The Good Money Guide
What is the Good Money Guide?
A comprehensive guide to help ANYONE (hopeful entrepreneurs, home cooks selling out of their kitchens, serial business owners, etc.) find funding sources that are more interested in the success of your business than in turning a quick profit - ones that are interested in seeing everyone in the community enjoy a positive triple-bottom line (people, profit, and planet).
What is included in this Guide?
The guide features a list of local community funders, helps to distinguish among different kinds of funding, offers expert tips, and features some local small businesses. The community funders on this list meet one or more of the following criteria:
- Locally-based and committed to local reinvestment
- Adheres to a social or environmental mission
- Enables regular people to invest in their community
- Avoids investing in harmful or extractive products & activities
- Avoids unfair or misleading practices and pricing
Is this Guide for me?
YES! if you’re trying to figure out your first step, learn about the different sources of capital or explore different resources available for your business, this is a guide for YOU.
Confused by any of the terms used to talk about start-ups or small businesses? You’re not alone. We’ve pulled together a glossary of these terms to empower you with the knowledge to understand what these terms mean.
- Accelerator: Organizations that provide excellent conditions for a company, who already has a verified business plan, to grow. In exchange for a certain amount of ownership of assets, an accelerator provides: education programs, mentorship and seed investment to compress years worth of work into a fixed, short period of time — usually a matter of a few months — and quicken a company’s life cycle.
- Angel Investor (also known as a private investor, seed investor or angel funder): A high net worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for a portion of ownership of assets in the company.
- Application Fee: A fee that some lenders charge to apply for or accept an application.
- Business Asset: Any item of value owned by a company. For example, they can be physical items, such as vehicles, real estate, computers, office furniture, etc.; or they can be intangible, such as intellectual property.
- Business Life Cycle: The progression of a business in phases over time and is most commonly divided into these stages: Launch, Growth, Shake-out, and Maturity.
- Business Model: A company's plan for making a profit. It identifies the products or services the business will sell, the target market, and the expenses it anticipates.
- Capital: A term that can refer to the money exchanged between entrepreneurs and investors during a business deal. Financial capital usually comes with interest, and new business owners can use their financial capital in purchasing real capital (like machinery or equipment) for their new business.
- Cash Flow: The total amount of money being transferred into and out of a business.
- Collateral: Additional reassurance or security that a loan will be repaid in case a loan agreement is broken. Examples include: real estate, vehicles, stock, etc.
- Community Development Financial Institutions (CDFIs): Nonprofit financial institutions that are 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream.
- Crowdfunding: A way to raise funds online by convincing a large number of people to each give money for a specific project or cause.
- Debt Instruments: Financial tools, such as credit cards, credit lines, loans, and bonds, that are used to obtain capital. When an organization uses these tools it comes with the promise to repay the capital over time.
- Default: Failure to pay the interest or principal on a debt when it is due.
- Early Stage Company: This stage in a business life cycle is characterized by market development. The business is focused on sales, marketing, and proving business viability.
- Incubator: Collaborative programs that provide start-ups and small businesses with the support needed to grow at their own pace. They are less concerned with how quickly a business will grow or how large it can scale and more focused on supporting businesses by providing working space, collaboration and mentorship.
- Information Rights: Rights that specify claims and duties concerning the communication, collection, access, use, and control of information.
- Interest: Money that is paid in exchange for borrowing or using another person's or organization's money. Interest is calculated as a percentage of the money borrowed.
- Growth: This stage in a business life cycle is characterized by products, sales, revenue and profits being on the rise. In the growth stage; the company's emphasis is not only on repaying the costs incurred in the launch phase but also on generating profits.
- Launch: A process during which the founders attempt to search and validate a business model first before they can execute on it.
- Later Stage Company: This stage in a business life cycle is characterized by viable products, a developed market, significant customers, sustained revenue growth, and both profits and positive cash flow from operations.
- Loan Closing Fee: A percentage of a loan or flat amount of money that lenders charge to close a loan.
- Personal Guarantee: A legal promise that helps loan borrowers overcome the challenge of a loan application that struggles with identifying adequate collateral. Providing a personal guarantee means that the individual is personally responsible if the business becomes unable to repay debt.
- Pitch: A presentation in which a startup founder attempts to persuade an investor of the viability of their company.
- Pivot: When an entrepreneur needs to re-evaluate their first (or second, or third) business model and shift to a different business plan, changing the direction of the company to meet market needs.
- Principal: The total amount of money being borrowed or lent.
- Scalability: The ability of a startup or small business to leverage its existing resources to grow and operate at a larger scale without being restricted by funding/investment, workforce, and administration.
- Seed Investment: A very early investment, meant to support the business until it can generate cash of its own or until it is ready for further investments.
- Shakeout: This stage in a business life cycle is characterized by businesses being eliminated or acquired through competition.
- Shareholder Equity: Represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company's debt was paid off.
- UCC Lien: A way for a lender to establish priority of assets in repayment in case of debtor defaults on a loan or goes into bankruptcy.