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Case Study 5

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Submitted By shannenamanda
Words 333
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Shannen Amanda Dinata
BUMT 4910
Dr. Gary Anderson
February 18, 2015
Case Study Homework Analysis pg. 350 1. Why did Sandra Nieto turn to micro lending as a source of capital for her business?
She turns to micro lending as a source of capital for her business because she has no other choice. She did not have enough money to design. She was an illegal immigrant and she did not have a credit history. Thus, no bank would be willing to lend her money. Also, she learned about micro lending from a friend in Colombia. 2. What factors made Sandra’s company a business that did not qualify for mainstream financing (specifically discuss the C’s of credit)?
Banks need to know what we own, what we owe and what our business finances are. There are five C’s of credit and they are collateral, character, capacity, capital and conditions. Collateral includes property or assets that is pledged against the loan that the lender can take and sell of the loan is not repaid. Character is the ability to borrow money and she did not have a credit history. Capacity means that the business cash flow must be sufficient to cover the monthly loan payments. The money she earned from working and selling her work went to daily costs. 3. When, if ever would you advise Sandra to approach mainstream lenders?
She should approach mainstream lenders when she has a business plan set up and when she starts earning profit. 4. What challenges and setbacks have Sandra overcome?
She has overcome a lot of challenges and setbacks. This includes her business in Colombia. Her business went bankrupt because of the economy downturn. She needs to work seven days a week and many late nights to create her clothes. She did not have enough money to continue designing her own clothes. She tried to get a bank loan but she did not have a credit history. She overcome all of this through hard work and

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