Doncouse_Jeremy_Week8 - which represents the major...

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Jeremy Doncouse MGMT303 June 9, 2009 List the sources of capital through which you intend to fund your business and estimate the amounts from each. What are your reasons for choosing them? The sources of capital through which I intend to fund my business are 1) personal funding, 2) debt financing, and 3) friends and family. From personal funding I estimated from last week’s operating budget and balance sheet (which I expanded into a cash flow and income statement) that an initial investment of $10k would be needed to fund the first year’s operations. From that $10k I could immediately supply $2,500 from savings and would need to borrow the remaining $7,500 using debt financing in the form of a collateral loan on either one of my vehicles which I own free and clear. I may also consider using some of the $8k available on my remaining line of credit on my credit card which can be advanced at 0% for one year but with a 3% fee. From family I have already received a piano
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Unformatted text preview: which represents the major equipment needed for my venture. The reason I would chose such sources of capital is because the more of my own funds I use from savings, the less those funds will cost me. Right now interest rates are low on vehicle loans. Advancing money from my credit card only costs me 3% for the first year. All such sources of funding are less expensive than a commercial loan or SBA loan. Additionally, I wouldn’t have to give up control of my business. Moreover, the collateral I have chosen separates the sources of funding from my business, so if the business fails I would still be able to make payments and eventually payoff the loans. I wouldn’t seek any actual money from friends and family because I don’t think the risks are worth the benefits in this instance, but my parents already provided me with the most expensive equipment necessary for this venture....
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