BMF
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This document discusses various types of small business credit options including business credit cards, asset based financing, short term loans, and long term loans. For each type of financing, the pros and cons are outlined. Business credit cards can help with expense tracking and building credit but come with risks of personal credit issues. Asset based financing provides capital and purchasing power but third parties may gain control of cash flow. Short term loans are economical and flexible but have fixed costs. Long term loans offer lower interest rates but carry foreclosure risks. Overall the document provides an overview of financing options for small businesses and considerations for each.
BMF
- 2. PGP-CEM 2013-14 BUSINESS CREDIT CARDS ASSET BASED FINANCING LONG TERM LOAN SHORT TERM LOAN LINES OF CREDIT TYPESOFSMALLBUSINESSCREDIT
- 3. PGP-CEM 2013-14 Firms following informal business practices Inability to maintain collateral Lack of credit worthiness and goodwill Lack of transparency due to poor reporting of firm data High processing cost GENERALCHALLENGES
- 4. PROS Expense tracking Higher limits Cards for employees Builds business credit record Added protection Special perks Extra benefits CONS Personal Credit Issues High Priced Financing Less Purchase Protection Security Issues BUSINESSCREDITCARDS PGP-CEM 2013-14
- 5. ASSETBASEDFINANCING PROS Injection of Capital Increased Purchasing Power Low interest rates Faster loan approvals Advantage for lenders CONS Commercial lenders may not deem sales to individuals or small businesses as "eligible receivables." More expensive than traditional loans Third party gains control cash flow PGP-CEM 2013-14
- 6. OVERDRAFT PROS Flexible- Time Pay as per use Quick No prepayment charges CONS Cost Recall Security Requires one to have a current account Has to be rearranged regularly PGP-CEM 2013-14PGP-CEM 2013-14
- 7. OVERDRAFT&CASHCREDIT PROS Flexible- Time Pay as per use Quick No prepayment charges CONS Cost Recall Security Requires one to have a current account Has to be rearranged regularly PGP-CEM 2013-14
- 8. SHORTTERMLOAN PROS Economical Flexibility No interference in management May also serve long- term purposes CONS Fixed Burden Charge on assets Difficulty of raising finance Uncertainty Legal formalities PGP-CEM 2013-14
- 9. LONGTERMLOAN PROS Lower Rates Interest Costs Cash Flow Budget CONS Face foreclosure or repossession of the property Prepayment charges Long term liability Exit strategy issues PGP-CEM 2013-14
- 10. PGP-CEM 2013-14 THANK YOU Credits: Abhijeet Verma NA 13001 Abhilasha Jaju NA13009 Kushal Pachisia NA13030 Mayank Baid NA13031