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Essay / Research Paper Abstract
This 3 page paper starts by considering the potential risks faced by a business where the only source of funding is a relative. The paper then looks at other options for funding; the use of venture capital and the use of debt. The risks associated with both are discussed. The bibliography cites 4 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEfundrel.rtf
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Unformatted sample text from the term paper:
is possible for the business to be created or to grown when otherwise it may not. However, there are also potential difficulties when the only funding has come from a
relative. The lender/borrower relationship is complicated by the family relationship, which can be difficult to separate from the business relationship. In any relationship between a borrower and a
lender, if the lender is the only source of funds this gives the lender a high degree of power over the borrower and their business, which may see demands may
and the desire by the lender to influence the business. In any cases family lending will originate from an older member of the family who may feel that they have
knowledge or wisdom, regardless of experience or qualifications. The threat of potential interference may be high and can be unwelcome (Campbell, 2002). It is also possible that borrowing from
a relative may take place in a casual manner there may not be professional documents and agreement, which can lead to the lender changing their mind over the terms of
the loan, or even demanding repayment at short notice,. This may be linked to the business, but it is also possible that a family issue may interfere. The borrowing from
family may create undue influence from other family and there is also the danger of souring family relationships if there are problems of disagreements. Once a business is up
and running with a good track record there will be alternatives sources of funding. Where funding is available from other sources it may repay relatives or lessen the overall influence
they can exert. The two we can consider here are venture capital and debt. Venture capital is offered by investors who are looking to make investments in young business.
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