Capital funding for a small business is a very difficult process. Here’s what I want you to know about the above terms: they all represent the amount of personal money the owner has put into, and taken out of, the business. With factoring, you sell your company’s accounts receivables to a company (known as a factor) at a discount, in order to free up your cash.
Asset Based Funding is perfect if your company has collateral such as accounts receivable, inventory, equipment, purchase orders, or real estate. There are grants being offered funding for new businesses, but they are only limited. The different types of frauds covered under these laws are check fraud, credit card frauds, property theft, misappropriation of funds, identity theft, etc.
The lender needs to evaluate Income Tax returns (Corporate and Personal), financial statements (income statement and balance sheet) and a cash flow projection. Depending on the sort of business you are requesting funding for, you may also need to include descriptions of Facilities, Equipment, and Personnel that you need for your proposed project.
Due to the lower risk to the bank, many major banks are more apt to lend money using SBA backed loans than regular loans. They essentially invest their money in companies in hope of seeing their investment bring returns when the company does well and earns large profits.
Thus, if you are calculating this ratio of a businessman, or a sole trading concern, you will need to simply divide the amount of debt with the capital. Whatever you are applying for a business grant for you need to keep in mind the strict terms and conditions that surround business grants.