Question 1

Mini-Case 13-1: "Where do I go now ...?
Christine Hernandez is in the process of launching a restaurant. Christine has never owned her own restaurant before, but she has worked for two of the best restaurants in town. Starting out as a hostess, Christine developed a special knack for the business and quickly worked her way up to the job of manager. Her 18 years of experience have given her a solid foundation for running her own restaurant.
Christine has worked with a counselor at a nearby Small Business Development Center and a counselor from the Service Corps of Retired Executives to prepare a business plan. She asked two other consultants and an accountant to review the plan and incorporated their suggestions into the finished product. When Christine took her plan to her bank, however, the bank turned down her loan request of $165,000, citing the venture as "too risky, given the failure rate of restaurants." The bank acknowledged her experience as "a major asset," but said that it "could not expose itself to such risks in its portfolio." Christine heard the same story from three other banks.
Christine is confident in her ability to manage her own restaurant successfully, and she is determined to get the financing she needs to launch it.
-What other sources of capital would you suggest that Christine explore?

Accepted Answer

The answer of Mini-Case 13-1: "Where do I go now...

Question 2

Explain how a typical SBA loan guarantee works. What interest rates do these loans normally carry?

Accepted Answer

The answer of Explain how a typical SBA loan guarantee...

Question 3

What is involved with vendor financing in the form of trade credit? How important is it as a source of debt financing to small firms? What role does it play in "bootstrapping"? What are some other bootstrapping techniques?

Accepted Answer

The answer of What is involved with vendor financing in...

Question 4

Mini-Case 13-1: "Where do I go now ...?
Christine Hernandez is in the process of launching a restaurant. Christine has never owned her own restaurant before, but she has worked for two of the best restaurants in town. Starting out as a hostess, Christine developed a special knack for the business and quickly worked her way up to the job of manager. Her 18 years of experience have given her a solid foundation for running her own restaurant.
Christine has worked with a counselor at a nearby Small Business Development Center and a counselor from the Service Corps of Retired Executives to prepare a business plan. She asked two other consultants and an accountant to review the plan and incorporated their suggestions into the finished product. When Christine took her plan to her bank, however, the bank turned down her loan request of $165,000, citing the venture as "too risky, given the failure rate of restaurants." The bank acknowledged her experience as "a major asset," but said that it "could not expose itself to such risks in its portfolio." Christine heard the same story from three other banks.
Christine is confident in her ability to manage her own restaurant successfully, and she is determined to get the financing she needs to launch it.
-What might Christine do to convince a bank to lend her the money she needs to launch her company?

Accepted Answer

The answer of Mini-Case 13-1: "Where do I go now...

Question 5

Mini-Case 13-1: "Where do I go now ...?
Christine Hernandez is in the process of launching a restaurant. Christine has never owned her own restaurant before, but she has worked for two of the best restaurants in town. Starting out as a hostess, Christine developed a special knack for the business and quickly worked her way up to the job of manager. Her 18 years of experience have given her a solid foundation for running her own restaurant.
Christine has worked with a counselor at a nearby Small Business Development Center and a counselor from the Service Corps of Retired Executives to prepare a business plan. She asked two other consultants and an accountant to review the plan and incorporated their suggestions into the finished product. When Christine took her plan to her bank, however, the bank turned down her loan request of $165,000, citing the venture as "too risky, given the failure rate of restaurants." The bank acknowledged her experience as "a major asset," but said that it "could not expose itself to such risks in its portfolio." Christine heard the same story from three other banks.
Christine is confident in her ability to manage her own restaurant successfully, and she is determined to get the financing she needs to launch it.
-Review the various loan programs under the Small Business Administration designed to help finance businesses like Christine's. Which of these programs would most likely help Christine get the capital she needs?

Accepted Answer

The answer of Mini-Case 13-1: "Where do I go now...

Question 6

Mini-Case 13-2: Bowden Brake Service
Jim Bowden has been operating his business for some time now and thinks it is time to grow and expand. To compute the cost of expanding his existing business, Jim Bowden makes the following estimates:
Adjacent lot $40,000
Metal prefab building 25,000
Hydraulic lifts 15,000
Tools and equipment 9,000
Parts and inventory 5,000
Additional operating expenses 55,000
TOTAL $149,000
-Explain to Jim the possible (and realistic) sources of capital for expansion. Where would you recommend that he go for the funds he needs? Why?

Accepted Answer

The answer of Mini-Case 13-2: Bowden Brake Service
Jim Bowden has...

Quiz 13: Sources of Financing: Debt and Equity

Explain how a typical SBA loan guarantee works. What interest rates do these loans normally carry?

What is involved with vendor financing in the form of trade credit? How important is it as a source of debt financing to small firms? What role does it play in "bootstrapping"? What are some other bootstrapping techniques?