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Create a 6 pages page paper that discusses strengthening the management of financing.
Create a 6 pages page paper that discusses strengthening the management of financing. Financing is of two types, equity financing and debt financing. When you are in need of money or looking for capital, the company’s debt-to-equity-ratio should be considered. It is the relations between the Dollars or Euros that an entrepreneur has borrowed and Dollars or Euros invested in the business. The more the investment by the owners the more they attract the financing.
When the equity to debt ratio of the firm is high then debt financing should be taken. If the proportion of the debt to equity ratio of the firm is high then it is advised that the owners should increase their equity investment, that way they cannot jeopardize the firm's survival.
Limited equity financing is used by most of the small or growth stage businesses. Whereas in debt financing, funds pour in from different quarters like from friends, relatives, etc. Venture capitalists are the most common source of equity funding. Venture capitalists may be institutional risk takers, financial institutions, wealthy persons, etc. and most of them specialize in industries.
Venture capitalists are risk takers and show an interest only in three to five-year-old companies that result in more than average profits. These venture capitalists are called investment gurus whose interest lies in those companies that have major regional and national concerns.
Commercial finance companies, financial institutions, banks, savings and loans, Lloyds Bank small business, etc. are some of the sources for debt financing. Because of their positive impact on the whole economy local and state government encourage the growth of the small companies. In debt financing, additional funds come from friends, family, relatives, and industry colleagues, etc when capital investment is smaller.
Generally, banks formed as a major source for loans for the establishment of small businesses. Banks don't offer long term loans to small firms instead they grant short term loans for machinery and equipment, they also offer demand loans to small firms that reduce the risk of leveraging the funds available.
Applying for a loan
The loan application should be well written so that the reader could get a clear picture of what your plans are. The presentation should be of the best quality in the initial loan proposal and application. Only industry-specific details should be included so that the reader can easily understand.
Business description:
a. Organization type.
b. Information date.
c. Location.
d. Product or service.
e. Firm's previous commitments (if any).
f. Future plans.
g. Competition.
h. Customers.
i. Suppliers.
Management experience
Resume of the owner and important employees should be included.
Personal Financial Statements
Care should be taken that the financial statements are not older than 90 days and financial statements of all principal owners and guarantors should be included. A copy of last year's income tax return should also be included.
