CARTOONS BY CHRIS BRITT

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or credit union, which handles the financial side of the IDA. Each month, you receive a report telling you how much money is in your IDA, including the money you put in, any matching amounts and interest. You can withdraw money as soon as you reach a specific saving goal but you must first get approval from the IDA program sponsor. The goal can be for something major, such as a home or a business, or something smaller, such as college tuition and textbooks. ADVANTAGES Range of services. In addition to a savings account, you can access other programs related to starting and managing a business, such as classes on managing cash flow and preparing tax returns. Match rates. IDA programs match each dollar you save with additional funds from donors. Many programs offer a 1:1 match rate, which means that for each $1 you deposit in your IDA, $1 in matching funds will be added to your savings. Depending on the program, though, match rates can be more or less. For example, the Mercy Corps NW IDA match savings program operates on an 8:1 match ratio. This means that every dollar you save in your IDA, they will match it with $8 in additional grant monies. Reasonable savings period. The savings period will vary from program to program, but most savings periods range from 1 to 3 years. This period indicates the length of time your savings will be matched. Uses of match dollars. Most IDAs allow you to use the savings to buy a home, pay for education or job training or start a small business. But programs vary, as do what they allow you to use the money for. Be sure that you know all of the uses that each program allows before enrolling. DISADVANTAGES Limits to the amount of match. Some programs will only match up to a certain dollar amount (for example, $500) on an annual basis or during the course of the program. In most cases, you can deposit as much as you like in your account, but savings over the limit will not receive matching dollars. Class attendance is mandatory. Most programs require you to attend a certain number of classes so that you can learn more about setting and managing household budgets, using credit responsibly, the basics of saving and investing, etc. Different rules and restrictions. IDAs are not all the same. You will need to spend some time researching the different programs so you can find the one that is the best match for you. Different hosts have different rules. For example, some faith-based IDAs may require regular church attendance as part of the match. 82
Not available everywhere. IDAs aren’t widespread. Some communities may not have an IDA program, so you may have to go outside of your community to be part of an IDA. The CFED provides a map to identify IDA programs at http://cfed.org/programs/idas/ directory_search/ Eligibility Guidelines. Eligibility is based on all or some of the following information: earnings, net worth, income and credit history. INDIVIDUAL DEVELOPMENT ACCOUNTS EXAMPLE Sunny Suppa had a dream. She wanted to start a business creating clothes for petite women like herself. But with less-than-stellar credit and no savings, she felt stuck in an economic dead end. Through an entrepreneurship program, she learned about Individual Development Accounts and quickly started one with CFED’s partner, Opportunity Fund in San Jose. For every $1 that Sunny saved, an extra $1 to $3 was put into her IDA from nonprofit and federal funds. Sunny earned $6,000 through her IDA savings, and became sole owner of 5ft2in - an apparel company that specialized in pants for women 5’2” and under. 83
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CARTOONS BY CHRIS BRITT
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STARTUP WISDOM 27 Strategies for Ra
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CONTENTS Bootstrapping. ...........
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- INTRODUCTION - As an entrepreneur
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- BOOTSTRAPPING - Bootstrapping is
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- CREDIT UNIONS - While banks may b
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- REWARD CROWDFUNDING - Crowdfundin
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Momentum. The more backing and inve
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- EQUITY CROWDFUNDING - Congress pa
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DISADVANTAGES Resource intensive. A
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- PEER-TO-PEER LENDING - There are
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DISADVANTAGES The money isn’t gua
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- COMMUNITY SOURCED CAPITAL - The c
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- PREPAID SALES - With prepaid sale
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- ANGEL INVESTORS - A century ago,
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DISADVANTAGES Investor expectations
Page 33 and 34: - VENTURE CAPITAL - Venture capital
Page 35 and 36: DISADVANTAGES Give up control. The
Page 37 and 38: - LOCAL INVESTMENT OPPORTUNITY - NE
Page 39 and 40: DISADVANTAGES Private transactions
Page 41 and 42: - FACTORING - If your company has r
Page 43 and 44: - HOME EQUITY - This type of loan a
Page 45 and 46: DISADVANTAGES Loss of assets. If yo
Page 47 and 48: - PARTNERSHIPS - Partnerships lever
Page 49 and 50: PARTNERSHIPS EXAMPLE Jacob and Sylv
Page 51 and 52: - SMALL BUSINESS ADMINISTRATION - L
Page 53 and 54: DISADVANTAGES Time consuming. On av
Page 55 and 56: - MICROLOANS - In the banking indus
Page 57 and 58: - RETIREMENT ACCOUNTS - If you’re
Page 59 and 60: - LIFE INSURANCE - Life Insurance c
Page 61 and 62: LIFE INSURANCE EXAMPLE Home economi
Page 63 and 64: - VENDOR FINANCING - If your compan
Page 65 and 66: - LEASING - Equipment can suck up c
Page 67 and 68: - GRANTS - A grant is money that is
Page 69 and 70: - BUSINESS PLAN COMPETITIONS - If y
Page 71 and 72: BUSINESS PLAN COMPETITION EXAMPLE E
Page 73 and 74: - “FARMER’S” MARKETS - These
Page 75 and 76: FARMER’S MARKET EXAMPLE CB’s Nu
Page 77 and 78: - LEMONADE STAND - Don’t laugh. S
Page 79 and 80: DISADVANTAGES Bad weather. One thin
Page 81 and 82: - MICROENTERPRISE DEVELOPMENT - Des
Page 83: - INDIVIDUAL DEVELOPMENT ACCOUNTS -
Page 87 and 88: - SHARK TANK - Okay, so we made fun
Page 89 and 90: DISADVANTAGES Be prepared. The shar
Page 91 and 92: - THE LOTTERY - Sure you could play
Page 93 and 94: AUTHORS AND ARTIST Maury Forman is
Page 96: Startup Wisdom Reviews . . . If you
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CARTOONS BY CHRIS BRITT

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