1. The young businessman must
find sources of money that will last until revenue begins to exceed cash
outflows. He must be creative in finding start-up funding. New small businesses
can start with the businessman’s own assets. On top of that, start-up financing
may come from friends and relatives. The larger businesses can obtain funds
from venture capital investors.
2. One of the personal assets
the businessman can use to raise funds for the business is his home. The value
of the home that the owner has paid for is called the owner’s equity in the
home. By pledging this equity, the homeowner can obtain a second mortgage or a
home equity loan.
3. A businessman can find
another source of start-up financing by life insurance policy. Many policies
build up cash surrender value – the money that the policy holder can borrow at
a low interest rate.
4. Those who need more funds
can obtain a variable rate installment loan. it is a personal loan with an
interest rate tied to the prime rate or some other index. When the index
changes, the rate changes in the same direction.
5. Some good sources of
start-up funds are family members and friends. Many people can afford to lend
at a low interest rate. The lender can share ownership of the business or can
become a partner or shareholder in a corporation.
6. In some cases, new
companies can obtain cash from venture capital firms. These financial
intermediaries specialize in funding ventures with good promise and invest in
businesses, which generate high profits within five years. Initially venture
capital firms invested in high-tech industries, but now other branches enjoy
this kind of financial aid, especially those working in the health-care field.
The venture capital firms provide seed money to start a new company, funds to
help the venture grow and gain the market and money to buy out a business.
Задание 3. Письменно ответьте на
следующие вопросы к тексту.
1. What can larger businesses
obtain start-up funds from?
2. How can a homeowner obtain
a second mortgage?
3. What is cash surrender
value?
4. What do venture capital
firms specialize in?