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Dear Ms C Walsh, Im writing to inform you about the different sources of finance that are available to you.

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Ninthusha Satkunalingam 12 barley lane Chelmsford Essex CM1 2NP 16 March 2012 PRIVATE AND CONFIDENTIAL Our ref: RF56/NTV The Mini- mart 23 Clanmill Avenue Chelmsford CM2 9UY Dear Ms C Walsh, I'm writing to inform you about the different sources of finance that are available to you. There are twelve different source of finance available these are: * Share issues When your company wants capital to finance business or to run your business activities it goes to the public and issue shares to produce amount from the public and people pay the amount in share capital of your company which mean your shares in share capital of your business this process is called share issue. The advantage of share issues is that your business object becomes more profitable and has a huge amount of money to buy assets and make improvement on your business. A business object becomes more profitable and has a huge amount of money to buy assets and advance their business. The disadvantage could be that your business becomes dependent on the public, if the public decides your business wasn't worth the investment and take it away, the business will go into negative equality and eventually your business will be in debt. * Leasing Leasing something is the same as renting it. You pay the leasing every month for the use of the equipment. The contract made with the lessor lasts a number of years estimated between 2 and 10 depending weather the cost on it. ...read more.


The banks will usually require that the business offers some security for the loan, although in the case of a start-up this security often comes in the form of personal guarantees provided by the entrepreneur. Bank loans are good for financing investment in fixed assets. They are generally charged at a low rate of interest that a bank overdraft. The interest rate can be either fixed or variable. The advantage of getting a bank load could be that you can borrow large amounts of money. The disadvantage is that some loans carry a prepayment penalty, preventing the borrower from paying the note off early without incurring extra cost. Another disadvantage could be that Borrowing too much money can lead to decreased cash flow and payments can even overtake income in some cases; this is why many loan payments are limited to a certain percentage of a borrower's income. http://www.ehow.com/facts_4761923_advantages-disadvantages-bank-loan.html#ixzz1pyMtD7tF * Friends and family Friends and family could help in your business for support such as giving you addition business funding. An advantage could be that asking family and friends can be quicker and cheaper to arrange and the interest of repayment terms may be more flexible than a bank loan. A disadvantage could be that conflicts could happen between them and relationship can break. * Hire purchase Hire purchase is about ownership. With a hire purchase agreement, after all the payments have been made, your business customer becomes the owner of the equipment. ...read more.


Commercial mortgages have commitment fees and can be quite profitable for mortgage lenders, although there is some default risk. An advantage could they can give your business a large assets which is likely to increase in value. Another advantage could be that the loan repayments involved can be similar to your current rental costs so you won't need to adjust your budgets which this depends on the mortgage. A disadvantage could be that when you sign a commercial mortgage contract you are committing to a period of 10 to 30 years. Also if you failed to make repayments on time you may have to pay additional interest. I would advise you in your expansion to use possibly a bank loan, own savings, reinvest profits source of finance. I think you could use a bank loan due to if you can demonstrate your business can generate enough profits to proper and then pay them back then that's a good option for you. Also the benefit could be that large amount cab be borrowed and also lower interest rates than overdrafts. Own savings could also be a good choice as I think you wouldn't have to worry about financial problems as you already have them and you don't have to worry about paying someone back. Reinvest is also a good option due to your using your own profits to expand your business and make it bigger then more customers are likely to come then you can gain more profits. Thank you You sincerely Ninthusha Satkunalingam ?? ?? ?? ?? Ninthusha Satkunalingam Business resources Assignment two Unit 2 ...read more.

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