SOURCES OF BUSINESS FINANCING

There are several funding schemes which are provided within the United States in order to support business organizations in their transactions. They provide capital for entrepreneurs to boost their businesses, and pay at a later date. This enables many businesses to become successful since the government helps them to stabilize their operations(Hadzima, 2010). Below are some of the ways through which business financing occurs;

a)      Small Business Administration Loans

Small Business Administration is an American Agency which ensures that the welfare of small businesses is maintained. This is achieved through supporting their growth and development. It guarantees loans to the small businesses through lending of businesses partners to them. It does not award loans to the entrepreneurs directly but it ensures that they get the amount which is necessary for facilitating their development.

Small Business Administration has entrusted the United States Bank with the responsibility of lending loans to entrepreneurs in order to promote their operations. It also recommends them to other financial institutions and economic development organizations in order to obtain mutual benefit from each other. It ensures that the loans awarded involve the least risks to the lenders. This enables them to avoid losses which may be incurred through offering losses to unfruitful entrepreneurs who may find it difficult to repay them.

Moreover, it ensures that the small businesses are awarded adequate amounts which would help them in promoting their transactions. This promotes the percentage of benefits which the entrepreneurs would be able to achieve through utilizing the availed funds. However, for an enterprise to qualify for being awarded the loans, it should be a profit-making organization. Its size is also considered to make sure that it meets the set requirements by the agency. Moreover, before awarding of loans, the financial standings of the organizations are investigated in order to determine whether they qualify for loans or not(Metrick, 2007).

Advantages of Small Business Administration Loans

i)                    Lower Down Payments

The Small Business Administration ensures that the loans are charged lower initial payback amounts in order to give the entrepreneurs amble time for generation of profits. Therefore, they are favorable to small businesses since they allow adequate time for the entrepreneurs to benefit from them without struggling to pay back. The down payments are affordable to many entrepreneurs hence ensuring that they benefit many of them.

ii)                  Awarding of High Amount

These loans are calculated to fund approximately ninety percent of business operations of a particular organization. This is adequate amount which can be used to promote operations of thesmall businesses hence making them to become successful. The Small Business Administration guarantees loans which amount up to $11.25 million for any qualified entrepreneur.

iii)                Longer Repayment Terms

The main motive of the Small Business Administration is not to generate profits from the transactions of the entrepreneurs. It focuses on helping them to develop their businesses. Therefore, they allow them to take up to a period of twenty five years before paying back the loans. This is aimed at ensuring that they do not interfere with the success of the entrepreneurs through making them to strain in repaying the loans. Moreover, it ensures that the entrepreneurs use the profits which they generate to repay the loans. This ensures that all business operations run smoothly.

Types of Small Business Administration Loans

The American federal agency guarantees loans of five types in order to ensure that they cover a wide range of business needs. These loans are offered by the United States Bank to the for-profit businesses. They range from $25 000 to $11.25 million depending on the size of the borrowing organization(Kieso, 2007). It provides loans for the following business operations;

i)                    Commercial Real Estate Transactions

This type of loans is awarded to the investors who are interested in conducting real estate purchases. They are provided with funds which would enable them to develop rental, or vocational homes. A certain percentage of the rent which is collected from the houses is used to repay the loans after the agreed period. They are useful to many investors since real estate purchases require high initial capital which becomes a challenge to many investors hence affecting the success of the businesses.

ii)                  Business Acquisition or Expansion

Some Small Business Entrepreneurs may be interested in purchasing other business enterprises, or expanding the operations of the ones which they already have. They require funds in order to accomplish their dreams. However, the profits which they generate from their daily transactions may not be adequate to facilitate the development plans. They require loans in order to accomplish their interests. Therefore, the Small Business Administration intervenes to guarantee loans for these entrepreneurs in order to support their projects.

iii)                Construction

This type of loans is awarded to the business persons who engage in construction projects. For instance, some constructors opt to apply for loans in order to purchase the required materials for construction before being paid by their employers. They enable construction projects to be completed within short periods since they make funds available for catering for all expenses incurred. They can be repaid after completion of the construction projects.

iv)                Working Capital

The Small Business Administration connects entrepreneurs with partners in order to provide funds for them to purchase the required equipment to support their businesses. Moreover, entrepreneurs require investing more capital into their businesses in order to maximize their profits. They may not have the funds hence making them to seek loans from the financial institutions. They can also obtain loans from the United States Bank which is the most preferred institution for offering Small Business Administration Loans.

v)                  Debt Repayment

Many Business enterprises in other nations are forced to terminate their operations due to bankruptcy. However, the United States government ensures that the selected federal agency takes care of the needs of small businesses in order to ensure that they do not run bankrupt. It guarantees loans which are aimed at enabling them to settle their debts with ease. This promotes healthy business practices since entrepreneurs are provided with favorable environment for conducting business without being disturbed by chaotic lenders(Berezin, 2005).

b)      Master Limited Partnerships

Master Limited Partnerships are traded publicly whereby they involve two types of partners. They involve limited partners which provide capital to the Master Limited Partnerships and in return get awarded income distributions. These distributions are provided quarterly hence providing funds to the people who invested their amount into the partnerships. Therefore, business organizations can choose to invest some of their profits in these partnerships in order to obtain benefits in return. The quarterly distributions are divided according to the percentage of investment hence the more an entrepreneur invests, the large the amount he receives in return.

They also involve general partners who are held liable for managing the practices of the Master Limited Partnerships. They provide any emergency requirements for ensuring welfare of the partnership and receive compensations in return. They have more managerial duties than the limited partners who concentrate in investing their financial resources only. The general partners represent the Master Limited Partnerships in most organizational levels and oversee its overall performance.    

However, for businesses to qualify being regarded as Master Limited Partnerships, they must prove to the American Government that approximately ninety percent of their income generation comes from natural resources, or real estate investments.They evade corporate income taxation from both the state and the federal levels because they are classified as partnerships.Entrepreneurs who operate under busy time schedules are advised to become limited partners in order to avoid bearing of extra managerial responsibilities.

Benefits of Master Limited Partnerships

i)        High Profits

Master Limited Partnerships result to high yields which make many entrepreneurs to get attracted to the investment. They mostly provide profits ranging between 6% and 7% of the total investment. This can be used as a way of funding businesses since the income obtained from the partnerships can be used to expand private businesses.

ii)                  Consistency in Awarding Distributions

These partnerships allow distributions to be made quarterly hence making it easy for the investors to predict the amount they are likely to receive. Therefore, it makes it possible for the entrepreneurs to plan for future business transactions depending on the amount they would get from the distributions. It also involves little unexpected expenses since the entrepreneurs are sure of the amount they would receive hence budgeting it effectively(Metrick, 2007).

iii)                Tax Exceptions

The Master Limited Partnerships protect the partners from being double-taxed. For the corporate investors, they are taxed both at corporate level, and at individual level. However, for the Master Limited Partners, tax is only levied on their distributions. Therefore, they are protected from paying the corporate taxes hence saving a lot of money. This amount can be used to boost their business operations. This initiative has encouraged many entrepreneurs within the United States to starting investing in Master Limited Partnerships.

iv)                Lower Capital Requirement

The Master Limited Partnerships require little capital in initiating development projects since they are not bound to paying a lot of taxes like the registered corporations. This enables them to grow rapidly since they find it easy engaging in development projects. They require little capital which can be obtained from their transactions hence eliminating the need for applying for business loans.

c)      New York City Tax Forgiveness Start-ups

The State Government of New York City introduced a tax forgiveness program in order to encourage entrepreneurs to invest more. This program was announced by Mayor Michael R. Bloomberg in 2012. According to a report which was compiled by the American Department of Labor (2012), the State government had helped more than 25,000 entrepreneurs to start and grow their business within a period of three years.

Rob Walsh, the Commissioner of New York Department of Small Business Services, said that between 2011 and 2012, the program had helped more than 1 200 families to secure jobs. This program involved allowing the new entrepreneurs to start their businesses and operate for a period of ten years without paying taxes.This motivated many potential entrepreneurs to start businesses hence improving the economy of the State.It was an effective way of financing businesses which was initiated by the State Government. It ensures that the entrepreneurs are given amble for generating enough profits which would be used to pay theirtaxes in future. Moreover, it enables businesses to have adequate period for learning the market needs in order to become successful before starting to pay taxes(Jaffe, 2008).

This program was devised after realization that most of the businesses in New York City became unsuccessful due to levying of high taxes by the State Government. Therefore, it was introduced in order to provide job opportunities for the New York Veterans. It helped many entrepreneurs to generate adequate income which would be used to cater for the business expenses and boost their transactions.

Differences among the three Ways of Financing Businesses

Business financing through the Small Business Administration Loans provides funds to entrepreneurs without having to force them to invest some of their capital in the program. They are helped by the federal agency to acquire loans from the trusted financial institutions. The agency gets involved in protecting both the welfare of the borrowers, and the lenders.

However, financing through Master Limited Partnerships requires the entrepreneurs to invest some of the capital in the organization in order to generate income in return. Unlike the Small Business Administration financing, the Master Limited Partnerships do not require lending of money. They allow the entrepreneurs to invest their capital in ownership of the partnerships in order to earn quarterly distributions in return. Therefore, each entrepreneur can easily predict the amount which he is likely to obtain from the partnership. However, in Small Business Administration Loans, profit generation is determined by the extent to which the loans were invested in transactions.

In Master Limited Partnerships, entrepreneurs are awarded opportunities to choose the kind of partners they want to become depending on their willingness to bear business responsibilities(Kieso, 2007). This differs from the other ways of business financing since entrepreneurs are entirely responsible for their fate in business. However, the New York City tax forgiveness start-ups programbenefitsthe new entrepreneurs mostly. It ensures that they are awarded amble time to learn the market patterns and generate adequate capital which will help them to cater for the expenses of their businesses. This method of business financing does not involve providing additional funds to the entrepreneurs. It focuses on providing favorable environment for the new entrepreneurs to succeed in business. This is achieved through reducing the burden of tax expenses for them for a period of ten years. It helps entrepreneurs to gain enough experience on how to survivecompetitions, and stabilize their businesses.

Difference betweenVenture Capitalists and Angel Investors

Venture Capitalists are people who provide funds for an already developed business in order to boost its practices, and acquire profits in return. They are only interested in making profits from the amount they provide. Therefore, they consider funding the promising businesses in order to ensure that they bear little risks(Ante, 2008).

On the other hand, Angel Investors are people who fund a business during its initial stage of development in order to help it to grow. They mostly get involved in the businesses which they have passion in in order monitor their progress keenly. Angel Investors take more risk than the Venture Capitalists. This is because they invest their resources in businesses which they do not know whether they will survive market competitions or not. Moreover, they do not provide financial resources only. They provide all the necessary resources which the businesses require in order to make their operations successful. They also take long periods before starting to enjoy profits from their investments since they have to wait until the businesses stabilize their operations.

However, the Venture Capitalists investigate the performance of a certain business in order to determine its likelihood of becoming successful before funding them.They are only committed to investing their financial resources in order to support business practices whereby they are assured of securing profits in return. They start investing after the businesses pass the stage of being funded by Angel Investors. Therefore, they are assured of starting to enjoy profits from their investments after short a period since the businesses would have already stabilized their practices.

The Angel Investors are bound to providing advice to the business managers in order to support its operations. Moreover, they are involved in decision making process of the crucial matters affecting the business(Berezin, 2005). They are also entitled to monitoring progress of the business in order to ensure that the proper amendments are made concerning its policy in order to promote its success.

However, the Venture Capitalists are only interested in the income generation of the targeted business. They do not provide any other help to the business apart from financial assistance. They ensure that they fully benefit from their investments without bearing a lot of risks. Therefore, they have fewer responsibilities compared to the Angel Investors who oversee the overall business progress.They are also not involved in most of the decision making processes except where they would be directly affected by the changes being anticipated for. They are majorly concerned with maximization of their profit generation rather than the overall practice of the business.

Conclusion

Businesses require adequate capital in order to support their practices and expand their transactions. In most cases, new businesses lack adequate capital for supporting their operations.They require financial support from other individuals and organizations. Therefore, they need to establish good relationships with the potential investors in order to acquire the required funds.

The Government of the United States has established mechanisms for taking care of the needs of the new entrepreneurs. They act as incentives which encourage more potential entrepreneurs to establish businesses. The State Government of the New York City has introduced a tax exemption program in order to enable the new entrepreneurs to reduce their expenses while conducting business.

This has enabled many entrepreneurs to establish business since they are allowed amble time for making enough profits before starting to pay taxes. The generated profits would be used to cater for the business expenses, and also boost their transactions.

Moreover, the Small Business Administration of the United States protects the welfare of entrepreneurs within the nation. It enables them to acquire partners, and link others with financial organizations from where they would obtain business loans. It also intervenes in order to ensure that both the lenders and borrowers benefit from each other mutually.This is achieved through recommending borrowers to the trusted lenders in order to ensure that they do not violate the terms of agreement after awarding of the loans. It also guarantees security of the lenders’ money through investigating the financial standing of the borrowers before allowing them to be awarded the loans.

Other entrepreneurs opt to engage in master limited partnerships in order to generate income from the amount theyinvest. They prefer this method of business financing in order to avoid paying corporate taxes which might become a setback towards their success. In this method, their commitment towards investing determines their success inincome generation. This makes them fully responsible for their fate in business.

Entrepreneurs opt to choose different alternatives of investing their resources in order to ensure maximization of their profits.Some prefer being Angel Investors in order to secure more profits after helping businesses to become successful while others choose to become Venture Capitalists. The Angel Investors are inclined to bearing a lot of risks which are associated with the progress of the businesses. However, Venture Capitalists are usually keen not to bear a lot of risks in their investments. They only target the promising businesses in order to lower their likelihood of incurring losses.

Therefore, other governments should emulate practices which would enable entrepreneurs within their territories to become successful. They should focus on ensuring that the new entrepreneurs are helped in coping with the market changes in order to stabilize their operations. They should also protect their rights in order to ensure that they do not get oppressed by chaotic lenders who might choose to violate the terms of agreement in awarding loans.

Work Cited

Ante, S. (2008). Creative Capital: Georges Doriot and the Birth of Venture Capital. Cambridge: Harvard Business School Press.

Berezin. (2005). Emotions and the Economy in Smelser. Princeton: Princeton University Press.

Hadzima, J. (2010). All Financing Sources Are Not Equal. Boston Business Journal, 34-67.

Jaffe, R. a. (2008). Corporate Finance. New York: McGraw-Hill Publishing.

Kieso, D. a. (2007). Intermediate Accounting. New York: John Wiley & Sons.

Loewen, J. (2008). Money Magnet: Attract Investors to Your Business. New York: John Wiley & Sons.

Metrick, a. A. (2007). Venture Capital and the Finance of Innovation. New York: John & Sons.

THE DAY OF THE DEAD

The day of the Dead is a poetry work which was obtained from a translation of Lozano’s poem entitled the Labyrinth of Solitude which was translated by Lysander Kemp in the year 1961. It talks about a Mexican festival which is usually held on November 1^st and 2^nd in every year to celebrate and remember people who have passed away within the society. Mayors of many Mexican towns spend a lot of money in buying items to decorate the Mexican towns and drawing of skeletal pictures in order to depict death. This leads to unnecessary expenses which are incurred in purchasing of less beneficial items compared to the basic needs of the citizens (Lozano). Many people within the towns require food and clothing more than the skeletal statues which are bought during the celebrations.

            Though the festivals are important in commemorating the death of their loved ones, the basic needs of the residents of the towns should be given the first priority. The mayors should ensure that the residents within their towns are living in decent houses and they have adequate food and clothing before deciding to spend a lot of money in conducting festivals. The clothes which are bought to be worn during the celebrations have skulls and human skeletal pictures drawn all over hence making the unfit to be worn on normal days (Carmichael). They also spend a lot of money in paying manufacturing industries to mould products which depict human skulls for the children to eat during the celebrations. The mayors should substitute the sugar-mould products with other nutritious foods since most of the children do not eat healthy foods while they at home. Most of the dwellers in the towns are middle and lower income earners hence they struggle a lot to get money for buying food and clothing for their families. They are highly taxed by the government while during the celebrations a lot of money is wasted in buying skeletal statues and paint for decorating walls of some buildings within the town.

            They also visit the gravesites of the loved ones where foods and drinks are poured to symbolize their love and kindness to them. After the festivals, the foods are eaten by wild animals while many people in the towns lack adequate food (Elizabeth). The mayors become motivated in making the festivals colorful hence failing to care about the basic needs of the residents of their towns. They order them to clean the gravesites by cutting down weeds and planting flowers around the graves in order to make them attractive. However, they do not emphasize on cleaning the streets in their towns since most of them have poor drainage systems and uncovered dumpsites. Most of the basic commodities used adding flavors to food such as salt are poured on the sacrificial altars since they are considered to be the spices of life (Lozano).

            Members of the community are also required to buy alcoholic drinks to pour on established altars in the gravesites. This leads to wastage of a lot of money which could be used in buying food and clothing for their family members. Most of the mayors spend a lot of the money which is allocated for funding development projects within the towns hence causing the residents to live in poor environmental conditions due to lack good facilities (Elizabeth). They should buy items which would be used to improve the living standards of the townspeople after the festivals. They should buy good clothes for the participants of the celebrations in order to ensure that they can be worn on normal days after the festivals. They can also collect the surplus food and give it to the needy people within the society instead of pouring it on the altars in order to avoid wastage of basic commodities while there are people who are in need of them in the society (Brandes).

  

Conclusion

Though Day of the Dead is an important festival to the Mexican people, it should be performed cautiously in order to avoid wastage of essential resources. The basic needs of the people should be considered first in order to ensure that they have better living standards before spending a lot of money in celebrating the death of other people. The festivals should be planned well in order to facilitate the welfare of the society and reduce wastage of essential resources. The mayors can also choose other alternative sources of money which would be used to fund the festivals other than spending the amount which is allocated for development projects within their towns.

The festivals can also be done collectively by involving members of different towns hence sharing the cost of buying the required items for the celebrations. It would enable them reduce their expenses since conducting them independently would be more costly. They should aim at showing that life is precious by promoting good living standards of the townspeople instead of demonstrating how loss of life causes a great impact to the society.

Income Distribution in the United States

                                              

            There is a lot of inequality in income distribution in America. Though researchers had earlier argued that income inequality had some benefits to the nation, they later reconsidered their claims and concluded that it caused more disadvantages than advantages. It was viewed as a tool of promoting accumulation of wealth to some individuals who would establish companies and manufacturing industries in order to provide job opportunities to other people within the nation.

            However, it was later discovered that most of the rich people invested in economic sectors which brought little benefits to the other members of the state. For instance, many of them invested in building vacation homes whereby the only people who would get employed in such homes were few caretakers who would ensure welfare of the tenants. Therefore, inequality in income distribution proved to be a major challenge to the overall development of the economy of the United States (Beeghley).

            According to a research which was conducted by a student in the University of California from 2009 to 2010, it showed that inequality in income distribution within the nation was increasing. The research revealed that among the top one percent richest people in the states, incomes rose by 31.4%. Moreover, the rest of the population experienced an income growth of only 0.4%. This shows that the fate of the economy of the nation would be determined by the actions of very few people (Stiglitz). There arose debates concerning the pattern of income distribution whereby some people argued that inequality in income distribution would lead to oppression of the workers in the United States (Krugman). They said that it couldn’t be fair for workers to help the owners of the prominent companies they work in to acquire more wealth while they get paid very little wages. Therefore, they anticipated for change in order to ensure even distribution of incomes to all citizens. However, other people had contrary opinions that the income distribution in the nation was fair since all citizens were being given same opportunities to compete for being the top richest people. They suggested that inequality was a form of reward to the hardworking people in the society who managed to use innovative and creative methods to become rich.

Positive Effect of Inequality in Income Distribution

1.      It Promotes Competition

            Inequality in income distribution triggers the necessity for people to compete in occupying the top position in the hierarchy of richness. Many people would become motivated to work harder in order get a chance of enjoying the privileges which are provided to the top richest people within the state. Therefore, many investors would become motivated to expand their businesses in order to earn more income. After expansion of their businesses, they would require workers to manage and coordinate all the activities which are done the premises. This would provide job opportunities to many citizens hence helping them to improve their living standards. They may also require buying machines in order to ensure effectiveness in executing all activities within their business premises. This would promote the industrial sector within the nation since it would have obtained a ready market for selling their products. Therefore, it would lead to improvement in the overall economy of the nation and reduce the dependency level of the citizens (Krugman).

Negative Effects of Inequality in Income Distribution

1.      Increase in Dependency Level

            Inequality in income distribution would lead to the economy of the country being controlled by few people within the nation. Therefore, majority of the citizens would become middle and lower income earners. This means that they would be struggling to meet their basic needs such as buying food and clothing. It would become necessary for them to depend on the government and the few people who control the economy of the nation for job opportunities. Therefore, the government would become overloaded with burdens of helping large number of the citizens to get job opportunities and providing relief food and clothing for them. This would make the large portion of the government’s budget to be allocated to helping the poor instead of developing infrastructure and other economic sectors.  

2.      Oppression of Workers by their Employers

            Inequality of income distribution would lead to high number of jobless people within the nation. Therefore, many workers would become desperate for getting job opportunities to a point of agreeing to work for extra hours without being paid in order to please their bosses and secure their jobs. The employers would become willing to sack any employee who does not show extra effort in doing his job in order to employ those who are willing to work for extra hours without being paid. This would lead to violation of the rights of many employees since their fate would be determined by the attitude of their employers towards them. Many people would also become forced to work for little wages since claiming of an increase might make them to get sacked. Therefore, it would become hard for them to improve their living standards since the money which they obtain from their jobs would not be enough to meet their basic needs and facilitate for development projects in their homes. Many citizens would start living in poor conditions hence leading to overall decline of the economy of the nation (Baudot).

3.      Violation of Rights of Children

            All children within the United States are entitled to rights to education and good health. This can only be achieved when their parents or guardians are financially stable. Therefore, if they become lower income earners due to inequality in income distribution within the nation, it would result to challenges in ensuring proper health and paying school fees for their children. Some children would become disadvantaged while others would enjoy all the privileges provided under their rights (Zweig). For instance, the children of the rich people within the nation would enjoy the privilege of being taught by highly qualified teachers and obtain mentorship from the most successful people since their parents are financially stable and they can cater for all expenses incurred. However, the children of the poor people might not be able to complete their studies since their parents would not be able to pay school fees for them. Many of them opt to drop out of school in order to look for jobs to support their parents. Others choose to be working part-time in order to get money to pay their school fees. This would affect their performance in class negatively since they would be motivated to work in order to earn more money than engaging in studies. They would also be having little time for resting and doing their homework hence making them unsettled when they report to school (Hine).

4.      Increase of Division in Social Classes

            Inequality in income distribution would lead some people to acquire more wealth while others continue to become poorer. This would lead to division in social classes within the nation whereby the gap between the rich, the middle income earners, and the lower income earners would continue to increase. This would cause decline of the economy of the nation since it would lower the possibility of interactions between all citizens in order to help one another to improve their living standards. The rich people tend to discriminate the poor and avoid being associated with them hence avoiding interacting with them. Therefore, it would become hard for the poor people to get jobs in order to cater for their basic needs since they depend on the rich ones for provision of job opportunities (Krugman).

Conclusion

            The United States of America is faced by a lot of challenges in ensuring even distribution of incomes among its citizens. This has led to difficulties in improving the economy of the nation further since its fate is determined by few people within the society. The top richest people control the largest percentage of all incomes within the nation. Therefore, the economy of the nation is greatly influenced only little percentage of the whole population and their actions determine whether it would improve or decline.

            The richest people have started investing in economic sectors which help only few people within the nation instead of promoting employment of many citizens. This has led to increase in dependency level of the citizens hence giving the government a burden of helping many people to meet their basic needs. It has also exposed children to violation of their rights since many of them become unable to complete their studies due to the inability of their parents to support them financially.