Question

Discuss the steps that the directors of Cautious Limited could take to fund the company’s operations if the bank refuses to agree to the required overdraft in September and October 2020.

Answer 1

Steps that directors could take to fund the company"s operation s in case bank refuse overdraft are following.

1. Use retained earnings

These funds are used to reward shareholders by way of dividend but can be used in business for investing and grow the business.

2. Arrange money from private lenders.

Interest rate may be higher but funds can be arranged from private investors in case the need arises.

3. Equity capital

Company can generate money by selling part of itself in the form of shares to investors.

4. Consider factoring

It is a finance method where company sells it's receivables to get upfront cash.

5. Raise money from family and friends privately.

6. Other ways can be get a micro loan or pledge some of assets to get the loan.

Pls like if logic explained