Domestic and International Sources of Financing
There are several private and public sectors that offer financial assistance for global business enterprise. Denim Trends will enlist financial professionals that understand global business and Denim Trends operations. Hiring financial professionals with a good understanding and knowledge of domestic and international financing will assist Denim Trends in dealing with organizational risk. Denim Trends will design a presentation and convene with potential investors to demonstrate how Denim Trends can improve Puerto Rico’s economy. It is imperative that Denim Trends develop a proposal that has an elevated protection against danger.
Denim Trends essential and reliable source of domestic financing will be self-financing. According to Business Dictionary (2011), self-financing is defined as a “firm or project that generated its growth capital from its own income” (self-financing, 2011). Denim Trends can reinvest the organizations profit as retained earnings. By Denim Trends using their retained earnings is a smart resource, because the investment can be carried out without involving shareholders or stakeholders.
Bank lending is another source of domestic financing Denim Trends will select. Denim Trends will rely on short term, medium term and long term financing. Short term financing will allow Denim Trends to pay for office supplies, utilities and payroll. With short term financing Denim Trends can arrange for a short term line of credit with our local bank. Getting the line of credit will assist Denim Trends with managing organizations operations. Examples of short term sources of financing are: trade credit and commercial banks. Medium term financing will let Denim Trends acquire loans over a fixed period and pay back in installments. The loans Denim Trends acquire through medium term financing will have an agreed interest rate. Denim Trends has the ability to renegotiate the loans, this is done against company assets. Long term financing will fund Denim Trends expansion into the global market. Long term financing can be paid over a year. Examples of long term sources of finances are: equity share, bonds, loans and preference shares.
Government grants are another source of domestic financing. Even though the United States do not offer government grants for start up business, other countries do offer government grants for start up businesses operating in low income areas. Denim Trends will research the different types government grants available in the United States.
Puerto Rico Development Fund is an international source of financing Denim Trends will acquire. According to Government of Puerto Rico (2011),”The Puerto Rico Development Fund was created in 1977” (Puerto Rico Development Fund, para). The development fund offers financing for the development of the private sector in Puerto Rico. The development fund offers loans and issues bonds for economic development.