SOURCES OF FUNDING
This type of funding comes from within the business and does not require repayment.
What is internal funding?
This is typically the first source of funding used by startups due to high risk and lack of records.
What are personal savings or informal funding?
This principle states that funding should match the stage of the business and the life of the asset.
What is the matching principle?
This common barrier involves not having sufficient assets to secure a loan.
What is lack of collateral?
This natural hazard poses the greatest business risk in The Bahamas.
What are hurricanes?
This funding source allows the owner to keep full ownership but creates a repayment obligation regardless of performance.
What is debt financing?
This stage of the funding ladder usually includes microloans and small bank facilities.
What is the early external funding stage?
Using a short-term overdraft to finance payroll is an example of this type of match.
What is a correct funding match?
This internal weakness makes lenders hesitant because it reduces transparency.
What is poor record-keeping?
Lenders may require this before approving a loan in high-risk areas.
What is insurance coverage?
This funding source involves giving up ownership in exchange for capital.
What is equity financing?
This funding mistake involves trying to access large loans or investors before proving the business model.
What is skipping rungs on the funding ladder?
Using a credit card to purchase a delivery truck violates this part of the matching principle.
What is matching funding to the life of the asset?
This is a barrier businesses can directly improve without external assistance.
What is financial documentation and planning?
This preparedness measure reduces downtime after storms and improves bankability.
What is a backup generator?
These funds usually do not require repayment but come with restrictions and reporting requirements.
What are grants?
At this stage of the ladder, businesses typically have stable cash flow and documented records.
What is the growth stage?
This financial problem is commonly caused by mismatched funding, not lack of profit.
What is cash flow stress?
This Bahamas-specific factor increases lender risk perception.
What is exposure to hurricanes and flooding?
Climate risk affects funding by influencing this aspect of loans.
What are interest rates and loan conditions?
This type of funding blends features of both debt and equity and may convert into ownership later.
What is convertible debt?
This is the main reason lenders prefer owners to invest their own money first.
What is risk-sharing and commitment?
This type of mismatch may not cause immediate failure but weakens the business over time.
What is long-term financial fragility?
This cost often rises due to climate risk and affects loan approval.
What is insurance premiums?
In The Bahamas, climate risk is best described as this type of risk for lenders.
What is financial or credit risk?