Sources of finance

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  • Sources of finance
    • Family loan
      • Agreed amount of money borrowed from a family member
      • Roshini can afford to lend entire start-up
      • Roshini as wealthy entrepreneur has funds to offer sheena at 0 interest .
      • Benefits.      {No sell shares.          {No loss of control        {Initial help no investors  {family accept delayed payment     {no forcing administration
      • Cons!                  {sheena wants independent , relying on dad isn't true to her beliefs or wishes
    • Venture capitalist
      • Who takes risk by investing in small businesses
      • Be willing to invest in Sheenas firm given pilot exper and  surrey location and business plan
      • Roshini may know wealthy  contacts to take risk
      • Benefits.       {avoids need for high interest costs.         {venture cap may be happy to not receive dividends in first years
      • Cons!              { risk by selling shares.        {loss of control and independence                  {be pushed into rapid expansion
    • Bank loan
      • Benefits.           { sheens keeps control.           {makes decisions herself - operating from red hill / choosing what flights to offer               { loan can be secured against helicopter! less risk to bank , s+r have invested over £1m  finance / commitment
      • Cons!                  { high amount required/ sheenas lack of track record interest still be high.                   { interest UK rates set to ride in 2016.   {large interest payments drain on finance.               Leads to extra costs/ just becoming established.   { low cash inflow- large cash outflow
      • Low UK interest rates at present , potential to borrow money
      • Agreed amount borrowed from bank, repaid with agreed added interest
    • Shared capital (equity)
      • Sheena and roshan only have 48% of finance
      • Could sell shares to raise remaining 52%
      • SAS  ltd   Private company  potential to issue shares privately
      • Roshan has business contacts  who could buy shares
      • Finance raised through selling shares
      • Benefit.                                     {no interest as launch is end of main season for flights as interest is drain on finance
      • Cons!             {if investor bought 52% of company means loss of control  in  decisions and goes against independence


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