PART 1
You have a great idea for a wonderful product but as most fledgling companies funding is an issue. This is one of most involved and complicated aspect of starting a business. For the purpose of this assignment, we will limit our options to the choices listed below. In real life there are more choices, and some are very worthy. As example are small business loans issued by the government, such as the Small Business Administration. Another option are investors, and they can come from any walk of life. These are people who like your company’s idea and are willing to take a chance on your company’s success. Lastly, you may be very fortunate and have a rich relative who is willing to help finance your business, or you may have come upon an inheritance.
(Remember to do PART 2 of the assignment which is listed below)
For now, let’s consider the following financing methods. These are the same as those discussed in the financing lecture.
1) Asset based financing -a specialized method of providing companies with working capital and term loans that use accounts receivable, inventory, machinery, equipment, or real estate as collateral. It is essentially any loan to a company that is secured by one of the company’s assets.
2) Factoring a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.
Be sure to respond to each of the questions thoroughly and completely.
1) Please select one of the above listed financing methods you think is best for your company and explain why your company made that choice.
2) What factor or factors influenced your decision
