Академический Документы
Профессиональный Документы
Культура Документы
BES 218
Week 12
25 Key Points of Financing of Interest
November 21st, 2016
2) Lending officers look for additional criteria beyond the Five Cs evaluating your loan
proposal:
Experienced management Are you experienced in the business and industry?
Commitment - Are you willing to make a substantial investment of time and money?
Adequate cash flow - With the loan, will the business generate enough dollars to pay off the loan
and then some?
3) The entrepreneur should obtain a copy of her or his credit report before the lender does.
Personal credit reports may contain errors or be out of date; many times people find that
they have paid a debt but that it has not been recorded on the report.
4) The entrepreneur will need funds for short-term assets, long-term assets, initial start-up
costs and working capital for the business until the business generates enough income to
support the expenses.
5) Short-term assets can be converted to cash easily within a short period of time. They
include cash, accounts receivable, inventory, and prepaid expenses.
6) Long-term assets usually cannot be converted easily into cash within one year. The most
common long-term assets are buildings and equipment, land, leasehold improvements,
and patents.
7) A realistic startup budget should only include those things that are necessary to start that
business. These essential expenses can then be divided into two separate categories: fixed
expenses (or overhead) and variable expenses (those related to producing sales for the
business). Fixed expenses will include things like the monthly rent, utilities, administrative
costs, and insurance costs. Variable expenses include inventory, shipping and packaging
costs, sales commissions, and other costs associated with the direct sale of a product or
service.
8) Unfortunately, banks usually end up far down on the list of most likely sources of start-up
funding. Instead, most small businesses are financed through private funding and other
sources. Some of these sources include:
Personal savings
Credit cards
16) Commercial banks generally provide financing at comparatively low rates but in return
expect a strict repayment schedule and detailed recordkeeping.
Line of credit an agreement that makes a specific amount of shortterm funding available to a business as it is needed.
Floor planning a type of business loan generally made for highpriced inventory items.
Balloon note small payments to cover the interest over the life of
the loan, but the large lump-sum borrowed due at maturity.
17)
Accounting is the system within a business to prepare and interpret reports based on the
data in the records.
25) A ratio is simply a comparison or relationship of two numbers. Financial ratios are
calculations which compare important financial aspects of a business. There are four
important types of financial ratios which are liquidity, activity, leverage, and profitability
ratios.
Material quoted from: https://ct-cc.blackboard.com/bbcswebdav/pid-11840795-dt-content-rid32197467_1/xid-32197467_1