funding option- series of health economics and entrepreneurship for pharmacy students part 8 Pharm Paul Malaba

1. Funding options in
Entrepreneurship.
.

2. • Most entrepreneurs who start up a business need to
provide the finance for starting their business
themselves.
• They would do this from their personal savings or
cashing in any investments they may have. The
advantage of is that your business and all its decisions
remain in your control.
• The disadvantage – you may not be able to access all
resources and if something goes wrong with the
business, you stand to lose your life’s savings.
Personal Savings

3.  When you take a loan, you raise funds for your
business by incurring debt. The repayments are
linked to what is known as the prime lending rate,
if you raise a loan from a commercial bank. (17%
to 27%).
 The problem with bank loans is that they require
security – they require collateral in the form of
fixed property or investments.
 If you do not pay repay your loan as agreed, they
take over your assets to cover the outstanding
loan amount.
Loans

4.  When considering granting a loan, some of the things
banks look at are:-
The number of years in business. Your track record is
very important. Banks usually require three years,
while other lenders may be less stringent.
The size of your company and the amount of money
needed.
Not all banks charge the same interest rate. Some
have more flexible packages, so you need to do your
homework & research where your best option lies.
Loans

5. • Some of the reasons for banks turning down loan
applications include:
The business plan does not include enough
information, particularly financial information.
The business is not regarded as being sustainable.
The loan requested is not justified
The applicant does not have sufficient collateral
Poor credit record of the applicant
Loans

6. • Equity is where the money raised gives the investor
a stake in your business. This results in the investor
having a share in the profits.
• Before deciding to raise finance in this way,
consider carefully whether you are prepared to
share your hard earned profits and whether you
are prepared to give someone else a say in the
running of your business.
Equity funding

7. • Small Industries Development Organisation (SIDO).
• Promotion of Rural Initiatives and Development
Enterprises Limited (PRIDE).
• FAIDIKA etc. etc.
Others