Unlike 40 years ago, today’s entrepreneur has varying options to explore when obtaining financing for ventures....

Unlike 40 years ago, today’s entrepreneur has varying options to explore when obtaining financing for ventures. For instance, they could use traditional sources that have existed for centuries, such as their savings, lending institutions, or investors with whom they have an established relation. They could also turn to more modern sources, such as online financial resources. In a world where business is often conducted online, entrepreneurs can obtain investments from individuals they do not know through a variety of sources.

Describe at least three of the sources of capital available to entrepreneurs and discuss their risk factors. Be sure to include at least two non-traditional sources, such as Kickstarter. in 300 words.

Expert Solution

The source of finance and there risk-

1- Selling Asset- Selling of the personal asset or property by the person to start new business or to expand the exsisting one. The person sell the property to arrange money for there business, It is a non traditional source through which finance can be arrange for a business. rational approch should be taken by the person before selling the asset. The person sell the property because it is the safe way to arrange the fund for there business. The risk involved in selling asset and arranging fund are-

- Getting the unfair price of the asset, The person will sell the asset in whatever price he is getting.

- The study should be done beforehand by the entrepreneur that money that he is getting by selling the asset is enough or not.

- Not know home much money you will get for the same asset in coming future because the property price are not stable and they get increased with increase in time.

2- Mortgage their home- The person arrange fund to start new business or to expand the exsisting business by pgiving home at mortgage and in return they will get the amount. This is the risky way of arranging finance for the business but the benefit is interest on the mortgage is tax deductible and is usually lower than what he or she would pay with a credit card or an unsecured loan. The risk involved in motgage are-

- Home loans will in general be unsafe when they're coordinated with an inappropriate kind of borrower.

- Adjustable rate contract loan costs may rise, which means you'll pay more in intrigue when they reset.

- In addition to the fact that interest are just home loan rates higher than others, yet you'll additionally need to pay the chief somewhere near a specific date.

3- Arranging Finance from bank- Various banks are ready to give loan to entrepreneurs to start their business or to expand their business. This is the safe way of arranging finance and various bank have different interest rate on which they give loans, The risk involved are-

- Higher rate of interest

-High amount of panalty if you unable to pay the interest or principal amount.

- Proper documentation is required to take loan

keosha answered 4 months ago

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