by Group 8 - C44C

N T
M E
T E
T A 21
S at o wn s

E M e ur is nes th
i
en n h us w nd
i

B L t
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e
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B a -up nd upp raft ure
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 PROBLEM STATEMENT
However, upon computing the initial expenditures needed for him to start
his business, he realized that he does not have enough financial
resources to fund his start-up. With this, he consulted his friend, who is
also a businessman, for business financing options that can best suit him
and his company to finally be able to jump-start his operations.
His friend gave him two options he can choose from to
finance his start-up. The first option is to acquire a
business loan from SKL Bank, where he can borrow
$200,000 with an interest of 5% per annum for 5
years. On the other hand, he was also given the option
to issue bonds to the market worth $200,000 with a
coupon rate of 3% per annum for 5 years.
 Question:

PROBLEM What are sustainable loaning options for

the 21st century entrepreneur?

STATEMENT
 OPTIONS
Bank
Bonds vs.
Loan

Face value = $200,000 Face value = 200,000

Coupon rate = 3% per annum Interest rate = 5%
Maturity = 5 years Maturity = 255,256
LOAN
● Flexible interest rate if bank allows
● Government bank bail
● Does not require multiple stakeholders to proceed, bank alone is enough
● Need to pay high interest rate
● Can take a loan at lower amount, unlike bonds if go public have a minimum
turnover requirement
 LOAN
Given: Principal (P) = $200,000
Rate (r) = 5% (0.05)
Time (t) = 5 years

Interest Amount = (Principal)(Rate)(Time) I = ($200,000)(0.05)(5/12)

I = $4,166.67
Future Value = Interest Amount + Principal FV = ($4,166.67) + ($200,000)
FV = $ 204,166.67
BANK LOAN
 BOND
● Interest payments are paid after every period (coupon) and at the end of of
the loan period, the principal borrowed as well as the last coupon is paid back
to the bond holder
● Highly complicated process; typically used by well-established companies and
corporations
● Riskier (in terms of investing in bonds)
 BOND
Given: Face Value (F) = $200,000
Maturity (n) = 5 years
Coupon Rate (CR) = 3% p.a

Coupon Amount = CR (F)

= .03 (200,000)
= $6,000

Total Amount Paid = ($200,000) + ($6,000 * 5) = $ 230,000

BONDS
 In conclusion, considering the
decision_ total maturity value and time
and effort that Brent will be
needing, it is recommended
that Brent takes up a loan
from SKL Bank to finally
acquire the needed financing
necessary to commence his
start-up.
 Activity Timeline/Duration Resources Needed Persons-in-Charge

Consult with SKL bank 1 week ● Human ● Business Owner

and determine if the Resources
company qualifies for ● Material
the loan Resources
implementation_

Apply for the loan and 1-2 weeks ● Human ● Business Owner
prepare the needed Resources
documents: ● Material
1. Business name Resources
and address ● Financial
2. Business Tax ID Resources
number
3. Business plan
4. Business loan
proposal
5. Business
financial
statements
6. Personal details
about the owner

Anticipate for the bank 3-4 months ● Human ● Business Owner

loan approval Resources