Factors Influencing The Total Amount Of Funds Essay

1088 Words Dec 8th, 2015 5 Pages
2.2.3 Influencing Factors
The total amount of funds is hugely influenced by strategic planning, which is defined as an important vehicle for setting priorities, making investment decisions, and laying out growth plans (HBR.org, 2013). It also relates to financial performance of SMEs (Peter McKiernan & Clare Morris, 1994).

In addition, SMEs will encounter with common obstacles in their way towards a more diversified financial offer. First, investor due diligence requirements are difficult for SMEs to satisfy. Furthermore, the large heterogeneity and opacity contribute to the characters of the SME sector, posing risks perceived by potential investors. Finally, the evidence base about SME use of alternative instruments is currently patchy, which limits the capacity of investors to monitor the market, as well as the design, implementation, and assessment of policies (BIS, 2013).

2.2.4 Evaluation
Debt and equity are two components of finance in my business plan. The advantages of debt finance are interest is tax deductible; and debt holders are limited to a fixed return and they do not have voting right (J. Chris Leach & Ronald W. Melicher, 2014). For our business plan, we all evaluate the debt-equity ratio at the optimal level, which offers a balance between business risk and financial risk.

2.2.5 Learning
According to my personal perspective and group viewpoint, we learned the following aspects from the combined presentation. For traditional bank finance, credit conditions…

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