Unit 1 Managing Financial Resources And Decisions

Bank Loan	The Businessowner will get in touch with the bank for a loan to finance the company. Bank loan are taken for a fixed period of time repayment every month with a fixed interest.	The money needed will be available when the necessary check has been done. The repayment terms are agreed in advance to make the lender knows the terms and conditions of the loan	The bank will ask for a security in case the lender default in payment. Charges higher rates of interest. Credit checks will be done before accepting the application. Fixed rate of payment.	With a Bank Loan, a legal document is sign with the bank outlining rate of interest, amount t of the loan, purpose of the loan. Repayable wit interest on agreed terms. The lender has the right on the company as a secured lender.	Payment for bank loan could be made over a long period of time without any problem arising, so far the terms and conditions are taken into consideration. No down payment required to be paid by the borrower so the whole amount borrowed will be made available to use.	Interest fees, the loan will be approved with an interest which will be added to the original fund for repayment. Arrangement fees will be paid upon accepting the loan. There will also be a charges levied by the bank.
Bank Overdraft	An overdraft is another source of finance. A company could obtain an overdraft from a bank which could be used towards financing the business environment.	The method provides instant availability of funds to use to ease the burden of cash flows.	Higher rate of interest is charged the lender The bank may withdraw the service at any time with a short notice. Credit checks will be done. Fixed rate of payment.	A legal document is signed with the bank outlining repayment terms, interest rate. Two charges are involved which are charges for taking the overdraft and charges on the amount of money spent on the overdraft.	There is fixed cost and interest rate which is known by the borrower before signing the documents. There are no down payments, the whole money would be made available to use by the borrower.	There will be a monthly charge for taking the overdraft. There will be an interest calculated based on the amount of money spent from the overdraft.
Credit Card	A Credit Cards Business owner could use the credit card to make a purchase of some items for his business.	Credit cards is easily accessible to finance a business. The Business owner could use the credit card to buy anything relating to the Business. The business owner could do balance transfer on the card which is good because it comes with no interest for up to 13 months and no interest in purchasing items as well.	Higher interest rate is charged. Minimum repayments are required each month. The facility could be withdrawn which will have a negative impact on the business.	A legal document is sign with the bank outlining the term of re payment. It comes with a higher interest rate. Withdrawing the cash in the credit card will incurred a lot of interest.	There is a fixed cost to pay as interest. Most of the bank allowed free interest for up to 13 months. Balancing transfer is offered, the credit card can be used to offset some debts for the period of 13 months without paying any interest.	There is monthly repayment with interest based on the amount spent from the credit card.
Business Angel	Financing of a Business could come from a Business Angels. These are wealthy Business managementinvestor that provides funds in return for a portion in the business.	The fund will be available with ease which can be used to finance the business.	The Business Angel will be demanding for a proportion in the business equity.	Legal agreements are reached. The Business Angel could ask for a bigger percentage in the company	The money will be available to use without paying any interest. The business angel will take a proportion of the business.	Some proportion of the business will be taken by the investor.
Relatives and Friends	The source of finance come from relatives and friends The money borrowed will not come with any interest.	The cash is obtained at   ease for the purpose of funding the business and it comes with no monthly repayment or interest.	The money could be requested back by the relatives of friends without any notice. The relatives and friends could ask for some shares or partnership in the business	No legal documents would be signed. No interest on the money borrowed.	The money could be requested by the lenders without warning.	The fund could be withdrawn at any time. The friends and relatives could ask for a proportion from the business.
Personal Saving	This is the money saved over a long period to start the Business. The money could come from saving from previous employment. The owner invests the money in the business to start up, this will kick start the business.	The cash is available to fund the business. No interest rate is paid Interest. Rest of mind is assured to concentrate of the development of the business.	The risk involved losing the entire saving if the business fails.	No documentation for repayment as the money belong to the company owner. No problem with controlling the company by other party. No money is repayable to any third party so issue of bankruptcy is eliminated.	No repayment would be required because the money belong to the founder of the business. No interest will be paid on the money. Money will be available quickly to finance the project because no third party would be involved.	If the business fails, the owner of the business will lose his or her life saving and bear the risk alone.
Trade Credits	Trade credit is also a means of financing a business. There would be an agreement between the Business Owner and the suppliers. investment.	The goods are bought on credit, the lender sells for cash and the re pay it. No interest is payable; this will help the lender to concentrate on the business.	The advantage of taking a discount on a purchase will not be available.	A credit application will be signed. Repayment terms are normally 30 days from the date of invoice. The item purchased will be owned completely after the re payment. If the company goes into liquidation or failed to pay as arranged the supplier could remove the goods.	There will be a fixed cost which will not change. Easily available upon request. No interest charged on the finance.	Some documentation could be signed. It could come with interest based on the amount of credit required from the seller.
Government Grants	This is the amount of money given to an individuals or a business for a specific project or purpose.	Being a grant, no repayment of the money. No interest on the money. The borrower will not lose any control of the business.	The difficulty in finding the grants that suits specific project. There are a lot of competition which may make the grant difficult to obtain. The process could take a long time. Order Now	No legal documentation required for repayment being a grants. No obligations to repay the money. Issue of bankruptcy will not arise because no money is repayable to the government.	No repayment required. The fund will not be available on time. It will take time to find a grant that suits a specific project. A lot of people are seeking for this limited grant.	Lots of competitions for the grant. Grants might not cover the project; the business owner will still have to seek another alternative.