Business finance questions
Business finance is composed of unending questions. Glossaries have been written, opinion espoused, theories set and discredited and terms defined and redefined. All these matters and more are found in the world of finance and financing.
Most of the greatest theorists including David Ricardo, Adam Smith, Kenneth J Arrow, Maynard Keynes and more have over the years attempted to write and formulate reasons behind what many of us only know in terms of how the economy works. Well, true, our brief here may not be to beat them at their game. We shall only attempt to ask and answer some of the very basic finance questions that trouble the average mind that is you and me.
What is business finance?
Business finance refers to all the funds that have been extended by banks and other lenders for commercial use through debt financing or equity financing. The choice and benefits of a particular source will depend on the investors’ condition and needs.
What are the sources of business finance?
This refers to the institutions, systems or individuals that extend the loan or other financing facility to the borrower. They include commercial banks, angel investors, venture capitalists, corporate venture capitalists, mezzanine lenders, Initial Pubic Offers (IPO’s), government grants and other a myriad of alternatives including account receivable financing.
What are the alternatives to the conventional financing methods?
Alternative methods involve these that are not used on an everyday basis by investors. They include factoring by factoring companies, supplier guarantees, purchase order financing and advance pay programs.
How will I fund my business without security/collateral?
Although collateral is the darling of most commercial lenders; it is possible to fund a business without security especially if your credit rating is respectable in the market. Shopping around for such flexible lenders will definitely yield good results.
How does business finance work?
The working of business finance cannot be tied to one phenomenon. However, the sources of financing will greatly determine the level and intensity of how the finance will work. A lot will also depend on the decisions made by the management of the business.
What constitutes small business?
The meaning of a small business varies from jurisdiction to jurisdiction. In the United States, any business whose number of employees is 100 or less qualifies for this tag while in Europe; the number is limited to 50. The size of the business may affect the finance to be received and the legal duties involved.
What is a business loan proposal?
This is a concise tabulation of all the factors that make up a business. These will invariably include its strengths, weaknesses, its asset base, the profile of its management team and any future projections. All factors to be contained in such a proposal must be reasonable and convincing in the eyes of the lender.
Who is a business finance broker?
A business finance broker can be described as a link between the bank and an investor. Brokers do not usually avail the money. In fact, they act as negotiators and some legal experts have described them as mere agents without possession or title. However, they have been known to extend money in certain situations.
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