Photo AI
Sarah Fleming is a wedding dress designer and has worked for over 20 years in the bridal and clothing industry - Leaving Cert Business - Question 6 - 2014
Question 6
Sarah Fleming is a wedding dress designer and has worked for over 20 years in the bridal and clothing industry. She specialises in creating unique wedding dresses wi... show full transcript
Worked Solution & Example Answer:Sarah Fleming is a wedding dress designer and has worked for over 20 years in the bridal and clothing industry - Leaving Cert Business - Question 6 - 2014
Step 1
Outline three factors that Sarah's bank may consider when assessing her bank loan application.
Answer
-
Creditworthiness: The bank will evaluate Sarah's credit history and her record of repaying previous loans. A strong credit history will positively impact her loan application.
-
Ability/capacity to repay the loan/Business Plan: Sarah is expected to prepare a business plan outlining her trading history and projected profit trends. The plan should indicate profitability and liquidity.
-
Availability of Security: The bank will assess the availability of assets that can be used as collateral for the loan. If Sarah can provide assets, this could enhance her chances of securing the loan.
Step 2
Step 3
Outline two sources of short-term finance Sarah may consider to meet her working capital needs.
Answer
-
Bank Overdraft: This is a facility offered by banks that allows account holders to withdraw more money than they currently have in their account, up to an agreed limit. Interest is charged on the overdrawn amount daily.
-
Trade Credit: Sarah may negotiate with suppliers to obtain goods and services on credit, allowing her to pay for them at a later date while using the product to generate revenue.