Kitchen Capitalism: Microenterprise in Low-Income Households

Appendix A. Glossary

203 Appendix A Glossary Assets are the stock of wealth of a person, association, corporation, or estate applicable or subject to the payment of debts (SBA, 2002). Business assets are the assets owned by the business. Business liabilities are how much the business owes. A business plan is a comprehensive planning document that describes the business objective of an existing or proposed business, including what, how, and from where resources will be obtained and utilized (SBA, 2002). Business revenues are the gross earnings or sales from the business. Capital is (1) assets less liabilities, representing ownership interest in a business; (2) a stock of accumulated goods, especially at a specified time and in contrast to income received during a specified time period; (3) accumulated goods devoted to the production of goods; and (4) accumulated possessions calculated to bring income (SBA, 2002). Collateral is property offered to secure a loan or other credit and that is subject to seizure on default (Federal Reserve of Chicago, 2003). Credit is the promise to pay in the future in order to buy or borrow in the present and the right to defer payment of debt (Federal Reserve of Chicago, 2003). Credit history is a record of how a person has borrowed and paid debts. Earned income is money taken from the business, or wages and salary earned from a job working for someone else. An entrepreneur is “a person who assumes the financial risk of the initiation, operation and management of a given business or undertaking” (SBA, 2002). Financing is “new funds provided to a business, by either loans or purchase of debt securities or capital stock” (SBA, 2002). A grant is money given to a business that does not require repayment (SBA, 2002). Household assets are assets owned by a family or household unit. Household liabilities are how much a family or household unit owes. Household net worth is the household assets minus the household liabilities. An incubator is a “facility designed to encourage entrepreneurship and minimize obstacles to new business formation and growth . . . by housing a number of fledgling enterprises that share an array of services” (SBA, 2002). They typically share secretarial, telephone, copying, and other office-related services and are charged on an as-used basis. Some provide technical assistance, training, and financing (CFED, 1997). An innovation is an “introduction of a new idea into the marketplace in the form of a new product or service, or an improvement in organization or process” (SBA, 2002). An intermediary organization plays “a fundamental role in encouraging, promoting, and facilitating business-to-business linkages and mentor-protégé partnerships . These can include both nonprofit and for-profit organizations: chambers of commerce; trade associations; local, civic, and community groups; state and local governments; academic institutions; and private corporations” (SBA, 2002). A lending institution is “any institution, including a commercial bank, savings and loan association, commercial finance company, or other lender” that makes loans (SBA, 2002). Liability is debt owed, including bank loans or accounts payable (SBA, 2002). Line of credit is “a short-term loan, usually less than one year” (SBA, 2002). Market research targets a specific community or neighborhood and seeks to improve the chance of survival for start-up businesses by identifying what types of businesses offer the highest chance for success (CFED, 1997). A microenterprise is a sole proprietorship that has fewer than five employees (usually a sole proprietor and no employees), has not had access to loans, and typically uses an initial loan of less than $15,000, usually much less. Most microenterprises are operated by the owner alone and have annual sales of $250,000 or less (Langer, et al., 1999; Walker & Blair, 2002). A microenterprise development program (MDP) is a program operated by a non-profit or public entity that provides any combination of loans, technical assistance, training, and other business or personal assistance services to microentrepreneurs. A microloan is a very small loan made to a microenterprise. Loan amounts vary considerably by program, from a few hundred dollars up to $35,000 in the SBA program. Net worth or owner equity is assets minus debts and obligations (liabilities). 204 Appendix A Peer group lending circles are small groups of borrowers who are organized in microenterprise programs that make decisions about who should be granted a loan and how much and monitor the repayment of loans. Profit is net income from a business (gross income minus expenses). A...