Question

NO HANDWRITTEN ANSWERS PLEASE

A-What is the most important document to have prepared before lenders will consider your venture? B-Describe the SBA Express Program. C-Why is it important for an entrepreneur to diversify their sourcing options and what are some of the alternative financing options?

Answer 1

A- The most important document that has to be prepared before the lenders consider the business venture is the business plan and the financial details of the business. The business plan includes the details of the company regarding the product or service that it is going to offer to the market, customers, market. team and financial statements that give information about the sources of income and expenditure of the company. These documents are required so that the bank can analyze the business in a better manner and is assured that they are lending money to a business that will be successful and profitablein future in order to pay back the loan amount.

B- SBA Express Program is a financing option for small businesses. The full form of SBA is Small Business Administration. It helps small business owners to raise money for their business without much paperwork and in a short period of time. Another feature of SBA Express is that it does not lend directly to the small businesses but instead authorizes the lenders to give money to the small business and covers the risk of loss up to 50% of the amount lend.

C- An entrepreneur should diversify the sourcing options and not depend on only loans from commercial banks. This is because the economy, interest rates and inflation rates keep fluctuating and they create a situation where the bank may not have sufficient funds to provide to the small businesses. Thus, alternative financing options is necessary for a business. Some of the alternative financing options are: Angel investors i.e. people who are interested in the business and would like to invest their money in the business. Funding from friends and family members, seller fianncing and invetsment in a variety of financial instruments are some alternative financing options. The aim here is to not depend on banks only for loans but also look for other options so that the money required by the business can be raised on time.