1. Sources of raising finance Language associated with raising finance
Unit 9 Raising Finance
Sources of raising finance
Language associated with raising finance

2. Discussion
How can an individual raise capital to set up or expand a business?
List three methods.
How can a business raise capital to start up or expand?

3. I. Ways of raising finance
p.76
Raise money
Go to
Go to

4. I. Ways of raising finance (keys)
p.76
Raise money
Debt
Equity
Go to
Go to
Bank for a bank loan
Private investors
Venture capitalists
Public offering on stock market
Secured
Unsecured

5. Debt vs. Equity: Sources of funds
Debt – Exchange of money for promise of
repayment (principal + interest)
• Commercial Banks and similar
 debt capital 借入资本: Funds obtained through borrowing.
Equity – Exchange of money for ownership
in company
• Venture Capitalists and Angel Investors
 equity capital 产权资本，股本资本: Funds obtained through owner investments, venture capital, stock issues, company earnings, or sales of assets.
Business angels: Private investors invest in new start-ups.

6. Key terms:
p.77 of Book 4
“Financial terms”

7. II. Debt capital: Discussion
What are the pros and cons for a private individual of borrowing money from the following:
a bank?
a friend or colleague?
a member of your family?
a loan shark?
a credit card company?

8. II. Debt capital: Bank loans
Commercial banks:
• Typically not a source for start-up.
• Loans are typical made on 5 C’s (character, capital, collateral, capacity, condition).

9. II. Debt capital: Bank loans
p.76 of Book 3
“Making loans”
What are the three important factors to consider when deciding whether to make a loan?

10. II. Debt capital: Bank loans
pp Reading
“Financing start-up businesses”

11. II. Debt capital: for reference
Business Plan:
 Writer: Reality check; a written guide to run a business
 Reader: Whether to invest in it
 Contents: refer to “Business Plan Outline”

12. III. Equity capital Equity capital • No due date
• Does not have to be repaid in the same manner as borrowed funds as it can become a permanent part of capital of the business.
• New businesses have higher risk and, hence, owners generally are required to have larger shares of owner equity relative to proven businesses.

13. Planning for financing
Key points to consider:
• Ensure that the kind of finance that you are seeking is appropriate;
• Ensure that you know how much is needed and for how long, and what you are going to do with the money;
• Prepare your case fully before meeting with the Bank / Investor.

14. Skills: Negotiating
p.81
Case study pp.82-83