WAYS TO FINANCE NEW BUSINESS VENTURES Week 5 Assignment – Ways to Finance New Business Ventures Jerrod Williams American Military University Entrepreneurship – BUSN 621 June 2, 2016 1
WAYS TO FINANCE NEW BUSINESS VENTURES Week 5 Assignment – Methods to Fund New Business Ventures The following paper discusses thoughts on methods to finance new business ventures or business startups while providing analysis for the positives and negatives for each method of financing or funding a new business venture. A few of the methods discussed to fund a new business venture are various types of loans, various types of credit lines, and equity. The paper will also discuss the ideal business finance model for a new business startup. Loans There are many types of loans available and for many types of applications. There are traditional bank loans available that vary from signature or personal loans to collateral backed loans for business related funding to business banking loans requiring no collateral[Kap13]. There are loans available through the Small Business Administration (SBA) programs that are used only for business related purposes and depending on the type of funding application and amount of the loan, the loan is guaranteed by the SBA but originated and serviced by a bank[Mar13]. The type of loan program will have its own required qualifications for underwriting. Personal loans through a traditional banking institution usually requires no collateral for approval but requires the borrow to meet strict creditworthiness guidelines, meaning the borrower will need to have a very good credit track record to qualify for a personal loan[Pri16]. The risk involved with obtaining personal loans for a new business startup is that if the startup does not generate enough revenue to cover the loan debt service, the borrower will be the only person or entity responsible for paying on the loan, and the borrower’s personal credit history could be severely damaged all because of a business entity failure[Pri16].
You've reached the end of your free preview.
Want to read all 7 pages?