Раскрытые топики к ГОСу по Английскому / Topic+13

Topic 13. What ways of raising finance do you know?

Raising money depends on the economy. It depends on the concept of your business at the start-up stage, and it also depends on having the right people in your business and having contacts with investors outside the market.

The commonest ways in which businesses can raise money are either through debt or equity. If business is raising debt they go to the bank, get a bank loan. It could be secured or unsecured. If a business is raising money through equity they can go to private investors, venture capitalists or through a public offering on the stock market.

The means that you use to raise the money depends very much on the type of business, the business stage that your business is at, and the revenue flows that come from a business. You need to match them up to the type of instrument that you are using to raise the money.

If you are in the start-up situation, it is very unlikely that you go and get a bank loan. Any bank loan will require a personal guarantee, or the guarantees of friends or family members, which tells investors that somebody else is at risk as well. You would definitely go more to private investors and equity. If you are in the growth business with strong cash flow, you would probably use debt, although it can be more expensive than equity. This is because of the interest that you need to pay to the bank or to whoever is lending you money.

You can take out a home equity loan. The equity you have build in your home can support a loan, often referred to as a second mortgage. So, if you have a $150,000 home and owe $50,000 on the mortgage, a bank or finance company will lend you between $60,000 and $80,000. Your home is not at risk unless you default on your first and second mortgages.

You also can take out a margin loan against securities you own. Margin loans are relatively cheap and perhaps the easiest loans in the world to secure. They are also probably the most dangerous. Brokerage firms will lend you up to 50 percent of the value of most securities. It’s fast cash with a reasonable interest rate. Of course, if the value of the underlying securities drops to less than 50 percent of the loan, you’ll get a call from the brokerage firm asking you to put up cash or face immediate liquidation of the shares you pledged.