapter 4: A Paradigm Shift Created by Amazon, Google, and Facebook

Amazon Creates Digital Trust

Who Answered All Those Questions Before?

Your Opinion Is (In)valuable

How Do These Changes Affect Small Business Lending?

Chapter 5: Private Equity In Search of ROI

The Fed’s Low Interest Policy and the Effects on the Private Investor

Wall Street Isn’t Main Street

First Buy In, Then Invest Up

A Cautionary Note about a 72 Percent APR

Chapter 6: First Change the Marketplace, Then Change the Market

Old Thinking/Technology Can Stifle Credit

Morality and Money

The Unintended Consequences of Old Law

Capital Markets Go Digital

Pattern Recognition—Data Is the Game Changer

Different Processes and Different Views

Crowdfunding versus the Crowd That Got Funding

The Rise in Alternative Paths to Source Funding

Billions Went Missing and No One Noticed?

Part Three: Digital Dynamics in Small Business Funding

Chapter 7: Funders and Lenders—Online Capital Providers

Innovative Funding Marketplace

Online Funders: Purchasing Future Receipts

Online Lenders: Money from the Cloud

Chapter 8: Crowdfunding with Donors, Innovators, Loaners, and Shareholders

Donors—Funding Arts, Solving Problems, and Floating Local Businesses with No Strings Attached

Innovators—Buy It, I’ll Build It

Loaners—Brother Can You Refinance My Visa?

Shareholders—Online Market for Equity

Crowded Elevator?

Chapter 9: Other Innovative Funding Sources on the Rise

Factoring in the Digital Age

Working Capital Management as a Financing Strategy

Investing Retirement Funds in Self, Inc.

No Store, No Hours, No Bank, No Problem—Virtual Lenders for Virtual Merchants

Taking as Much Time as Needed to Repay

Chapter 10: Capital Guides—Online Resources to Find, Coach, and Assist Borrowers and Lenders

Loan Brokers

Other Online Resources

Chapter 11: What Innovation Means for Bank Lending

Competition Erodes Banks’ Share of Small Business Loans (Again)

What Banks Can Fund (but Won’t) versus What Banks Cannot Fund (but Will)

The Best Defense Is Still a Good Offense

Banks Still Have the Most Customers and Cheapest Bucks in Town

What’s Next? Character Redux, Rise of Alternative Payments, and?

About the Companion Website

Index

End User License Agreement

List of Illustrations

FIGURE 1.1 Quality of Financial Information versus Loan Size

FIGURE 1.2 Common Loan Application Requirements

FIGURE 1.3 Sources of Small Business Financing

FIGURE 1.4 Small Business Financing Applications versus Approvals

FIGURE 2.1 Bank Funding/Loan Approval Cycle

FIGURE 8.1 Reasons Borrowers Seek Peer-to-Peer Loans (as of November, 2013)

FIGURE 8.2 Loan Migration over Nine Months (as of August, September, and October, 2012)

List of Tables

TABLE 1.1 Small Business Size Standards

TABLE 3.1 The Costs of 90 Days of Financial Chaos

TABLE 7.1 Typical Merchant Cash Advance Scenario

TABLE 8.1 Average Borrower at Lending Club (as of November, 2013)

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Guide

Cover

Table of Contents

Begin Reading

The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more. For a list of available titles, visit our Web site at www.WileyFinance.com.

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding.

Banker’s Guide to New Small Business Finance

Venture Deals, Crowdfunding, Private Equity, and Technology

CHARLES H. GREEN

Cover image: © iStock.com/hidesy

Cover design: Wiley

Copyright © 2014 by Charles H. Green. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

ISBN 978-1-118-83787-0 (Hardcover)

ISBN 978-1-118-94086-0 (ePDF)

ISBN 978-1-118-94085-3 (ePub)

This book is dedicated to the tireless women and men who perform the detailed tasks required to deliver financing to small businesses. To all those lenders and brokers who engage in countless conversations, answer thousands of questions, and drive hundreds of miles, and whose work takes them to diverse places like dry cleaners, convenience stores, doughnut shops, mills, loading docks, funeral homes, dentist offices, manufacturing plants, highway motels, and every other door on Main Street.

An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.

—Dr. Clayton Christensen

Figures and Tables

Figures

1.1

Quality of Financial Information versus Loan Size

1.2

Common Loan Application Requirements

1.3

Sources of Small Business Financing

1.4

Small Business Financing Applications versus Approvals

2.1

Bank Funding/Loan Approval Cycle

8.1

Reasons Borrowers Seek Peer-to-Peer Loans (as of November, 2013)

8.2

Loan Migration over Nine Months (as of August, September, and October, 2012)

Tables

1.1

Small Business Size Standards

3.1

The Cost of 90 Days of Financial Chaos

7.1

Typical Merchant Cash Advance Scenario

8.1

Average Borrower at Lending Club (as of November, 2013)

Preface

My introduction to the real world of banking, beyond lofty finance courses taken in college, was found on my first bank office desk in a stack of pages filled with columns of blank grids, matched with an adjacent column of accounting terms on the left side of the pages. These papers were spreadsheets, designed to be populated with numbers found in the hundreds of business financial statements collected by the bank from clients as obligated through their loan agreement covenants.

Behind these sheets were musty stacks of file folders of varying age, size, and degree of disorganization, which contained evidence used by the bank previously to decide whether to make each loan. Many of them actually had multiple financial statements inside while many were missing any such information.