Different Sources Of Finance For Fund The £ 30000...

Introduction: Harley Enterprises is a corporation involved in various industries across the Queensland region. One of Harley’s businesses called ‘The Grind Cafe’ is looking to expand due to large amounts of infants and adolescent visiting, as well as high demands on play areas for younger children while parents are drinking their coffee. In order to realistically and effectively fund a $30,000 play ground in attachment to ‘The Grind Cafe’, sufficient financial intermediaries must be analysed, evaluated and decided to help this cafe increase their revenue and cater for a wider variety of customers. This report will analyse two different possible sources of finance to fund the $30,000 construction by outlining the benefits, concerns, and the†¦show more content†¦Source of finance one: The first type of loan that will be evaluated is a term loan. A term loan is a way to borrow money provided from a bank or credit union with flexible interest rates and a specified repayment schedule (investopaedia.com, 2016). It is specifically for newly established businesses, or companies wanting to expand and offer low interest rates with medium term repayment periods. Having a set reimbursement date will give the business a deadline to save the excess money and will ensure the loaning company get their money back within the timeframe stipulated by the contract. Benefits of a term loan are that there is flexibility, minimal risks, and the ability to claim on the interest paid. Banks and credit unions are well established and highly regulated corporations and allow interest rates and payback times to be negotiated where necessary. â€Å"If a strong relationship is made between the lender and the borrower, small negotiations can gain access to better interest rates than what is ad vertised to the general public†. (huffingtonpost.com, 2013). If a good relationship is established, the normal term loan interest rates of approximately just â€Å"5%-7%† (westpac.com.au, 2015), the rate of borrowing may be brought down to 4.5%. In addition to flexibility, minimal risks apply with term loans, especially if borrowing