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UNIT 5 Sources   of  financing  Neus Artigues  Alejandra Prohens  Antonia Vila  Joan Manera


INDEX Step 1: Investments and expenses​ ………………………………………2 Step 2: Financing with own funds​ ……………………………………….2 Step 3: Compete for financing​ …………………………………………....5 Step 4: Loans and credits​ ………………………………………………....9 Step 5: Support in the initial phases​ …………………………………...13 Step 6: The crowdfunding that saved the homophobic pizzeria​ ….16 Teamwork​ …………………………………………………………………...17 - Positive and negative aspects​ …………………………………...17 - The work of each partner​ ………………………………………....17

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Step 1: Investments and expenses   To start our activity we need a series of expenses and fixed assets, as well as the necessary goods. All this is detailed in the following list, which can be accessed by clicking on this link:

THE LIST

Step 2: Financing with own funds  We, the four partners, each contribute € 10,000 of our savings with a total of € 40000 of initial capital. This initial capital will be deposited in the current account that we have open in the '' Caixa Colonya ''. We have been analyzing the different temporary partners, among them are the friends, family, business angel, venture capital, etc. Assessing whether it will be positive to have the contribution of friends or family, and this option has been denied as complete. This contribution can cause conflicts between our friends or family and us. Family and friends are not compatible with the construction of a company. If the business will wrong, the money that these relatives have contributed could not be returned. BUSINESS ANGEL What is a business angel? He is a person who contributes his own money to companies created by other people. It plays a fundamental role to these companies that are in the initial phase. The characteristics that differentiate them from other types of investors are: ● They invest their own money. ● They make the investment decisions themselves. ● Only invest in companies whose partners have no relationship or friendship or family. ● Most seek to earn money, although not everyone has this goal.

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Advantage: đ&#x;‘?They

are professionals who give you a great experience and business knowledge. They not only finance your project but they give you advice and guide you on the right path. đ&#x;‘?These entrepreneurs have many contacts that at some point you will be able to need. đ&#x;‘?Banks tend to put a lot of flaws when it comes to being able to finance a project when you are in the initial phase. However, business angels do not lose any problems. đ&#x;‘?The Business Angel is involved in the business since it invests with its own capital. Disadvantages: đ&#x;‘Žâ€‹Everything

depends on the money that you lend but you can have an excessive control over the company. You can take too much control of the company, and after all it is he who puts the money. đ&#x;‘ŽThe Business Angel can limit the financing. đ&#x;‘ŽThere is no regulation that regulates these operations. đ&#x;‘ŽThis type of financing is not yet very developed in Spain. RISK CAPITAL What is a risk capital? The risk capital is a source of financing for small and medium enterprises. A company invests capital in companies that are just beginning, these become shareholders during a period of time. Companies that seek this type of financing are considered risky and therefore have it more difficult when accessing another type of financing. The companies that invest look for companies that grow rapidly and that are innovative, in addition to being in the growth stage. Depending on the stage of development that the company is in, there are many types of investment: â—? Seed capital: They are for companies that have just started or that have not yet started the activity. The capital that is invested is used for market studies or product development, and that means that the capital is lower than the other phases. â—? Capital for start-up: They are for companies that have not started with the production and distribution of the product or service, therefore they have not generated benefits. This investment can last a long period of time that leads to having to invest more capital later. â—? Capital for expansion: They are for companies that already have a path and seek growth. They seek to start in other markets, that reduces the risk of the operation to have customers, suppliers and financial institutions.

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â—? Acquisition of leverage: It is a way to eliminate the acquisition costs of the company, which allows large acquisitions. â—? Restructuring capital: They are for companies that have had a bad period and seek financing to make a change. â—? Substitution capital: The investor company is replaced by another that is not interested in continuing. Advantage: đ&#x;‘? A source of financing different from banks. đ&#x;‘? Eliminates the worry of having to face a debt that you will have to pay regardless of whether the company is doing well or badly. đ&#x;‘? Growth of the company. đ&#x;‘? Venture capital brings a good reputation. Disadvantages: The entrepreneur loses strength because of the entry of investors as partners, since it reduces their decision-making power. đ&#x;‘Ž The vision and know-how of the business are lost, since the investor is looking for a return on his investment. đ&#x;‘Ž

Here the meeting minutes: Â

Meeting minutes

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 Step 3: Competence for financing

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LIST OF CROWDFUNDING We have analyzed different platforms on how to obtain funds for our company, that is why we chose crowdfunding, which aims to share the financing of a project among those who want support. Some platforms are: ​ UTURE FUNDED:​ ​ It is a platform only for women entrepreneurs in the F technology sector. ​ LULE:​ ​ ​It is the only international crowdfunding platform in which most of the U technology projects are financed. ​KUKUMIKU​:​ ​Financial solidarity projects. ​ ERKAMI​:​ ​It is a way to finance projects through large groups of people who V receive rewards in return, in the form of products, services .... ​CROWDCUBE:​ ​The activity of the company has to be about games or tobacco. ​LANZANOS​:​ ​They support all kinds of projects.

We have decided that if we have to choose a crowdfunding platform we will work with​ ​LANZANOS​,​ because they admit all kinds of projects and don’t charge commissions.

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We are four friends who carry out a simulation of a business project in the second degree of Administration and Finance. Our project is based on creating a pizzeria located in Cas Concos, 5 Cardenal d'es Rosells street. There we will offer a variety of services for all kinds of people: đ&#x;‘‰Home

service with a bicycle. đ&#x;‘‰Food service in the restaurant. đ&#x;‘‰Events room. đ&#x;‘‰Game room.

In our business we want to introduce a different​ ​coffee machine​ ​from those normally used in a bar-restaurant. Features:

đ&#x;?ś

​Italian coffee maker

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Automatic 5 doses device presetting đ&#x;?ś Distinctive window to control the boiler water level. đ&#x;?ś Incorporated motor and positive-displacement pump đ&#x;?ś Steam/water tap with pivoting knob control and jointed nozzles đ&#x;?ś Double access cup-holder compartment đ&#x;?ś High precision gauge with double scale đ&#x;?ś Reduced energy consumption / programmable night cycle đ&#x;?ś Brewing temperature electronic control and setting đ&#x;?ś Larger and more powerful boiler (patented) đ&#x;?ś Steel frame with anti-twist unit connections đ&#x;?ś

VIDEO CROWDFUNDING

SUBSIDIES: Go:​ ​INDEX

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Looking for entrepreneurs webs, we found a catering subsidy that would be related to our projects.

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Step 4: Loans and credits There are many ways to get money: ask a friend or family; with a loan; public financial entity; crowdlending; etc. After analyse this options, we decided ask a loan to the bank, because if we ask to family for money, they may remind us all the life that they left us money and the relationship may break, and the others aren’t exactly what we expected. Our company will request a loan of €10,000, and here we put the differents options to try to choose the best bank for us.

FINANCIAL HELP FROM FAMILY OR FRIENDS Loaned amount

€ 2,500 / partner, per family

Terms

The family considers that we should not return the loan plus interest, only the amount borrowed, that is, € 2,500 per family. Families have given us a maximum of 4 years to repay the loan per member.

SANTANDER TIN

Interest 6,95%

TAE 10,31%

Finance

Maximum: €90,000

Maximum term

8 years

Commissions

● ●

Study Commissions: 0% Opening Commission: 2.25%

1% if exceed a year and 0.50% if doesn't exceed a year.

Open an account called 1/2/3 in the bank.

Early cancellation fee Requirements

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COLONYA CAIXA POLLENÇA Interest

Requirements

The bank does a study of the project and interests are decided. 1. A bank guarantee is needed: a. Payroll. b. Annual income tax. c. Memory of the project.

BANKIA Interest

TIN

TAE

15,50%

11,99%

Finance

Maximum: €60,000

Maximum term

8 years

Commissions

● Opening Commission: 2,00%

Requirements

● ID card. ● Annual income tax. ● Payroll/Pension or quarterly income tax (in case of self-employed) ● Payment commitments. ● Document of the investment.

Options

● Postpone to 35% of the capital by the expiration date. ● You can expend to 13 or 14 the number of annual fees and choose the due date that most convenient.

BBVA With payroll domiciled

No payroll domiciled

Interest

TIN: 6,95% (fixed) TAE: since 7,73% up to 9,66%

Finance

Since € 3,000 up to €75,000

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TIN: 7,95% (fixed) TAE: since 8,82% up to 10,76%

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Maximum term

10 years ● ● ● ●

Commissions

● ● ● ● ●

Early cancellation

Opening Commission: 2.50% Additional commissions of 0.125% quarterly Of administration: €0.60 for Aim Commissions of claim of debts expired or exceeded in accounts Vista and of credit: €30 (single amount). Availability: 1% Quarterly (no minimum set) Study Commission: 00.00% By presentation of the receipt : 0.40%, Minimum €3 For the return of each unpaid receipt: 4%, Minimum €15 Commissions for the grant of the discovery: 4,5%, Minimum 15€

● Yes, paying a % not more than 1.00% of the amount of the credit refunded for long-term loan or 0.50% if it is short-term.

ING DIRECT Interest

TIN 5,95%

6,11%

Finance

Minimum: €3,000 Maximum:€60,000

Maximum term

7 years

Commissions

● ● ● ●

TAE

Comp. Depr. Advance: 1% long- term Opening Commission: 1% No commissions: 0% partial Amortization Commission.

Early cancellation fee

● Yes. 0% commission.

Requirements

● No Payroll required. ● Via online: ● A photocopy of the two sides of your identification.

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LA CAIXA Interest

TIN

TAE

3,90%

4,527%

Finance

Maximum: €90,000

Maximum term

2 years and 2 months

Commissions

● Opening Commission: 3,00% ● Study Commission: 2,50% ● Commissions for renovation: 3,00%

Early cancellation fee

● 0,50% commissions

Requirements

● Quarterly of the investment. ● Open account with the bank. ● Document of the investment.

After having studied all the options to apply for the loan to start our activity, we have decided that we will request the loan to "caixa colonya Pollença", for different reasons: ★ Because it is an ethical bank. ★ Because we have all the requisites requested. ★ Because we already have the company account at this bank. ★ Because from covering an occasional need to an investment, whatever the reason, Colonya helps us to look for a financing solution that adapts to our preferences and ability to borrow with the best conditions. ★ If you need to collect your customers' debts and / or advance the payment payment maturity, Colonya will anticipate the amount through promissory notes "not to the order", free of payment of stamps (IAJD), which you It will allow you to reduce expenses. ★ Because they offer us unique solutions adapted to our needs.

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Step 5: Support in the initial phase BUSINESS NURSERIES Definition:

● They are based on shared and temporary work centres, where different entrepreneurs share the same office.

Characteristics:

● They are financed with public funds. ● They are used by young entrepreneurs who are starting a business. ● The maximum time of use of these nurseries is two years. ● Normally, they include legal and accounting advice.

Examples:

● Centre Bit Es Raiguer (Plaça de Son Castelló, 1 07009, Palma.Illes Balears) ● http://www.idi.es/index.php/es/vivero-de-empresas-es

COWORKING Definition:

● The same physical space shared by workers from different sectors to carry out the tasks of their trade.

Characteristics:

● Its price depends on the time occupied by the space. ● It is used by anyone, but usually by young people entrepreneurs. ● It can encourage the realization of projects in common among the different entrepreneurs that share the place. ● Rayaworx (C/ Bernat Vidal i Tomàs, 43 - 07650 Santanyí)

Examples:

● https://www.rayaworx.eu/english

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BUSINESS INCUBATORS

Definition:

Characteristics:

● Organization created to increase the growth and achieve the success of business projects through a set of resources and commercial services. ● ● ● ●

Offer advice to evaluate the business idea. They are, in their majority, private companies. They have a maximum of two years. Its objective is to help create and grow young companies through its technical and financial support.

● Parc Bit (Carrer Rita Levi, 4, 07120 Palma, Illes Balears, España)

Examples:

● http://www.parcbit.es/wparcbitfront/EmpresaIncubadaLi s.jsp

BUSINESS ACCELERATORS

Definition:

● Organization created to increase growth and achieve the success of entrepreneurial projects, but in the shortest possible time.

Characteristic:

● They goal is to advise a rapid growth of the business in a short time. ● They offer economic facilities, a person who acts as a guide and a seed capital (share offer in which an investor receives a part of that business) to start the business. ● Normally, they are hired on-line for a low price.

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● Mola (c/Galilei, Building​ ​U,Office 13A, Parc Bit. 07121., Palma de Mallorca, Espanya)

Examples:

● https://www.mola.com/

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Step 6: The crowdfunding that saved the homophobic pizzeria  Looking for internet crowdfundings of pizzerias, I found a piece of news that seemed very interesting. It was a pizzeria called​ ​Memories Pizza​ ​in Indiana (a small town in Walkerton) that did not accept a homosexual couple who asked for a catering for their wedding. One of the phrases that have struck me most is that they consider that law fantastic because it doesn’t discriminate anybody, but it protects people who are believers. It is clear to us that the new law (Religious Freedom Law) is actually a spawn of legalized discrimination. After the words said by that company, social networks were filled with insults to the O'Connor family and the family decided to close the business until everything calmed down. Here I leave the link of the website of the pizzeria where all the people put negative comments.​ ​MEMORIES-PIZZA The thing did not calm down, they created a crowdfunding to help the discriminated couple to raise money, and the thing went very well. They raised a lot of money, more than what they had asked for​. ​GOFUNDME And this is my opinion: I think that you have to accept all kinds of people, independently of their religion or sexual orientation, and nowadays in our society there is a lot of discrimination.

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TEAMWORKÂ -Positive and negative aspects Positive: We have worked a lot in a group. đ&#x;‘? We have learned a lot about financing with different banking entities. đ&#x;‘? It has been fun to do crowdfunding because we have learned more about this topic. đ&#x;‘? We have worked on different financing options that we did not know. đ&#x;‘?

Negative​: It has taken a lot of work to select the supplier of each product. đ&#x;‘Ž It has been a very long unit. đ&#x;‘Ž We have needed a lot of time to decide the right products with which we are going to work. đ&#x;‘Ž

-The work of each partner Joan and Neus have done step 1​ (​Investment and expenses​). Alejandra has done step 2​ (​Financing with own funds​). Antonia has done step 3​ (​Competence for financing​). Neus, Alejandra and Joan have done step 4​ (​Loans and credits​). Joan and Neus have done step 5 ​(​Support in the initial phases​). Antonia has done step 6​ (​The crowdfunding that saved the homophobic pizzeria​). The whole group has done the​ ​Teamwork​.   

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Profile for laconcaccia

Unit 5: Sources of Financing  

Unit 5: Sources of Financing  

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