Funding Basic Knowledge

Notegolddiamond - What is funding ? as some of my experienced was a member of team consultants for establishing companies in Indonesia, I directly involved in business funding. Wiki said that funding is "to provide resources, usually in form of money (Financing), or other values such as effort or time (sweat equity), for a project, a person, a business or any other private or public institutions. When a request for funding is made then fundraising is being attempted."

I write this article and this blog mainly for sharing and learning our knowledge and experienced. So dont hesitate to correct me if I'm wrong.

Funding is mainly divided into some source. Among the main sources of funding, there are:
* Credit
* Donations
* Grants
* Savings
* Subsidies
* Taxes

Funding In The Mean of 'Credit' Term

Definition of credit is the provision of resources (such as granting a loan) by one party to another party where that second party does not reimburse the first party immediately (wikipedia),The first party is called a creditor or lender, while the second party is called a debtor or borrower. When credit occurs, there is movement of capital between creditor and debtor.

Some Basic Rules on Credits

There are some basic rules of the loan I mention below. Whatever type of loan you are applying for, you should do your best on these basics to be able to find the best loan as you wish.

Since credit is based on the reputation or creditworthiness of the debtor's responsibility, then your loan history is worthy. You will find loan easily with creditors, high street banks and mortgage lenders,who already know your credit reputation. But however, you have the right to look for as many suitable lenders as you can, till you can find the very best deal that suit you
Go online and you will find some online pages that allow you to compare loan rates from a variety of lenders.

Always think for unsecured loan first, as this is safer than secured one. If you have good enough credit performance to borrow without collateral, then do so. The unsecured loans will always have higher rates because you not put your home or other capital you have as collateral.
Dont bet on long period of loans, always try and take a loan out over the shortest period you can afford. Nobody can predict your future finansial situation over long time period such as ten years or more.

Repair or even more recreate your Equity Investment first. It is used to assess whether a company’s level of debt is still appropriate to the credit they propose in relation with the amount that the applicant has invested in their business. It shows your commitment to your business, so the weak equity investment can be viewed as a signal of a weak commitment. Some Ratios will be checked by the creditors such as the debt-to-worth ratio which compares how much money the lender is being asked to lend (the debt) to how much you, the owner, has invested (the worth).

Your income statement as well as cash flow statement is the next step to concern by. It shows about earnings requirements that are important measures to know whether your business are in healthy proper cash management or not. A business cannot continue to operate if it spends more money than it takes in, and as a lender, you have to demonstrate your ability to repay the loan from the business operations. If you settle a new business, you have to give detail assumptions that underlying how you intend to generate revenues along your repayment schedule.

Another important factor is Working Capital, defined as current assets minus current liabilities When (assume) your business run into trouble, the creditors will seeking for protection for their capital that alreaady put into your business. This working capital represent that kind of protection.

Collateral is defined as security that you pledge for repayment of the loan. It can consist of both business and personal assets. A good collateral is the one that adequate to secure the loan. Commonly a collateral need guarantees requirement for owners, as well as individuals who hold key management positions.

Last factor but not least important is your resource management, your teamwork business that reflect the ability of you and other owners/partners to manage the resources of the business.
It is dependent upon your education, experience and motivation.

Among some important ratios that the creditor will consider are debt to worth, working capital, the rate at which income is received after it is earned, the rate at which debt is paid after becoming due, and the rate at which the service or product moves from the business to the customer.

Some link to check for tips on credit
http://www.bbb.org/us/consumer-tips-finance/
http://www.moneysavingexpert.com/banking/

When Funding Comes Into 'Donation' Term

I dont have experience with raising fund by this way, but since you all a genius reader, I think it doesn't need more explanation. Just go to wiki and type donation...ok.
Oh one more..... if you want to be a fundraiser for a cause, it will be very helpful if you come to some site that helping you to do that, such as http://stepbystepfundraising.com

How About 'Grant'....

When funding comes into grant term, it usually refer and relate to research, scolarship, government social project, or natural disaster. Every grant requires proposal or fulfilling applications, but you can find easily how to make a good grant proposal on the web. Even wiki give thorough explanation on how to write a grant proposal here http://en.wikipedia.org/wiki/Grant_Writing

Or, alternatively, you can find some other resouces of grant here, http://www.itcompany.com/inforetriever/grant.htm

Hope all this link above helping you in building a good grant proposal to your project.

To be continued ..........



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