HELP! School Project, Help appreciated :>

Discussion in 'Growing and Managing a Business' started by kashmir, Jul 21, 2011.

  1. kashmir

    kashmir
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    Here's the scenario, it's for a school project and i really need help

    Scenario: i currently have a buisness in South Africa producing 500 articles to be sold locally in SA. i have received an order, and need to now produce 2500 articles to sell in Slovenia. I need to expand my buisness, and employ more workers.

    I have applied for a loan of R200,000 from the bank, and i need to write a letter to my bank manager explaining:

    Why i should accept the order from slovenia
    How the order will benefit my workers
    How the order will benefit the south african economy
    Why the loan should be accepted.

    NB: this is not my real situation, just a school project.

    I need to write a letter of 2 pages, following the above criteria. Here's what i've got so far:







    Why I should accept the order from Slovenia:

    My buisness should accept the order from Slovenia for a variety of reasons. The order from Slovenia will provide stability for both my buisness and it's workers. It will also give my buisness an international profile, wich will eventually lead to many more orders from other international clients. It also provides my buisness the opportunity to expand, and reduces risk. As i employ more workers, the load will be spread evenly amongst them. I will also employ a factory manager, which will also help me expand.


    Benefit of the order for workers:

    With a stable source of income from Slovenia, my buisness will be able to give it's workers bonuses and extra advantages like further education for the worker, and training courses, providing the profit margin highers. I will also be employing more workers, so that the load is spread amongst them, and my buisness is not very dependent on one single worker, and it will also free the workers up, and give them more time. With the order from Slovenia, the workers will have a very stable and predictable income.
     
  2. Fergal

    Fergal
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    Welcome to our Business Forum kashmir, thanks for joining and posting.

    When a bank receives a loan application their main concern is that the borrower will pay the money back. The first thing the bank will want is confidence that the person or people behind the business are honest, reliable and capable of running the business. With regards to the business the bank will want to see details of the order, preferably with written confirmation of the order from the customer. Next they will want to see financial forecasts that shows your company will make a profit from the order and will be able to use those profits to pay back the loan.

    I'd be surprised if the bank would want to know how the order will benefit your workers or the economy. Their concern is getting their money back with interest, not on helping others. However, I understand that those might be factors that you have to address for your school project.

    Did you have any specific questions that you wanted to ask in relation to your project?
     
  3. Clint Cora

    Clint Cora
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    I would think that in this specific case, the bank would want to know whether you've taken the measures to make sure that this deal will go through or not, especially from a new customer from a country that you have never dealt with before. It would be a disaster if in this scenario, you got the loan, produced the articles and then the customer either backs off or receives shipment and doesn't pay. There is risk involved so I'm sure you would have to address that on how you would lower that risk to the bank.
     
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  4. Gary Barzel

    Gary Barzel
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    To answer the question of why the loan should be accepted, you will need to provide the following to help increase your chances of getting a bank loan.

    A solid business plan is one of the best assets you can bring to the bank when applying for a loan. Be sure to include a precise breakdown of your products. What marketing and advertising strategies do you implement and what are the costs involved?
    Also provide clear and accurate financial statements since banks will use them to assess your business’s ability to repay the loan.

    By being fully prepared you can help increase your chances of getting accepted for the loan.
     
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