THE NEED FOR FINANCE

Businesses need money for one or more of the following reasons:-

  • To put the basic infrastructure in place.
  • To get the trading activities of the business moving.   
  • To acquire capital equipment.  
  • To purchase inputs.  
  • To carry out marketing activities.   
  • To pay staff.


SOURCES OF FINANCE

There are several sources of financing that are available to entrepreneurs. These include:-

  • Personal: Savings, Assets which can be used as leverage in securing other funds. 
  • Friends and relatives: This is often called love money.   
  • Banks: Commercial and Development  
  • Credit Unions   
  • Partners  
  • Silent Partners: Own a percentage of the business but does not play an active role in the day-today operations. You are able to maintain control over your business
        Active Partners: Play a role in the business. 
  • Investors   
  • Suppliers   
  • Potential Customers   
  • Government Special Programmes



SOME THINGS TO NOTE WHEN DECIDING ON A SOURCE OF FINANCE

i. Loans from banks and Credit Unions must be paid back with interest over a predetermined time. You must not only have collateral but you must be able to repay the loan as well.
ii. Having a partner

  • Adds needed resources and skills to your business.   
  • Gives you someone with whom you share failures and successes.  
  • Prevents you from having full control of your business.


iii. Term Loans: taken for a specified period of time.
iv. Trade Credit: a supplier sells you products on credit.
v. Line of Credit: operates similarly to a credit card but has a lower rate of interest.



LENDING CRITERIA - THE FOUR C’S

  • Character: The financial institution assesses you and the business’s past financial history and credit rating.   
  • Capacity: The lending agency determines if the business is capable of making projected profits and marketing its products; Has a healthy cash flow and realistic projections.   
  • Conditions: General economic conditions.   
  • Collateral: Security against the amount of money that is borrowed. It can take the form of the business or owner’s assets.

Budget Address 2017

Carcip Project

Argyle International Airport