Question

In: Economics

PLEASE PRETEND THIS QUESTION IS ABOUT YOU.. WHAT WOULD YOU DO TO GET MORE FUNDING, WHAT...

PLEASE PRETEND THIS QUESTION IS ABOUT YOU.. WHAT WOULD YOU DO TO GET MORE FUNDING, WHAT IS BEST FOR YOU, AND WHY YOU CHOSE THAT.

Pretend you are going to be an entrepreneur and you want to start your own business.  You have a great idea, you are ready and willing to work. You just need--money. You will need $500,000 to start your business.  But you do not have that much money. You only have $50,000 available from your life savings. What avenue or avenues would you pursue to gain the money you need to get your business started? Explain what would work best for you, and why you would pursue that option. You can tell what kind of business you would start, if you want to include that

Solutions

Expert Solution

Ans- Suppose i have to open a gym at my place for which i need $500,000. But unfortunately i have only $50,000 which are my lifetime savings. For the purpose i need to collect more money from different sources. There are many sources from where a businessman can raise funds easily but to choose the best alternative option is always difficult. All the prons and cons should be identified by a businessman before choosing an alternative.

For opening gym it is obvious that i need money for the machines,music system,proper maintenance and much more stuff.

The first option that i i will choose probably be the loan from banks. The banks provide two types of loan to a businessman- working capital loan which is meant for day to day maintenance of business and based on regular activities and second is fund. Banks allote funds to a businessman when businessman shows the complete project then banks sanctions a good loan amount.

Similarly i will show my complete project to the bank and i will take loan from bank. Bank will sanction a good amount as a loan to me from which my 70% problem would be resolved. Offcourse i i cannot take the whole amount from the bank because in future i have to repay the amount of loan sanctioned along with the current interest rate.

The remaining amount can be raised through the STARTUP CAPITAL which was announced by the indian government in 2014-15 with a main aim to increase the large scale enterprises. In this MUDRA bank works as the main bank which has very cheap interst rates. Some amount will be raised from MUDRA bank.

At last if any amount is still left the best avenue will be the relatives. I will borrow money from relatives. This gives me an advantage that there will be no obligation for me that i have to return money on a specific date. Also there is no or very less interest rates.


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