economic assignment
wding000
assignment.docxNew small business: Antique Furniture Store
Your client owns many antique furniture pieces. She has successfully sold some pieces at antique shows but would like to open a store front in Dardanelle and sell her merchandise from there. She owns $10,000 worth of inventory and would like to borrow $16,000 to purchase a $13,000 box truck for deliveries, a $500 sign, and a $2,000 point‐of‐sale system. She would rent a location in which to operate her business but will use sales income to cover those expenses.
Research the antique furniture business and include details in the description part of your paper to indicate whether there are similar stores in the Dardanelle/Russellville area. Define what qualifies a piece as “antique” and include examples of the type of pieces your client might sell in her store. Include price ranges for a few of the pieces you find to give an overall picture of the type of business and clientele the store may attract.
Assume that the client is willing to put up all of her inventory and the truck as collateral. If the bank will not lend the entire amount requested, find out how much they will lend and report on that amount. Find out about and report on any stipulations the lender requires such as credit rating, business plan information, or any other requirements they would need to lend the money.
When you receive the financing information, get (or calculate) a monthly payment for your client. This should be based on the loan interest rate and length of the loan (make sure to include those figures in your paper). Assume the balance is compounded daily if you do the calculating. Also, calculate the total amount the client will repay for each of the options and use that information in your recommendations. Make sure to include one option that is not a bank loan.
For all three options, you must include contact information so that a client could pick up where you left off and pursue any or all of the options. Also, make use of table(s) within your report as visual aids for your options.
Your client is in the Dardanelle area, so the banks you contact should be in that area as well.
Each groups will have a fictitious “client scenario” based on a past ASBTDC client. They will contact lenders and do research to write their report outlining three financing options for a fictitious small business client. Each project must show three forms of financing, one of which must be something other than a traditional bank loan. The report should include the following sections. n Business description including a list of resources and constraints of the client such as collateral, available matching funds, etc (approximately 0.5 pages). n Description of business’s needs including the amount of capital the client needs (approximately 0.5 pages). n List of loans found including source, requirements, stipulations, financial details, and advantages/disadvantages. You should answer the question, “why would you recommend this loan for your client?” This section should be addressed to the client. It should sound professional. Keep it about the loans. If you find that you are using phrases like “We talked to...” and “He told us...” then it is too much about you and you need to change the tone. A table containing the details is good. (Approximately 1 page for each loan) n Analysis which obeys the first rule of consulting: each option must be suited to the needs of the client. Do not propose an option for which the client does not qualify. In this section, tell under what circumstances each loan would be ideal. It is not a ranking; all three options should be appropriate under the right circumstances
Presentation:
The presentation should consist of about five presentation slides and rarely has to take longer than five to ten minutes. Summarize your paper and include each of your options. Include advantages/disadvantages for each option.
STUDENT GUIDELINES FOR ASBTDC MONEY/BANKING BUSINESS
Students will be given a business scenario based on a past client of the ASBTDC. You will not be given the name of the client; just some general details from which you will gather information and write your paper. Refer to your fictitious business owner as “client,” “business owner,” “entrepreneur,” or similar alternative expression when writing your paper or speaking to a third party.
2. Your job is to get three financing options for your client; one of which cannot be a bank. When looking for your bank options, choose banks that are in the same general geographic area as your client; do not just contact the closest banks to ATU. Make sure to get complete contact information from each lender.
3. You may call or visit lenders to gather information about a financing option. If you choose to visit a lender, you are to dress professionally. You want to make a good impression on others, as you would in any business situation. No shorts, flip‐flops, sleeveless shirts, etc. Men should wear khakis and polo (or better) and ladies should wear dress slacks and blouse (or better). Those who will be presenting their project during class should also dress accordingly.
4. Loan specifics: For a potential small business owner to request a loan, they should have a business plan, cash flow forecast, income/expense forecast, collateral listing, current and prior tax returns, and other financial information. For this project, however, you will NOT have all of that information. You will be given enough information to present to lenders and to complete the project.
a. The information you will need from your scenario before you contact any lending agency will be:
a description of the business (with annual sales if already in business)
the desired amount of the loan
the purpose for the loan with a breakdown of how will the money be spent
a general collateral listing and the approximate value of each category of collateral.
b. When you speak to a lending officer, you will identify yourself as a student at ATU working in conjunction with your Money and Banking class and ask to speak to someone who can help with a business loan (or other financing option).
c. You will inform the lending agency that you are working on a project for this class and give a brief description of the business scenario.
d. You will ask the lender to assume that cash flow and credit score are not an issue and ask for information that would help a business owner obtain capital from their organization.
e. You will disclose the desired loan amount, the purpose for the loan, and the collateral available to the lender.
f. You will ask what types of loans (or other options) are available for which they could apply and find out the terms including but not limited to:
length of the loan interest rate
monthly payment amount
total loan amount (cost of the loan including interest, fees, etc.)
co‐payment/down payment amount that a client would need to have available (usually expressed as a percentage of the loan amount)
minimum credit score required
any special requirements of the bank
any other information you deem relevant for your project
Note: If you are told that the client would not qualify for financing because there is not enough collateral, find out how much financing the client could get based on the amount of collateral available. We want a realistic loan amount for the client. You can then look at the possibility of other options to add to the loan to get as close to the amount needed as possible. Not all clients will get all of the money they want, so find out what they could possibly get based on the information you have.
5. For your non‐bank loan option, think outside the box! However, if you give an option, you must include all of the specifics for gaining funding and demonstrate how the financing could be a real option for your scenario.
6. Include in your paper any contact information you have including the name of the person with whom you spoke, the institution name, the phone number, address, and/or website. Assume that a real client could take your paper and continue with each financing option.
7. When you are writing your paper, incorporate the following into your final product: Your paper should flow from section to section. It should not appear that one person wrote one section and another wrote a different one.
Do not use your name or the word “I” in any part of your paper. This is a group project so if you author a section of the paper, you are writing on behalf of the whole group
The first section of your paper is the business description. Write this as if you are writing it to your group or to your professor to show your understanding of what the client does and the information they have given you regarding their business and their loan requirements.
The rest of the paper should be written to your fictional client. Normally, a client would receive a copy of your paper, so write as if you are speaking to him or her. Write it as fact based, and not a narrative about your travels through the project. For example, don’t write, “Our group visited bank X and found...” Instead, write, “Bank X offers a construction loan…”
Make sure to include a well thought out Analysis section to conclude your paper. Your job is not to tell the client which loan to choose, but to give the advantages and disadvantages of each option and discuss the circumstances under which each would apply. For example, “Although Loan X has a slightly higher interest rate than Loan Y, it carries a longer term which makes the payments lower for the client each month.”
Make use of tables to summarize and/or compare loan options.
When you have completed your paper, submit it only to Dr. Fusaro according to his instructions.
Refer to the “Presentation” section of Dr. Fusaro’s instructions to complete your project.
Everyone in your group must proof your paper, check it against this document, and make sure it complies with Dr. Fusaro’s instructions before it is submitted.
8. You may be in a situation in the future in which you will need to access capital for a business. Work like this is a real business that you are trying to help fund and strive to find three viable options; options that you would consider for yourself as a business owner.
