For each of the following scenarios, identify the type of financing from the options provided that you believe to be most appropriate. Be specific, and briefly explain your choice.
Options:
Short term financing options- self-financing, credit cards, trade credit, commercial paper, factoring
Short term loans and grants- business line of credit, peer to peer lending, micro-loans, grants
Long-term financing- securities, debit financing, equity financing
Financing with bonds-leverage
Financing with equity-venture capitalist, stock
Jose started his retail florist business ten years ago. His business has always paid its bills on time. In preparation for the Valentine’s Day rush, Jose needs to order a large shipment of roses from his regular supplier. Valentine’s Day is in one month, and Jose is short on cash.
Linda owns a small printing business that does $750,000 in annual sales. Her company has been in business for seven years and earned a healthy profit each year. Since Linda has previously reinvested the profits to grow the business, she has limited cash on hand. She would like to purchase a state-of-the-art printing press for $200,000.
Bill, in his late thirties, has worked himself up from handling mail to being an agent for a well-known entertainment agency. He now represents several famous musicians. To help his clients get jobs, Bill uses bite-sized chocolate chip cookies as calling cards. His aunt taught him how to bake cookies when he lived with her as a teenager. Before Bill dropped out of high school, he was pursuing vocational training in the food trades, but he has never run his own business. Some of Bill’s friends in the entertainment industry have encouraged him to open a store that would sell his cookies. His cookies would look and taste very different than the cookies sold in the grocery stores today. Unfortunately, Bill has only half of the $500,000 he would need to open a store.