Here are discussions of rollover and plough-back as sources of business finances: a. Rollover: Rollover refers to using profits from one business to start another business. When a business is successful and profitable, the owner can choose to reinvest the profits into starting a new business rather than withdrawing the profits. This allows the business owner to open another business and expand their business portfolio without needing outside financing. b. Plough-back: Plough-back refers to reinvesting profits back into the existing business to help it grow rather than withdrawing the profits. By ploughing profits back into the business to finance expansion, renovations, upgrades, inventory, etc. the business owner is self-financing the

2. 
Business finance refers to capital
that supports the creation, growth,
and sustainability of entrepreneurs,
small holders, and small enterprises
who were previously excluded from
the financial markets.
BUSINESS FINANCE

3. 
Refers to the means by which an aspiring or current
business owner obtains money to start a new small
business, purchase an existing small business or bring
money into an existing small business to finance current or
future business activity.
Cole (2013)
https://www.sba.gov/sites/default/files/files/rs399tot.pdf
BUSINESS FINANCING

4. 
The following are the basic business financing:
1. Personal Savings
2. Friends & Family
3. Equity (Angel Investors)
4. Bank Loand (Debt Financing)
5. Leasing and hire purchase
6. Grands (Sure-P, You Win) etc.
7. Rollover
FORMS OF BUSINESS
FINANCING

5. 
 Money that an individual
has put away for non-
immediate use.
 Excess money after
necessity expenditure,
which is usually have
being kept for feature use.
PERSONAL SAVING

6. 
FRIEND AND FAMILY

7. 
 This kind of business finance comes from members of the
family whereas they contribute money to support a
family member to establish a business.
 Also friends contributes money for their friend to
establish a business.
 This kind of financing could be free, or payable usually
have no interest.
 They always concern with the wellbeing of their
members.

8. 
Equity Financing involves giving
up a portion of the ownership of
your business in exchange for
money received from equity
investors.
EQUITY (ANGEL
INVESTORS)

9. 
EQUITY
INVESTORS
Visit www.youtube.com
and search for Dragons’ Den

10. 
 Bank loan sometimes refers to as “Debt Financing”
is money that you will pay back, usually with
interest, over a set time period and in accordance
with specific terms.
 Bank Loans could be:
 Short Term Loan (with one year)
 Medium Term Loan (with one – three years)
 Long Term Loan (More than three years)
BANK LOAN

11. 
PROSPECT AND CONSEQUENCES DEBT
AND EQUITY FINANCING
Debt Financing / Bank Loan Equity Financing
Prospects
Typically easier to get than equity financing Investors can provide expertise and key contacts
Wide range of options available (Bank loans,
line of cards, family and friends loan etc)
Usually available in larger amounts than debt
financing
Allows you to retain control of your business If business fails, you usually don’t have to pay
back the money
Consequence
Collateral is sometimes required Investors may demand a say in running your
business
Amount you can borrow is usually limited Requires additional time to manage investor
expectations
If business fails, you still may have to pay back
the money
You forfeit sole ownership of the business and its
profits
Advani (2003) http://www.score-
suncoast.org/Publications/FinancingGuide.pdf.

12. 
Loan and Equity
Financial
Requirements
http://webcache.googleusercontent.com/search?q=cache:bxCe0TTQL0cJ:www.score-
suncoast.org/Publications/FinancingGuide.pdf+&cd=7&hl=en&ct=clnk&gl=ng

13. 
Lenders need to feel comfortable that a
borrower has the necessary background
and skill set to effectively operate the
small business.
A. Management Experience
& Expertise.

14. 
Lenders usually require start-up
businesses to have a business plan
that includes income and expense
projections for the first three years of
operation.
B. Detailed Business Plan.

15. 
To reduce their risk in case of default,
lenders often require the borrower to
secure the loan with collateral. This is
usually hard goods such as office
equipment, vehicles, etc., but sometimes
it can be against accounts receivables
depending on the business' current cash
flow.
D. Collateral.

16. 
Lenders want to know how much
money the borrower has at risk. For
start-up businesses, commercial
lenders typically require at least a
third of the total project costs to be
covered by the borrower.
C. Cash Injection.

17. 
In addition to your experience, lenders
also try to understand who you are as a
person. As a result, some lenders will
conduct background checks that can
include looking for any previous
litigation or bankruptcy information.
E. Personal Character.

18. 
Lenders like to see a good credit
history. If there are any credit issues,
an explanation will be required.
Different lenders have different
levels of tolerance when it comes to
credit issues
F. Credit History.

19. 
Lenders like to see a list of
personal assets and personal
liabilities. Do not include debt
paid by your business.
Include other sources of personal
income
G. Personal Financial
Statements.

20. 
 Loan granted to finance the acquisition of an asset
e.g., motor vehicles, generating sets etc.
 Leasing refers to a mode of financing which allows
the use of equipment in return for agreed lease
payments
Lease Financing
http://www.wemabank.com/corporate/loans-financing/finance-lease-
facility/

21. 
 A system by which a buyer pays for a thing in regular
installments while enjoying the use of it.
 A method of buying goods through making installment
payments over time. The term hire purchase originated
in the U.K., and is similar to what are called "rent-to-
own" arrangements in the United States. Under a hire
purchase contract, the buyer is leasing the goods and
does not obtain ownership until the full amount of the
contract is paid
Hire Purchases
Read more: Hire Purchase Definition | Investopedia
http://www.investopedia.com/terms/h/hire-purchase.asp#ixzz3m7lJR7c4

22. 
 This kind of finance occur when government want to
encourage people to engage in any kind of enterprises
then, it will establish a scheme which will facilitates, train
and finance the participants to establish such enterprises
e.g.
 U win
 Sure-p
 CBN
GOVERNMENT
GRANDS
https://www.youwin.org.ng/youwin_success_story

24. 
FINANCIAL
MANAGEMENT &
LITERACY

25. 
 Financial literacy is the ability to understand how
money works in the world: how someone manages
to earn or make it, how that person manages it, how
he/she invests it (turn it into more) and how that
person donates it to help others.
 More specifically, it refers to the set of skills and
knowledge that allows an individual to make
informed and effective decisions with all of their
financial resources
FINANCIAL LITERACY

26. 
 Become familiar with your household finances
 Set a financial goal.
 Develop a budget and stick to it.
 Keep a record of your monthly spending for several months.
Include groceries, gasoline, clothing, lunches and dinners out,
dry cleaning, school expenses, etc. You want to be sure that your
record is an accurate picture of how you spend your money.
 Write a spending plan using your spending record as a guide,
eliminating unnecessary expenses, and decreasing those, which
may be too high.
 Revise your budget as necessary. When monthly bills change or
are eliminated, your financial goals become different, or your
income increases or decreases, a change in the budget is
necessary. Your budget must be flexible in order for you to stick
with it.
FINANCIAL MANAGEMENT

27. 
Discuss finances openly and honestly with
your family and stay involved.
Learn the difference between good debt and
bad debt.
Avoid Living on credit, Not setting financial
goals is dangerous. Calling luxuries items
necessities

28. 
Learn more on your personal
finance
Learn how to identify reliable
and unreliable sources of
information
Pass on the knowledge
http://www.wikihow.com/Develop-Financial-Literacy

29. 
 ACTIVITY V
(Q1) Discuss the following
a. Rollover and
b. Plough-back as sources of business finances