Individual Project Unit 4 Essay Example | Topics and Well Written Essays - 750 words

Individual Project Unit 4 - Essay ExampleThis creates a situation where a silent partner begins exerting their pressure on the alliance leadership (in this case a friend or family member) which can jeopardize future relations or future lending opportunities.Oftentimes, as well, because friendship and family relationships argon usually quite informal, the receiver of the start-up funds will neglect to put any formal agreement into contract form. When this occurs, if conflict arises about the progress of the business, confusion and mutual anger can occur, which could often cause internal conflict which is apparent to the customers, diminishing profitability when sales decline.Having identified the risk of relationship funding, it is all-important(a) to identify other sources of financing in order to prevent damaging long- call camaraderie with the acquaintance lender. As such, the business had identified one accomplishable option as a term loan, which is provided by a banking insti tution. Term loans involve a specific amount of money, usually loaned at a term of five to 10 years, based on projections of future profitability (Longenecker et al). Though this is probably one of the most stable methods of borrowing money, there are strength risks to the receiver of the funds. For instance, a business that takes out a term loan must have a competent method of forecasting cash inflows and twin(a) future periods of revenue to meet the loans repayment terms. A business which does not plan accordingly will experience a cash flow crisis, potentially harming the future operating potential of the business.Another type of financing option is asset-based lending, which involves receiving a line of credit (usually from a bank) which is based on asset care for (GE Capital, 1999). For instance, assume that the company maintains regular payment in accounts receivable or maintains inventory which, when resold, can be liquidated for