Assignment 1—Financing Your Business Venture

To: Naomi Bond

From: Chante McDonald

Subject: Recommended financing option for our overnight childcare business

Hello Naomi,

I have done a deep analysis of various financing options that we can utilize to launch our overnight childcare centre for first responders. Each of the options identified has a share of pros and cons when selecting the best choice for the project. The first option is personal savings. It gives us complete project control. Also, it helps us avoid debt: Assignment 1—Financing Your Business Venture.

However, it limits our funding capacity and puts our finances at risk. The second option to fund the business is bank loans. The option offers substantial capital with fixed repayment terms. However, bank loans have a share of cons that are worth considering.

Qualifying for a sufficient bank loan requires meeting a criterion that can be hard to meet at times (Kotenko & Bohnhardt, 2021). For instance, startups without a strong credit history qualify for limited loan amounts. Also, interest payments add to our financial burden early on.

The third option is investors who can offer large funding amounts. However, this option comes with expectations from investors in equity and decision-making, which can potentially reduce our business control. Lastly, the grant funding option is considered. Grants are ideal financing options since they are non-refundable.

They have a significant disadvantage of lacking a guarantee they will be granted (Kaur, 2024). However, since there are currently child-care-related grants to support essential worker families, we will endure the competitive and time-consuming process of acquiring this funding.

Essentially, this means that grants are the recommended option for financing. We will seek federal, state and local government grants to fund the project. The option will be blended with a small business loan with lower interest rates and flexible terms.

Best Regards,

Chante McDonald

Reference

Kaur, J. (2024). Fueling healthcare transformation: The nexus of startups, venture capital, and innovation. In Fostering Innovation in Venture Capital and Startup Ecosystems (pp. 327- 351). IGI Global. DOI: 10.4018/979-8-3693-1326-8.ch016

Kotenko, N. V., & Bohnhardt, V. (2021). Digital health projects financing: challenges and opportunities. http://orcid.org/0000-0002-6972-7780

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One of the most important aspects of starting a business is to secure financing for it. With several options to finance a business venture including investors, loans, grants, savings, etc., one must decide on the best option.

You are about to start a new business and are eager to secure the financing needed for it. Research financing options available and write an e-mail to your business partner explaining the pros and cons of each option and your recommendation. Be sure to justify your choice.

Assignment 1—Financing Your Business Venture

Client’s Notes: