Page 485 - Business Principles and Management

project:
MY BUSINESS , INC.

SELECTING FINANCIAL SERVICES
A good working relationship with a financial institution is important for
a small business. Income received through cash, checks, and credit cards
must be invested and protected, because they can be important sources of
interest income. You must select the correct types of accounts and man-
age them carefully, so that your account balance is neither too large nor
too small to meet your business’s financial needs. You may need short-
term loans to solve cash-flow problems. Other banking services may help
you make the best financial decisions for your business.

DATA COLLECTION
1. Identify at least two bank and two nonbank financial institutions in
your community that offer services for individuals and businesses.
Gather information on the types of accounts and services each of-
fers. If possible, identify the interest rates they offer on checking and
savings accounts as well as the interest rates they charge for com-
mon types of loans. Prepare a chart comparing the information you
collected on each of the businesses.
2. Use the Internet to identify:
a. Financial institutions that offer banking services via the Internet.
b. Sources of financial information for small-business owners, such
as information on loans, interest rates, and investments.

ANALYSIS
1. Assume you will need a four-year loan of $15,000 to start your busi-
ness. You estimate that you will need a $2,000 line of credit for the
first year of operation. Of the financial institutions you studied in
Data Collection #1 above, which one would you go to for the neces-
sary financing? Justify your answer. What do you feel the greatest
personal obstacles will be in obtaining a line of credit for your new
business? Why?
2. Obtain a loan application form from a local bank or an Internet
bank and fill in the necessary information as if you were requesting
the $2,000 line of credit.
3. Answer the following questions:
a. What type of financial institution will you use for regular busi-
ness activities? Why?
b. What type of checking account will you open?
c. What minimum and maximum balances will you attempt to
maintain in the checking account? What will you do with any
excess funds beyond the maximum checking account balance?
d. What will you do with your deposits of daily receipts? When will
you do it?
e. In what ways can you use technology to access and use financial
services? What type of electronic equipment will you need? What
risks do you see in using the Internet for financial transactions?

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