Case Study 5: Sandra Baquero Design Homework Analysis
In:
Submitted By Isabel92p Words 388 Pages 2
Isabel Perez
Case Study 5: Sandra Baquero Design Homework Analysis
Creativity in Business
1. Why did Sandra Nieto turn to microlending as a source of capital for his business?
Sandra Nieto learned about microlending from a friend in Columbia. Ultimately, Sandra did not have another option because she didn’t have the funds needed to design. As a result of her being an immigrant, she could not obtain a credit history which take her chances away from ever going to a bank. She was an illegal immigrant and she did not have a credit history.
2. What factors made Sandra’s company a business that did not qualify for mainstream financing (specifically discuss the C’s of credit)?
The five C’s of credit are collateral, character, capacity, capital and conditions. Collateral which is the property/assets pledged against the loan that the lender can take and sell of the loan is not repaid. Character represents how well qualified she is to borrow money. This was hard for her to do because she did not have any money. You also have capacity, which is the business cash flow that must be sufficient to cover the monthly loan payments. The money she earned from working and selling her work went to daily costs. In order for banks to consider someone they need to know what is owned, owed and what the details to the business financials are such as conditions. Capital typically represents what is yours or the owners.
3. When, if ever would you advise Sandra to approach mainstream lenders?
I would advise her to make predictions, research the industry well enough to prepare for pros and cons, and then write down a solid business plan on how she would distribute her money and how she would differentiate herself in the market. Most importantly, ensuring lenders that they can get a return on their investment.
