scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 2,313
Financing a small firm can be achieved in three ways The most preferable but at the same time the least likely is self financing from retained earnings otherwise the firm will have to resort to either one of the two following financial markets Debt capital and equity capital which strictly speaking is the same as retained earnings both having their advantages and disadvantages Only after 1979 did clearing banks start making loans with a maturity term in excess of ten years In the case of a loan to smaller companies the fixed interest rates are usually set at a premium over base rate 3 - 6 Larger companies who have a good credit rating will probably be offerred the premium on the inter-bank rate which is lower than the base rate Loans are usually secured on the personal guarantee of the Directors or the owner of small companies and in the case of larger ones a charge is made against the assets of the company If the charges are fixed that means that they are linked with a specific asset of the company Floating charges are made on the general assets All bank loans are based on three elements which the company has to be able to satisfy The interest rate demanded by the bank the security demanded by the bank and the terms of repayment which are open to individual arrangements between bank and borrower although they usually consist of systematic amortization payments made over the full time of the loan A small company will have to ensure its capability of all three in spite of the fact that in comparison to a larger company it will be paying a higher interest rate will be risking security based on the owners personal assets rather than company assets and repayment terms will probably be more rigid rather than flexible as banks rightly see the small company borrower as a higher risk
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA