Question

write up a list of appropriate funding lending options for each of the events listed

a) Renovating the existing property (estimated cost $250,000)

b) Acquiring new equipment ($75,000 one off payment)

c) Employing another part time spray painter additional (estimated $55,000 pa)

Answer 1

Similar to public companies, private companies also need funding for various reasons. A business typically needs the greatest amount of financing during the startup and growth phases, but it may also require a cash infusion for research and development, new equipment or inventory. While funding options for private companies are numerous, each choice comes with various stipulations.

Friends and Family

In the early stages of a private company, personal resources are used to finance business operations. Pulling from savings, taking a distribution from a retirement account or taking out a second mortgage on a residence are common among new business owners. Once financing from personal resources dries up, owners may find funding opportunities among friends and family members.

Bank Loans

Conventional lending through a financial institution such as a bank or credit union is available for a private business that can provide proof of a strong financial track record. A conventional bank loan may require owners to show revenue sources, profit levels and detailed business plans prior to approving a loan, and as such is not appropriate for all private companies.

Angel Investors

An angel investor is typically a high net worth individual who lends funds in exchange for an ownership stake in the company. Because of the equity position within the company, angel investors are more likely to provide substantial amounts of capital when they find a business in which they want to invest. Most angel investors are professionals in private equity, meaning the business seeking funding must pitch its need for financing along with current financial statements, its business plan and a viable exit strategy.

Venture Capital

A venture capitalist is similar to an angel investor. This is a group of high or ultra high net worth individuals or a company that manages the assets of those individuals. Because of the volume of money that flows into venture capital firms, businesses able to secure capital through this medium are awarded deals of $11 million on average.

Traditional bank loans.

Business credit cards and lines of credit.

Alternative balance sheet lenders.

Payment gateway lending.

Marketplace/peer-to-peer platforms.

You can choose the best one from above information